2014-03-12  

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No Justification for Farm Rents to Increase this Year

The Tenant Farmers Association has warned agricultural landlords and their agents that there is no scope for rent increases this year on farm tenancies regulated by the Agricultural Holdings Act 1986 following their last rent reviews three years ago.

TFA Chief Executive George Dunn said, “Over the past few years landlords and their agents have been used to serving notices for rent review on farm tenants in the expectation that increases would follow when the reviews took place in the year after the notices were served - but this year is different”.

Hay

Rent reviews follow a three year cycle which means that rents due for review this year would have been last reviewed in 2011. In every rent review case there needs to be consideration of both farm budgets and comparable levels of rent being paid on similar holdings.

“In comparison to 2011, farm budgets this year are showing lower levels of profitability due to steady or slightly lower prices in most sectors and an increase in costs across the piece. However, there is, as yet, little evidence of reductions in comparable rents leading to the conclusion that standstills in rent should be the order of the day,” said Mr Dunn.

The TFA has tested this view with leading rural chartered surveyors.

“The TFA has just completed its annual round of meetings with its panel of Recommended Professionals including around fifty leading, rural practice chartered surveyors who act for both tenants and landlords. We put the hypothesis that there was no justification for rent increases this year where rents were properly reviewed three years ago and there was unanimous agreement in support of the hypothesis,” said Mr Dunn.

“Of course I am only talking in generalities and there will be individual circumstances which will dictate different outcomes. For example, a rent set too highly in 2011 may be ripe for a reduction and there will be cases where the opposite is also true. It is vital therefore that individuals take specific advice on their case,” said Mr Dunn.

“One piece of good advice is that tenants should not feel that they must conclude the rent review by the review date, a view often pressed on tenants by landlords’ agents. This is only the date when either there needs to be an agreement or one party who wishes the review to continue has to have applied for an arbitrator to be appointed. It does not mean that the parties will end up at arbitration, it merely extends the time available for negotiation,” said Mr Dunn.

TFA

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