Rents for Agricultural Holdings Act (AHA) tenancies are reaching a tipping point, where evidence will allow tenants to argue for rent reductions this year.
The Tenant Farmers Association (TFA) said squeezed farm incomes had been gradually pushing down rents over the last two to three years and that the majority of rents were now at a standstill or facing just very low increases.
As a result, evidence from comparable rents, which tenants can use in rent reviews, had started to catch up with farm profitability and would help tenants argue for rent reductions this spring and autumn.
George Dunn, chief executive of the TFA, said tenants whose rent had been agreed to the right level (or too high) in the last three years should be arguing for rental reductions this year.
He said evidence for lower rents had been available for the last two years from farm budgets, but evidence from comparable rents had held up rental decreases.
If tenants were seeing increases, most were facing rises of no more than 5%, said Mr Dunn, and the large increases of last autumn had stopped.
However, he warned that some land agents were still trying to push tenants into agreeing unreasonable rental increases.
“Of course there will be resistance and we are already seeing landlords’ agents using tactics to dissuade tenants from arguing for reductions,” said Mr Dunn.
“One such tactic is to present a case for a significant increase in rent in the hope that the tenant will be frightened into accepting a much lower increase which will lock the rent in for the next three years.”
Some land agents were also using the market rental value of the farmhouse to argue that the tenant should be paying more, while others were telling their tenants their rent had not increased as much as it should have done in the last rent review and so they should be paying more now.
Mr Dunn advised tenants to not use percentage increases in other people’s rents as a benchmark, as it depended on where they had started. He said tenants could serve notice on their own review for 12 months time, if their rent had not changed for at least the last two years.