Time For a Farm Rent Revolution
The Tenant Farmers Association (TFA) has said the time has come for landlords to expect to see reductions in farm rents particularly for farm tenancies regulated by the Agricultural Holdings Act 1986.
Over the past few years rent increases have been the clear expectation of landlords and their agents but with continuing low returns across all sectors of agriculture, many more standstills have been agreed during this year’s rent reviews than over recent years. Should the current economic conditions within agriculture continue, rent reductions should be the order of the day for rent reviews later in the year.
TFA Chief Executive, George Dunn said “The budgetary evidence for rent reductions has been there for some time and to date the limiting factor has been comparable rental evidence which also has to be taken into consideration. However, we have now reached the tipping point and landlords should not be surprised that tenants will be using their rent review notices served last year to argue for reductions”.
“Of course there will be resistance and we are already seeing landlords’ agents using tactics to dissuade tenants from arguing for reductions. One such tactic is to present a case for a significant increase in rent in the hope that the tenant will be frightened into accepting a much lower increase which will lock the rent in for the next three years. Anyone in a rent review situation this year must take professional advice about their individual circumstances,” said Mr Dunn.
“The rental market for Farm Business Tenancies continues to be more unpredictable. Still, there are displays of utter madness in some of the very high levels of rent being offered in the tender market, but some more reasonable discussions during rent reviews in existing landlord/tenant relationships.
Happily, the number of individuals offering ridiculous levels of rent at tender are reducing but there remain a number of largely owner-occupied farmers with low rent and finance charges on their main holdings making unsustainable bids on short term tenancies damaging their own profitability and causing problems for other tenants,” said Mr Dunn.
“For some time the TFA has been highlighting the damage being done to soil fertility, soil structure and the maintenance of farms as a result of the short-term/high rent paradigm in which we find ourselves. Other interest groups are now beginning to appreciate what we’ve been saying including some landlords. The solution is to offer sensible lengths of term (10 years plus) at sustainable levels of rent. Landlords concerned about the long term sustainability of their estates need to think differently and not necessarily slavishly follow the short-term bias of their agents who might simply be looking for the next fee,” said Mr Dunn.