Tenants look to serve rent review decreases

A growing number of farm tenants are considering serving a rent review notice for a decrease next year, says the Tenant Farmers Association.

George Dunn, the TFA’s chief executive, said a number of tenant farmers had contacted the association to discuss the case for cuts in their rent on both traditional and Farm Business Tenancies (FBTs).

“With arable farmers looking back at two relatively poor harvests in 2011 and 2012, with yields down this year, and with dairy prices and costs where they are, people are asking: ‘is this the opportunity to get rents down?’,” he added.

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As the Michaelmas (29 September) deadline approaches for notices to be served on traditional tenancies, Mr Dunn said it was the first time for many years that the TFA had been receiving calls from farmers seeking advice about the possibility of rent reductions.

“The last time was probably the mid-2000s. The TFA ran a campaign in the late 1990s saying, ‘rents must come down’. We’re not at that stage yet, but it’s interesting that the tide is starting to turn.”

Last autumn, tender rents for arable land FBTs were often running in excess of £200/acre, Mr Dunn recalled.

High output prices, particularly for arable, but also for beef and sheep, coupled with a strong expansionist desire, were fuelling the increases, which he said were “simply not sustainable”.

But Mr Dunn said it was clear that this year’s exceptionally difficult weather conditions, which had left many farmers with lower-yielding crops produced at higher than normal costs, had “dented the ardour of many” who otherwise would have bid over the odds to have access to additional land.

However, he is aware of a significant number of contested reviews where landlords and agents were taking an “unrealistic stance”, particularly to land let under FBTs.

The TFA urged all tenants to think carefully and seek advice before proceeding, as each case was different and a lot would depend on the current level of rent being paid.

Once a rent review notice has been served it cannot be withdrawn unless both parties agree.

Andrew Shirley, the Country Land and Business Association’s chief surveyor, said the decision to go into a rent review process should not be taken lightly.

“You should look at what’s provided by the landlord/tenant, the costs of production and the profits of the business, then take a realistic view,” he added.

“If your figures do not go in your direction, it could lead to an increase. Then there are the costs of arbitration. You also have to look forward and not always look back.”

Angus McCall, an executive director of the Scottish Tenant Farmers Association (STFA), added: “Any rent review agreed in 2013 will take you through to 2016.

“Under the new CAP, it’s likely that farmers will be getting a substantial reduction off their single farm payment which should be considered in the rental calculation.”

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