Change Tax for Rural Landlords to Think Long-Term

The Tenant Farmers Association’s National Chairman, Greg Bliss, has used his address to the TFA’s Annual General Meeting to challenge rural landlords to think longer term in their land management decisions.

 

“It is clear after 15 years of Farm Business Tenancies that the 1995 Agricultural Tenancies Act has not succeeded in providing a better framework for the landlord/tenant system than the 1986 Agricultural Holdings Act tenancies they replaced.  Yes, more land is being let but it is typically for short durations on restrictive terms.  There appears to be a lack of long-term thinking amongst virtually all categories of landlord and in the absence of the market doing what is required to ensure the sustainability of the let sector for the future of our nation, it is time again that the Government should consider what it needs to do to correct the market failures that exist.  We need a system which allows tenants the security to invest and develop their businesses whilst giving a fair return to landlords.  The current system whilst providing a return to landlords is far from adequate to provide the stability and security that farm tenants need to develop sustainable, long-term businesses”, said Mr Bliss.

 

“For many landlords the taxation framework within which they operate is a big driver in deciding how they will manage their land.  A major advantage to the taxpaying landlord is the ability to have 100% relief from inheritance tax for the agricultural value of their holdings let after the 1st September 1995.  However, as an Association, we are beginning to question that this relief should be so widely available.  What is in the national interest from providing a landlord with such an advantage when his response is to let for only a short period of time on restrictive terms?  Perhaps the relief should be restricted only to those landlords who let long term”, said Mr Bliss.

 

“We know that a major disincentive for landlords looking to let land is the income tax handling of the rent which is treated as investment income, from which there are limited opportunities to offset expenditure, as opposed to earned income with many more reliefs available.  It would be unfair for a landlord who has let on a long term basis to have to treat the income earned as investment income and we therefore believe it would appropriate that landlords letting for longer terms should be able to deem the rent received as earned income”, said Mr Bliss.