As the dust settles on the General Election, the new Government must work to improve the resilience of farm tenancies.
As the dust settles on the General Election, the new Government must work to improve the resilience of farm tenancies. The deregulatory experiment which was the Agricultural Tenancies Act 1995, running now for 22 years, has failed in its objectives to increase the area of let land, provide more opportunity for new entrants and improve the economic efficiency of the sector.
The short-term nature of Farm Business Tenancies (FBTs), with average lengths of term consistently under four years, is a major problem. Farming is a long-term endeavour requiring significant capital investment, patience, good soil management and the ability to balance profitable years against the bad.
None of this is assisted by the shockingly short lengths offered on FBTs. Landlords are reluctant to use anything like the full flexibility of the statute, but have gained considerably from it and associated tax changes. With much higher demand than supply, landlords can offer shortterms for high rents at very little risk and obtain, into the bargain, 100 per cent Agricultural Property Relief from Inheritance Tax.
By contrast, the short-term nature of tenancies holds back progression, investment and sustainable land use. There are five straightforward steps to change this:
Some landlords are nervous about letting long-term given the difficulties which can occur when bringing a tenancy to an end for a tenant’s breach, chiefly for non-payment of rent. The Tenant Farmers Association (TFA) would be prepared to see easier to use provisions for handling such breaches in long-term agreements.
Also, where landlords obtain development opportunities, the TFA would be happy to see easier to use termination provisions in longer tenancies, subject to fair compensation to the tenant. Finally a word to landlords’ agents.
Achieving the highest rent for the shortest term should not be the only considerations when letting land. Sustainable solutions for both parties and for the benefit of the wider economy must form part of the analysis.