Act now if you think your farm rent is too high
By Robert Harris
TENANTS who believe they are paying excessive rent and who have been served with a review notice should act immediately to try to negotiate a cut this autumn.
"Tenants hoping for a rent reduction can use landlords notices to achieve this," says Reg Haydon, chairman of the Tenant Farmers Association. "But they must take action now. If the rent review date comes and goes, the rent will stay the same for at least another year.
"There has never been a better time in recent years to negotiate a reduction. I have never known the general run of agriculture to be as bad. Apart from potatoes, everything is in free-fall."
Farmers paying £60/acre for arable land or £80 for dairy ground under Agricultural Holdings Act tenancies should consider a reduction, says TFA chief executive George Dunn. Typical spreads are £35-£70/acre and £50-£110/acre, respectively, depending on soil grade, topography and access.
Oliver Harwood, of the Country Landowners Association, agrees some holdings will certainly be overvalued, given the recent downturn in farmings fortunes.
"But a great many are still unrealistically valued," he adds. "It is certainly not true to say that every rent should be reduced. But clearly, times are hard. No reasonable landlord will turn down a chance to look at the situation."
Few farm business tenancy notices have been served – most of the reviews are being done voluntarily, notes Mr Dunn. "We have had a new culture in letting and many landlords are not totally aware of the need to serve notices. There may be a lot of people hoping for a review who wont be able to have one."
Where reviews do take place, dramatic reductions are likely, he believes. "A few farmers with a very large enterprise might still be able to pay £100/acre for good combinable crop land. But to make money, or break even, £85 is about the limit, and for many farmers, it will be much lower than that."
But at least half the FBTs taken out three years ago contained agreements which linked rents to the retail price index, says Antony Oliphant, of Laurence Gould.
"Inflation was falling fast at the time, and competition was such that landlords could include such a clause. But the RPI must have increased by 9-10% in that time. Although some landlords may look kindly on this, it is unlikely that rents will fall as much as the TFA would like."
The ending of the two-year rule, which stopped a farmer setting land aside unless he had farmed it for that time, could also put a bottom in the market, he adds. *