Editor’s View: New-look FBT is catching up with reality
© Adobe Stock There is always pleasure to be taken in a landlord-tenant relationship where there is goodwill on both sides and a desire to collaborate.
As journalists, too often the stories we hear are when there’s been a breach of trust, a war of words and the lawyers have got involved.
Not only does this cause heartache and a lot of financial costs to those involved, it undermines a vital segment of our agricultural sector that – although not perfect – still provides a much-needed route to farming independence for many.
See also: Tenancy model promotes nature’s recovery and diversification
So the news this week that the Crown Estate, working with the Tenant Farmers Association and others, has launched a pioneering new model of tenancy – which seeks to recognise how farming is changing and support their tenants through it – is very welcome.
The environmental farm business tenancy (eFBT) offers tenants a minimum 15-year term and encourages them to develop their holdings to earn income not just from food production, but environmental schemes and diversification as well.
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Indeed, as the Crown Estate’s Paul Sedgwick, deputy ranger at Windsor and managing director of the rural portfolio, warns: “In a farming sector facing the total removal of subsidies, seeking to build on-farm diversification of income streams and a diversity of land uses will be critical, not only to the lasting resilience of our farming businesses but also to us.”
So there is benefit on both sides, like all things that uphold the delicate dance that is a functioning landlord-tenant relationship.
This development comes as the Crown Estate itself is undergoing a broader transition – with new powers that permit it to borrow money from the Treasury for the first time, enabling it to accelerate investment in offshore wind, among other purposes.
Previously it had only been allowed to fund major capital expenditure from the sale of other assets, with agricultural land recently a major contributor to this, causing its rural estate to shrink from 345,000 acres in 2014 to some 200,000 acres now.
However, last September it made its first major acquisition of recent times, the 2,552-acre Dissington Estate in Northumberland.
The question that remains is this: how big a gravitational pull will this new model have on the sector as a whole?
Will it only work for the biggest estates that can afford to take the longest- term view, or will it in time come to be the norm in England and Wales, at least?
Some may be put off by the complexity of drafting these agreements at the outset versus the boilerplate agreements that all parties are more familiar with.
Yet the high level of intricacy needed to run a modern farming business that takes in food production, environmental schemes, and often at least one other source of income, has been the hallmark of the past decade.
It is to the benefit of neither landlord or tenant if contracts do not keep up with the reality of life on the ground.
Where that is the case, tenants will find themselves more likely to be second-class farming citizens, shut out of the options available to owner-occupiers, and landlords may find that, as a result of this, they increasingly have tenants that can’t pay the rent.