News
4th Oct

2019

Landlords Should Value Their Tenants More

This is the full (unedited) piece, written by George Dunn, TFA Chief Executive, for The Cumberland News and Westmorland Gazette, published on 27 September 2019.

Landlords Should Value Their Tenants More

A combination of short-term agreements, restrictive terms and high levels of rent is causing significant damage to the landlord-tenant system in agriculture which has served us well for generations.  Bringing together those who are asset rich, but who lack the necessary entrepreneurial flair to operate effective farm businesses with the landless who have the skills, expertise and business acumen to farm, is a good model.  However, for success, the model relies upon mutual respect, trust and an understanding that both parties need to make a return.  For some landlords that return goes far beyond any direct financial benefit from the rent.  Owners such as water companies and the National Trust, for example, care as much, if not more, about the management of the environment within which the farming takes place while other landlords have an eye to support, long-term development and the social impact of their property management.

For the tenant, making a sustainable return which enables them to support themselves, their homes and their families, whilst caring for the landscape and biodiversity over which they have been given custody, is what drives them every day.  The last thing they want is to be in constant dispute with their landlord or their agent and having to fight for survival against spiraling rent demands, unreasonable restrictions to the use of their holdings and abiding fear that what the landlord really wants is to see them gone.  The best landlord-tenant relationships are those where the landlord has the best interests of the tenant in view and where the tenant also sees, understands and respects the interests of the landlord.  It has been a privilege to encounter and observe many such relationships down the years, but sadly they are becoming fewer to be replaced by a more attritional approach led, in the main, by a short-sighted view of commercialism which fails to see the wider picture.

Unless the landlord agent community has experienced some form of Damascene conversion over the summer months, regrettably there will be evidence of this myopic phenomenon as we approach the autumn and winter rent review season.  Unable to justify their usual inclination to argue for ever-higher rents based on the figures they read in the 50th edition of the John Nix Pocketbook landing on their desks around now, they will turn their minds to other tools of the trade.  These include the use of marriage value, latent value, the old chestnut of trying to add a separate value for the farmhouse derived inappropriately and of course comparing apples and pears in arguing, wrongly, that rents tendered for new Farm Business Tenancies should be used as comparables for regulated rents under traditional Agricultural Holdings Act tenancies.

In truth, save for some very specific circumstances, most rents in a regular review cycle should see a standstill this year.  Of course, every individual circumstance must be looked at on its own merits and tenants would do well to seek advice about the approach that they should take.  It might also be an opportune moment to consider whether, within the context of Brexit, tenants should be considering triggering a rent review for next year if available.  Whatever the circumstances both sides should be encouraged to find an agreement quickly, with the minimum of fuss and save their limited funds to buy in professional advice on more productive areas of concern.

The recent events playing out on the United Utilities estate at Westhead Farm near Thirlmere are indicative of the lack of ability to see the wider picture.  Bringing in a contract shepherd to manage the Lake District’s largest Herdwick sheep flock hefted to approaching 4000 acres of land, is not a long-term solution.  That is not to decry the passion and enthusiasm of whoever might be selected by the company to take on the role.  However, having an eye to the management of the sheep flock will be one thing but without responsibility for making the business decisions or for the wider management of the holding including its farm infrastructure, biodiversity and landscape quality, they might soon become deeply frustrated in having to constantly chase an otherwise distracted owner for decisions that need to be made or to carry out works that must be done but for which they are not themselves responsible.  In the end, as has been the case in many other situations, the shepherd might end up assuming responsibility for things they shouldn’t without receiving any of the benefits for their effort.

While it is easy to be critical of Farm Business Tenancies, much of the negativity surrounds the way in which they are used by the landlord community.  In fact, they provide a broad canvas to create very bespoke deals if both parties to the agreement invested the necessary time to produce arrangements that fit their individual circumstances.  This is where the skills of professional advisers should be used – developing and building sustainable relationships rather than chipping away at the fabric of our countryside by taking a short-term view.

 

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