2015-12-29  

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Farm Rents Must Come Down in 2016

The Tenant Farmers Association’s National Chairman, Stephen Wyrill, has called for concerted action to get farm rents down in the New Year.

“With little prospect of improvement in farming fortunes into the immediate future, it will be necessary, once again, for the farming community to tighten its belt and it is only right that landlords should share that burden too,” said Mr Wyrill.

Farm

“Despite the significant downturn in returns across all sectors we have seen very little response, so far, in terms of farm rents falling. On tenancies let under the Agricultural Holdings Act 1986 we have seen some reductions and many more standstills. However, I would have expected a larger number of reductions to have been in evidence in 2015. If current economic conditions within agriculture prevail then we must see many more reductions in 2016,” said Mr Wyrill.

“For those taking land on Farm Business Tenancies, I continue to be concerned about what I can only describe as exorbitant levels of rent being offered at tender. However, I was very pleased to see the common sense advice coming from the Andersons Centre in its 2016 Outlook Report which said that if rent was more than a third of output it was better to walk away than allow damage to the wider business. Taking arable land and given current feed wheat prices, that must suggest that sustainable FBT arable rents should be no more than £100 per acre and even that, in some cases, would still be too much,” said Mr Wyrill.

“Whilst FBT rents are reviewed at “open market” levels, rents under the 1986 Act are judged against a more formulaic approach taking into account a range of factors including the productive capacity and related earning capacity of the holding. As a result, rents on 1986 Act tenancies will always to be lower than those achievable on FBT’s despite what landlords agents try to say,” said Mr Wyrill.

“Landlords agents are of course seeking to protect their clients’ positions and are using age old and spurious arguments including in respect of the value of the farmhouse to justify keeping rents at unsustainable levels”, said Mr Wyrill.

“We need wide-scale action to get rents down. Tenants must take advice about serving their own rent review notices on their landlords and using notices served on them to argue for reductions. Rent reviews conducted now will set the rent for the next three years and in this period of pressure on incomes they need to be as low as possible. Having taken advice tenants should get on and serve those notices. The more tenants that do serve notices the better it will be for ongoing negotiations,” said Mr Wyrill.

TFA

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