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'This is a step in the right direction' - farm business tenancy length increases but challenges remain

Tenant Farmers Association (TFA) said tenancies had been ’too short for too long’.


Alex   Black

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Alex   Black
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'This is a step in the right direction' - Farm business tenancy length increases but challenges remain

Farm business tenancy length increased ‘noticeably’ in 2016 but more needs to be done, according to a survey by the Central Association of Agricultural Valuers (CAAV).

 

The average let increased by eight months on 2015 to 4.48 years. In England and Wales, letting of fully equipped farms averaged 14 years, with units of over 81ha (200 acres) averaging nine years against 2.54 years for less than 10.1ha (25 acres).


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94 per cent of farm business tenancies which ended were re-let as well as 86 per cent of 1986 Act lettings.

 

But in Scotland the proportion of holdings falling vacant that were re-let fell to 35 per cent, leading to a further decline of 11,331ha (28,000 acres) in the total tenanted sector.

 

68 per cent of lettings were of bare land, with rental seen as ‘high risk and low reward’ and the Scottish tenanted sector has nearly halved since the early 1990s.

 

Vibrant

 

Jeremy Moody, secretary and adviser to the CAAV, said a vibrant tenanted sector was key to helping farm businesses adapt to changing demands ahead of, and after, Brexit.

 

“If tenancies are discouraged or made less flexible, then the likely structural changes in farming for economic reasons and in adaptation to a post-Brexit world will use business contracts instead,” he said.

 

“As is now happening in Scotland, that would bypass the let sector with its opportunities for combining flexibility with assurance and the framework it offers for investment and land management.”

 

The amount of new lettings taken by new entrants fell to 14 per cent of units let to a new occupier.

 

“That compares to 25-30% in previous years,” Mr Moody said.

 

“Significantly, the level of lettings to new entrants in Scotland was zero.”

 

Welcome

 

The Tenant Farmers Association (TFA) welcomed the findings and said the short-term nature of agricultural tenancies had held back progression, investment, sustainable land use and productivity on farms.

TFA chief executive George Dunn said it was encouraging to see the average length increased.

 

“This is a step in the right direction towards the goal of seeing average lengths of term in excess of 10 years and clearly the TFA’s campaign has had an impact in encouraging more sustainable tenancy lengths being brought forward.

 

“However still more needs to be done to encourage the landlord sector to offer the longer terms that we need to see.”

 

He called on the Government to ‘grasp the nettle’ and encourage longer term tenancies.

 

“The tenanted sector cannot begin to consider issues of resilience and sustainability in the post Brexit environment with average lengths of term on new FBTs of under 10 years,” he said.

TFA called on the Government to:

  • Restrict the 100 per cent Agricultural Property Relief from Inheritance Tax to landlords prepared to let farmland for 10 years or more (excluding rotationally let land on short terms for vegetable and other high value crops)
  • Clamp down on landowners who are using share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity and as vehicles for aggressive tax avoidance
  • Offer landlords prepared to let farm land for 10 years or more the ability to declare their income as if it was trading income for taxation purposes
  • Reform Stamp Duty Land Tax to end the discrimination against longer farm tenancies
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