FBT review to begin

13 July 2001

FBT review to begin

TENANT farmers representatives are pressing researchers to consider key points in the long-awaited review of farm business tenancies due to begin next week.

The study, to be carried out by the University of Plymouth to fulfil a government promise made before the 1997 election, will examine the impact of FBTs on the tenanted sector, including changes in the amount of let land, the effect on new entrants and the impact on business restructuring.

The government will consider the findings, expected at the end of this year, with a view to changing legislation in 2002.

At first sight, FBTs appear to have been a good thing, freeing much more land for rent compared with the 1986 Agricultural Holdings Act, which they replaced in 1995, says George Dunn, chief executive of the Tenant Farmers Association.

"Since 1995, 250,000 more acres have been added to the tenanted sector. But one of our main concerns is the short-term view that FBTs encourage. Agreements average just four years. That is very restrictive in terms of what tenants can and cant do, especially on environmental and diversification projects that are likely to attract more financial support in the future."

It would be impossible to legislate minimum letting terms, but the government could encourage longer lets by providing tax breaks for landlords, says Mr Dunn.

FBT rates are also "exorbitant", often 60% above 1986 Act levels, he adds. "Only market information is taken into account. Somebody looking to make a living solely from an FBT would be hard-pushed to do so. Most land is going to owner-occupiers looking to spread their fixed costs. If they have low rent and finance charges, they can spread their overheads at a reasonably high rent."

This means new entrants find it increasingly difficult to break into farming, says Mr Dunn. "I have been involved in at least 15 cases in the south and east where new tenants were hoping to make a go of it at rents of £80/acre plus. All lasted less than three years." &#42

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