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,” continued 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.”