The Tenant Farmers Association has expressed its concern about a creeping deterioration in landlord tenant relationships in the countryside fuelled by overly aggressive landlord’s agents and short termism.
TFA Chief Executive George Dunn said “As an organisation which represents the interests of tenant farmers, it is our desire to see landlords and tenants working in partnership for their mutual advantage and for the long term benefit of the farms and estates forming part of the vital landlord tenant sector of agriculture. Of course there are plenty of examples of good practice but sadly many cases of extremely poor practice also exist. In our discussions with members of the TFA, we have regular reports of situations where the tactics being employed by agents of landlords are below the standards expected of professionals and are causing unnecessary distress and worry to farm tenants.”
Farm rent reviews have been a particular point of conflict with landlords’ agents undermining long standing principles for the way in which rents are to be reviewed and seeking to drive rents to unsustainable levels.
“Most commentators agree that tender rents for farm business tenancies have reached unsustainable levels driven principally by large owner occupiers seeking to spread fixed costs over marginal acres, many of whom have not conducted the proper analysis to measure the impact on their businesses. However, too often we see landlords’ agents seeking to introduce these open market rents into reviews of rent on traditional holdings let under the Agricultural Holdings Act 1986 where the review process deliberately avoids consideration of the open market to produce a level of rent which is affordable for the tenant and fair to the landlord. TFA members are often left reeling when they receive correspondence suggesting rent levels double or triple what they are currently paying using this flawed approach,” said Mr Dunn.
Another favourite tactic of some landlord’s agents is to seek to separate out a value for farmhouses within rent reviews again against the provisions of the Agricultural Holdings Act 1986. Landlord’s agents will correctly look at the productive and related earning capacity of a holding to produce a pre-rent financial surplus and to agree a split of that surplus to provide a return to both the landlord and the tenant. All well and good until some then add in a separate amount for the farmhouse on the landlord’s share which can take it to 90% or more of the total available surplus for that holding.
“Arbitrators need to take a strong line against these practices to ensure they are stamped out. It is completely unreasonable to expect a tenant to survive on 10% or less of the financial return from farming the holding which is what we regularly see argued and is certainly not supported by the legislation,” said Mr Dunn.
On farm business tenancies the TFA continues to be concerned about the short-term nature of tenancies being offered particularly in the context of tenants looking for security to build resilience in the face of Brexit. Average lengths of term on FBTs remain below four years.
“We are sure that a major part of the problem is the lack of imagination amongst many landlord’s agents and a tendency to replicate the standard practice of offering short-term agreements on standard terms rather than thinking long-term and drawing up bespoke agreements suitable for each individual circumstance. If we are going to build profitable, sustainable and resilient businesses in the post Brexit era, we need to be thinking more creatively than we do now,” said Mr Dunn.
“We also need to see landlords’ agents thinking more creatively about how to assist tenants in retirement. With a large and growing demand for opportunities for new entrants, the TFA believes there is scope to encourage some older tenant farmers without successors to consider share farming as a way to ease them into retirement and to bring on the next generation. However, most farm tenancy agreements would preclude such arrangements and an approach to the landlord’s agent for consent is more likely than not to be turned down,” said Mr Dunn.