The Tenant Farmers Association (TFA) has issued its first call in 10 years for farmers to trigger rent reviews this autumn in order to have a “safety valve” in the event of a no-deal Brexit.
Serving notice this year would give those on Agricultural Holdings Act 1986 tenancies the right to review rent in the second half of 2019.
This will be after the March 2019 cut-off point when the UK will leave the European Union and either enter a two-year transition period or crash out without a deal.
The same advice applies for some Farm Business Tenancy (FBT) tenants, but because FBT rents are so varied, it is not possible to generalise about the need for these tenants to serve notice, said TFA chief executive George Dunn.
FBT tenants with rents in the £160-£180/acre range needed to serve notice, while those with lower rents should take advice about their position, said Mr Dunn.
Many tenancies have a Michaelmas (usually 29 September) term date by which notice would have to be served for a rent change to be effected from 29 September the following year.
By next year tenants and landlords will have a lot more information about what farming incomes are likely to be like after Brexit and it would allow rents to be calibrated accordingly, said Mr Dunn.
Trade experts warn that leaving without a deal has the potential to have a severe impact on farming incomes as it would restrict the export of UK goods into the European Union and potentially allow overseas goods to enter the UK tariff-free.
International trade secretary Liam Fox forecast earlier this month that there was a 60% chance of a no-deal Brexit happening.
This is only the third time in 20 years that the TFA has issued such a call; the most recent was during the 2008 financial crisis when the economic environment was also extremely unpredictable.
Mr Dunn also advised tenants and landlords who had triggered reviews in 2017 and were therefore up for negotiation this autumn to allow the notice to expire and to serve another one for next year.
However, he said that there appeared to be only a low number of rents under review this year.
Rent review notice checklist
- Serve notice in time – check the term date; it is not always Michaelmas
- Make sure you serve it on the correct party
- Keep evidence that you have sent the notice – for example, proof of posting
- Ask for acknowledgement of receipt of the notice