News
16th Jul

2018

Media Release – MR18/24 – Rural Landlords Are Falling Short on Security of Tenure

The Tenant Farmers Association (TFA) has reacted with disappointment, to newly released figures showing that rural landlords in England and Wales are failing to provide adequate security to farm tenants taking on new Farm Business Tenancy (FBT) agreements.

Figures released this month by the Central Association of Agricultural Valuers (CAAV) in its annual Agricultural Land Occupation Survey, show a marked decrease in security of farm tenure in 2017 in comparison to the previous year.

The short-term nature of agricultural tenancies has held back progression, investment, sustainable land use and productivity on farms.  With much higher demand for farm land than supply, landlords can offer short-terms, for high rents at very little risk whilst at the same time pocketing generous and unconstrained tax benefits which the TFA argues must be addressed.

TFA Chief Executive George Dunn said “last year’s results were encouraging.  They showed, for the first time, that average lengths of term across all types of FBT were moving in the right direction.  At the time, we said that one swallow did not make a summer and we wanted to see those improvements built on in future years.  Sadly our hopes have been dashed.  We have seen a significant retreat by landlords in terms of what they are willing to offer by way of security which will undermine the confidence of the tenanted sector to invest in their farms”.

The CAAV figures report that the average length of all FBTs has decreased from 4.5 years in 2016 to less than 4 years in 2017.  Excluding lettings of less than a year, the average tenancy length has fallen from 6 years to below 5 years.  Worryingly, fully equipped holdings, which would be expected to be let for longer terms, have seen a reduction from over 14 years on average to below 10 years.  It is also unacceptable that 85% of farm tenancies let in 2017 had terms of 5 years or under.

Since the introduction of FBTs in 1995, the TFA has been concerned that average lengths of term have ranged between just 3 and 4 years.  As a direct result of this statistic, and to coincide with the 20th Anniversary of the introduction of the new legislation, the TFA launched the FBT10+ Campaign in 2015.  The TFA continues to campaign today for longer commitments from landlords, arguing that farm tenancies continue to be too short for too long and that change is necessary.

“These statistics make grim reading.  Everyone agrees that long-term relationships are the best way to achieve positive outcomes for landlords and tenants and yet the market is failing to deliver efficient or sustainable outcomes.  The tenanted sector cannot begin to consider issues of resilience and sustainability in the post Brexit environment with such short lengths of term.  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 farm land and where FBTs represent about half of that area.  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,” said Mr Dunn.

 

Ref:  MR 18/24                                                           Date: 16 July 2018

Notes for Editors:

The TFA is arguing for the following taxation changes:

(a) Restricting the generous, 100% Agricultural Property Relief from Inheritance Tax (currently available to all agricultural landlords, regardless of the length of time for which they let land) only to those landlords prepared to let farmland for 10 years or more (excluding rotationally let land on short terms for vegetable and other high value crops).

(b) Clamping down on those land owners who, through schemes promoted by agents and accountants, are using share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity and as vehicles for aggressive tax avoidance where they take no risk in the business, have little, if any, entrepreneurial input and lack any management control.

(c) Offering landlords prepared to let farm land for 10 years or more the ability to declare their income as if it was trading income for taxation purposes.

(d) Reforming Stamp Duty Land Tax to end the discrimination against longer farm tenancies.

For further information contact George Dunn on 07721 998961 or Julia Meadows, TFA Communications and Events Co-ordinator on 0118 930 6130 or 07887 777157

 

 

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