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Tenant farmers: How to navigate on-farm diversification
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For tenant farmers, diversification can provide a valuable route to greater financial resilience, but taking a new enterprise onto rented land comes with an additional consideration: the relationship with the landlord.
Before investing in a farm shop, holiday accommodation, visitor attraction or another non-agricultural enterprise, tenants need to understand both the commercial opportunity and the terms on which their landlord may agree to the proposal.
Run the numbers before approaching your landlord
According to Caroline Squire of the Tenant Farmers Association, the first step is to understand exactly what the proposed diversification could cost and what income it could generate. Having these figures gives farmers a clear benchmark when approaching their landlord for consent and negotiating the terms of the arrangement.
“There is no point getting consent for a diversification which you end up giving so much of the income away to the landlord, which turns out to be not economically viable for the farmer,” she explains.
Landlords may agree to diversification in return for a percentage of the income generated or through a subsequent increase in rent. Squire says she would generally favour negotiating a percentage of net income, as this takes the costs of running the diversification into account.
She also warns that incorporating diversification into the rent can create challenges at future rent reviews, where the landlord may use the additional enterprise as justification for seeking a further increase.
Building a strong landlord relationship
While the financial arrangements are important, the relationship between tenant and landlord can be equally critical. Squire says resistance to diversification can sometimes stem from historically poor relationships between the two parties. There can also be specific concerns around Agricultural Holdings Act (AHA) tenancies, where a successful diversification could affect future succession considerations.
For tenants, therefore, communication should start well before a diversification project reaches the planning or investment stage. Amelia Greenway, who farms more than 1,200 acres on a Farm Business Tenancy at the National Trust’s Killerton estate in Devon with her husband Jason, has taken this approach.
The couple have introduced educational visits, a farm shop and a holiday let, with ambitions to develop their own butchery. For Greenway, diversification is about creating economic resilience while delivering benefits for the local community.
Trust can create opportunities
Greenway describes the National Trust as an “incredibly open minded” landlord that recognises the need for its farms to develop profitable and resilient businesses. The relationship has been built on trust and regular communication rather than a formal business plan. Greenway meets with her landlord every six to eight weeks, a relationship she actively requested so both parties understand each other’s priorities.
“We always delivered and never overstepped the mark,” she says, explaining that this helped establish a strong foundation of trust.
With many of the diversification enterprises still in their early stages, the National Trust has not yet increased the rent or requested a profit share. However, Greenway expects that conversations around future income-sharing could become relevant as the businesses mature, particularly if plans to expand the holiday accommodation progress.
Don't underestimate the investment
One of the biggest challenges for Greenway has been securing enough capital to get diversification projects off the ground. She admits to being an optimist and often underestimating the amount of capital required, meaning some projects have taken longer than anticipated.
The financial commitment is also about more than physical infrastructure. Planning, legal advice and the additional administration involved in running a diversified enterprise all require time and money. For tenant farmers, these costs need to be factored into the initial feasibility work, alongside any potential income share or changes to rent.
Diversify for the right reasons
For Greenway, one of the most important lessons is to ensure a diversification project is authentic to the farm and the people running it. Rather than chasing the latest trend, tenants should consider how an enterprise fits with their own skills, values and long-term ambitions, as well as those of their landlord.
With the right approach, diversification can deliver more than an additional income stream. It can strengthen the relationship between tenant and landlord, create wider community benefits and help build a more resilient farm business for the future.
Farmers and landowners looking to explore their diversification options can discover practical ideas, expert advice and specialist suppliers at Farm Business Innovation 2026, taking place at the NEC Birmingham on 4–5 November.