News
2nd Sep

2019

Time for Some Long Term Thinking from Landlords and Their Agents

This is the full (unedited) piece, written by George Dunn, TFA Chief Executive, for The East Anglian Daily Times, published on the 31 August 2019.

Time for Some Long Term Thinking from Landlords and Their Agents

Although the area of land farmed under agricultural tenancies in England has been fairly constant for the past 25 years, there has been a steady shift away from secure tenancies governed by the Agricultural Holdings Act 1986 towards Farm Business Tenancies (FBTs) regulated by the Agricultural Tenancies Act 1995.  In fact, we are now approaching almost half of the land farmed under FBTs.  Accompanying this shift, we have seen the increasing prevalence of two unwelcome phenomena – short-termism and restrictive agreements.

Tenancies under the 1986 legislation granted occupiers security of tenure at least until retirement, often for their lifetimes and sometimes for up to two further generations.  Contrast that with FBTs where we see average lengths of term of barely four years and where 85% of all new tenancies are granted for five years or less.  In agricultural terms, these periods represent a blink of an eye and at a time when farmers are being required to focus more on environmental outcomes, including improving biodiversity, enhancing landscapes and managing carbon, these short-term tenancies are a major problem.  They provide no basis for the long term thinking and investment required to achieve these important outcomes for wider society.

The trouble is that landlords and their agents are neither incentivised nor under any pressure to consider offering longer tenancy terms.  They have fallen into a lazy, cultural style which simply perpetuates the myth that everything must be held on a short-term basis.  This represents a serious market failure that needs to be addressed by public policy.  Sadly, within Government, whilst there does appear to be at least a recognition of the problem, there is overriding inertia which seems to prevent any move to change the status quo.

There has been a growing sense that the best way to shift attitudes is through the taxation system within which landowners make decisions about land use and land occupation.  The TFA is ever hopeful that with a new occupier in number 11 Downing Street, we may see some new thinking from the Government on how this might be achieved along the lines of the budget representations made by the TFA year in and year out.  The TFA has written to Sajid Javid urging him to use his first budget this autumn to do what his predecessors have so far failed to do.  This includes restricting the very generous Agricultural Property Relief from Inheritance Tax available to landlords only to those who are prepared to let for 10 years or more.

To add insult to injury, we have seen farm tenancies become increasingly restrictive.  Most now contain clauses restricting tenants to agricultural use only and a large number define that even more closely.  Repairing obligations, break clauses, part resumption provisions and reserved rights are routinely written to give landlords the maximum advantage and flexibility.  Again, these clauses add further difficulty for tenants, particularly as support systems move away from those we have known under the Common Agricultural Policy towards more public payments for public goods approach.  Without landlords being willing to grant consent, many tenants will be disenfranchised from accessing the new arrangements DEFRA is considering introducing in the post Brexit era.  In its recent consultation on agricultural tenancy reform, DEFRA at least appreciated it has a problem here but has made no commitment to finding a solution.  With the Agricultural Bill still stuck in the House of Commons awaiting Report Stage (and unlikely to see the light of day until after Brexit) there is at least time for the Government to table its own amendments to the Bill, along the lines of those which other MPs have tabled following prompting by the TFA.

 

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