The Tenant Farmers Association (TFA) has warned that the let sector
of agriculture in England and Wales is being ruined by short-term
thinking by landowners and their advisers.
TFA Chief Executive, George Dunn said “There is no doubt that we
are in an unprecedented period of uncertainty. The lack of an
obvious route through Brexit and the strong possibility of an
imminent General Election are clearly unsettling. However, that
uncertainty is being compounded by professional advisers urging
their landlord clients not to enter into long-term tenancy
agreements. Despite the current uncertainty, farming has always
needed a long-term view and short-term tenancy agreements are
ruining the ability for farm businesses to plan ahead”.
The tenanted sector of agriculture makes up about one third of
the agricultural area of England and Wales, and around half that
is rented under Farm Business Tenancies (FBTs) governed by the
Agricultural Tenancies Act 1995. Since the introduction of the
1995 Act, average lengths of term have been around the four-year
mark but there is now evidence that lengths of term are getting
even shorter. 85% of all new FBTs are let for five years or less.
Part of the problem is anticipation about the development of new
Government policy for agriculture and the rural environment.
“Advisers to the landlord community are speculating about the
possibility of their clients been able to capitalise on new
Government policy, particularly environmental land management
contracts and potentially lucrative planting grants for forestry
and woodland. The Government should be making it clear that new
policies will be targeted at active farmers only. It should also
be made clear that landowners will be excluded from new schemes,
where they have taken land back in hand from tenant farmers
purely to take advantage of new schemes,” said Mr Dunn.
“In the current uncertainty, it would seem more appropriate for
those advising landlords to be helping them find good tenants,
with whom to do long-term deals at sensible levels of rent.
However, since the market is not delivering this rational
outcome, it is time for the Government to step in to correct this
market failure. For a long time, the TFA has been urging the
Government to use the taxation framework within which landlords
make decisions about land occupation to encourage longer farm
tenancies and to remove taxation benefits to those who wish to
continue to let on a short-term basis. If we get to a budget on
06 November, we will be pressing the Chancellor of the Exchequer,
once again, to take this approach,” said Mr Dunn.
