News
22nd Dec

2014

TFA Media Release No. 24 – TFA Launches Campaign on Farm Business Tenancies

2015: TFA Launches Campaign on Farm Business Tenancies

The Tenant Farmers Association is launching a campaign in the New Year under the banner “FBT10+: Too short for too long”, aimed at more than doubling the average length of term offered by landlords on Farm Business Tenancies.

2015 sees the 20th anniversary of the introduction of Farm Business Tenancies (FBTs) through the coming into force of the Agricultural Tenancies Act 1995 on 01 September in that year.  Designed to promote economic efficiency in agricultural land-use, it has singularly failed in meeting that objective with average lengths of term on new tenancies only four years.

TFA National Chairman Stephen Wyrill said “Four years is no time at all if we want to see sustainable farm businesses.  We have seen significant volatility in all agricultural sectors with particularly severe downturns in profitability for dairy, livestock and arable farms in 2014.  That reduction in profitability looks set to continue for the foreseeable future.  Farm businesses need long term security to ride these economic storms and to service the borrowing necessary to support business development”.

“Landlords appear reluctant to use anything like the full extent of the flexibility of the legislation. Too often we see landlords using short term agreements to maintain maximum flexibility but leaving tenants in very difficult situations.  The lack of security also provides little incentive for investment by farm tenants.  In fact landlords – particularly private estates – have gained considerably from the new legislation and its associated tax changes.  With much higher demand than supply, landlords can offer short-terms, for high rents at very little risk and obtain, into the bargain, 100% Agricultural Property Relief from Inheritance Tax.  The short-term nature of tenancies is holding back progression, investment and sustainable land use,” said Mr Wyrill.

The TFA is therefore using 2015 to argue for further reform, particularly to the taxation environment within which land owners make decisions about letting.

“We do not want to set a statutory minimum term.  If landlords want to let on a short-term basis they should be able to do so but without the advantage of significant tax benefits.  The TFA suggests that only those land owners prepared to let for 10 years or more should be in receipt of the generous advantage of Agricultural Property Relief from Inheritance Tax whilst, at the same time, the Government should clamp down more heavily on those owners of land who are using other vehicles such as share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity to gain tax advantage when in practice they are taking no risk, having no entrepreneurial input and lacking any management control.” said Mr Wyrill.

“FBTs have been too short for too long and in 2015 this must change,” said Mr Wyrill.

end

Ref:  MR24

Date: 22 December 2014

Notes for Editors:

For further information contact Stephen Wyrill on 07754 582 600 or TFA Communications and Events Co-ordinator Jenna Kirkpatrick on 0118 930 6130.

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