Tenanted farm sector slows as short lets persist

UK farm letting activity slowed sharply in 2024, with short tenancies dominating the sector across the UK, according to the Central Asociation of Agricultural Valuers’ (CAAV) annual land occupation report.

The report covers activity up to October 2024, so does not reflect the impact of changes announced in the Budget.

But within that timeframe, the survey records a significant fall in letting activity, with 830 units let during 2024 compared with 1,452 units in 2023.

See also: Fewer farm tenancies agreed as rents increase in England

Although around 2,000 acres of land let on farm business tenancies (FBTs) had not previously been let, the report highlights that around a third of Agricultural Holdings Act tenancies which ended without a successor were not re-let.

Average tenancy lengths across all FBTs remained short, despite a small increase to an average of 3.97 years.

Agreements including land and buildings had an average term of 6.25 years, while those covering land, buildings and a house extended to just over 10 years.

However, more than 80% of all new FBTs recorded were for terms of five years or less.

Continuing frustration

Responding to the findings, Tenant Farmers Association (TFA) chief executive George Dunn said: “It is a continuing frustration that FBTs are characterised by such short lengths of term.

“With the current focus on farm profitability, resilience and environmental performance, we need to push these tenancy terms out to much longer periods of time.”

He added: “It is hugely disappointing that despite many seeing changes in the taxation environment within which landlords make letting decisions as the key driver, the government continues to shut down any opportunity to make much-needed amendments within the current legislative window.”

Mr Dunn reiterated the TFA’s long-standing call for reform to agricultural property relief (APR) from inheritance tax (IHT), stating: “For many years, the TFA has argued that the government should amend the availability of APR from IHT to landlords letting land so that there is an encouragement to let for the longest terms.”

He said the proposals “continue to have relevance and, indeed, have acquired a new level of relevance in the context of the wider changes being introduced by the government through the Finance Bill”.