The Tenant Farmers Association (TFA) is urging the Chancellor of the Exchequer to consider in his autumn Budget including much needed reforms to the taxation environment within which rural landlords make decisions about letting land to encourage longer term Farm Business Tenancies (FBTs).
The TFA is working with Government on measures to help the agricultural industry build resilience, raise productivity, manage risk and secure its long-term profitability. Within the tenanted sector of agriculture reliant upon FBTs, it is difficult, if not impossible, to achieve these goals when the average FBT length is only 4 years and when 85% of all new tenancies are let for no more than 5 years.
TFA Chief Executive George Dunn said, “It has been 23 years since the introduction of the Agricultural Tenancies Act 1995 which ushered in FBTs. The legislation represented a major deregulation of the agricultural let sector and at the time there were great hopes that it would increase opportunities both for new entrants and progressing farmers. However, nearly two and a half decades on and neither of these objectives have been attained. Whilst we saw an increase in the amount of let land through the early years of the new legislation this has, by and large, tailed off. However, the biggest failing of the legislation has been the perpetuation of short lengths of term leading to inefficiency”.
“Farming is a long-term endeavour requiring significant capital investment, patience, good soil management and the ability to balance profitable years against the bad. Short term tenancies are holding back progression, investment and sustainable land use. Farm Business Tenancies have been too short for too long and this must change,” said Mr Dunn.
The TFA believes that average term lengths on FBTs should be 10 years or more and that the Government should be using fiscal levers to encourage a more sustainable position.
“There is a growing consensus that the taxation environment within which landlords make decisions is encouraging a plethora of short-term interests in land and that this is leading to unsustainable economic outcomes. We cannot allow this situation to perpetuate,” said Mr Dunn.