Farm Tenancies offer little security argues the TFA

Rural Land:

The Tenant Farmers’ Association (TFA) says that rural landlords are now offering ‘cripplingly low’ security of tenure to their tenant farmers.

This, argues the TFA, simply results in short termism – the short-term nature of agricultural tenancies is crippling progression, investment, sustainable land use and productivity on farms, it says.

The TFA thinks it is ‘unacceptable’ that 90% of farm tenancies let in 2018 had terms of five years or under, while newly released figures show that security of tenure on agricultural tenancies continues to decline.

These figures are gleaned from statistics produced by the Central Association of Agricultural Valuers (CAAV) in its annual Agricultural Land Occupation Survey recently released. They show another worrying decrease in security of farm tenure in 2018 in comparison to the previous year.

There is currently much higher demand for farm land than there is supply. This means that it’s a landlord’s market, allowing owners to offer short-term from tenancies at high rents, with little risk of void periods. In addition, agricultural landlords have the benefit of “generous and unconstrained” tax concessions, which the TFA is arguing needs to be addressed.

These CAAV figures report that the average length of tenancy on all farm business tenancies granted in 2018 decreased from the 2017 figure of under four years, to below three years.

When sub one-year tenancies are excluded, that means the average tenancy length has dropped from just below five years to four years overall last year.

Even fully equipped holdings, which once would be expected to be let for much longer periods, have seen reductions to just seven and half years in 2018, which in most cases is around half the length of term seen two years previously.

In 2018, in what the TFA says is an ‘unacceptable’ situation, that 90% of farm tenancies let in 2018 had terms of five years or under. Furthermore, 63% of all new lets are offered were for under two years and on the most insecure terms.

Chief executive of the TFS, George Dunn, has said:

“These statistics are simply dreadful. Everyone agrees that long-term relationships are the best way to achieve positive outcomes for landlords and tenants.

“Yet, the market is failing to deliver efficient or sustainable outcomes, in fact, it is going backwards.

“It is now urgent that the government steps in to address this major market failure, in a sector that makes up one third of all UK farmland and where FBTs represent about half that area.”

Mr Dunn added: “The best way to do this would be through the taxation environment within which rural landlords make decisions about letting land to encourage longer term FBTs.

“However, with the government cancelling next week’s Budget, another opportunity to change this terrible situation will be missed.”

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