The government’s Agriculture Bill is a missed opportunity to make much-needed changes to tenancy legislation, according to the Tenant Farmers Association (TFA).
The organisation’s chief executive, George Dunn, voiced his frustration that the bill had not included measures to encourage landowners to offer longer-term tenancies.
“The fact that 85% of all farm business tenancies are let for five years or less is no basis for a sustainable tenanted sector.
“Yet the bill only made provision for a consultation on possible changes,” Mr Dunn said.
He insisted the bill was the obvious place to include Tenancy Reform Industry Group (TRIG) recommendations that were presented to the government last autumn.
Tenancy Reform Group recommendations
Tax changes should include:
- Limited income tax relief on farm land rents to encourage letting and letting for longer
- Stamp duty land tax – exempt leases of agricultural property, to remove a deterrent to a tenant taking a longer lease
- Capital gains tax rollover relief – allow reinvestment in improvements to let farmland
Agricultural Holdings Act (AHA) recommendations include:
- Giving landlord and tenant greater freedom to make changes to the holding where there is agreement within the AHA
- Allowing AHA landlords to invest in the holding without impinging on the statutory rent review process
- Clauses prohibiting the erection or alteration of buildings to be subject to a test of reasonableness
- Introduce a statutory mechanism for conversion of a year-to-year AHA to a fixed-term, assignable AHA tenancy
- Succession – replace the suitability test with a business competence test and repeal the commercial unit test
- Allow a wider range of successors, but with a limited-term AHA tenancy being offered, at an open market rent, after which an incontestable notice to quit could be served
Mr Dunn said the disappointment about a lack of action had been compounded by the fact that it was Defra officials who asked the group for its recommendations on what changes would be needed post Brexit.
“To ask for these recommendations and then to do nothing is illogical,” Mr Dunn said.
“We must have government amendments to the Agriculture Bill or a commitment to an early agricultural tenancies bill,” he said.
As well as urging Defra officials to act, the TFA is putting pressure on the chancellor of the exchequer, Philip Hammond, ahead of this year’s autumn budget statement.
Mr Dunn said one way to encourage landlords to offer longer-term tenancies was to use the budget to introduce changes to inheritance tax laws.
“One of the TFA’s keystone recommendations is to restrict existing inheritance tax agricultural property relief on rented land to those landlords offering tenancies of 10 years or more,” he said.
Mr Dunn insisted the taxation system should not be rewarding landlords who take a short-term approach and provide little benefit to society.
“Farm tenants need long-term security to meet the government’s aspiration of ensuring a continuing supply of quality food produced to high animal welfare and environmental standards while delivering wider environmental and societal benefits.
“The government has challenged the farming industry to achieve greater levels of productivity and the tenanted sector accepts that challenge, but needs action from the government to play its part by bringing forward tenancy legislation,” Mr Dunn stressed.