The Tenant Farmers Association (TFA) is calling for the Government to use Brexit as the “perfect time” to bring forward changes to farm tenancy legislation.
TFA chief executive George Dunn said: “The confluence of the Agriculture Bill and the Government’s annual Budget Statement due at the end of this month, provides a rare opportunity for the Government to reformat the basis upon which deals are done between landlords and tenants in the agricultural sector.
“The aims should be to promote long-term resilience, sustainability and opportunities for progression.”
Supply and demand
The Agricultural Tenancies Act 1995 was brought in with the confidence that the open market would deliver sustainable outcomes without the need for the complicated structure imposed by the previous legislative environment.
However, nearly a quarter of a century later, the outcomes are far from sustainable. This is due to the substantial imbalance of demand over supply.
Landlords can dictate the terms they are willing to offer land to let without having to consider the wider benefits to society of longer and more open terms in their agreements.
New farm tenancies have also been criticised for offering too little security. Around 85% of all new agricultural tenancies are let for five years or less.
Looking only at those tenancies including a house and buildings, the TFA explained that the average length of term falls short of 10 years.
These terms do not provide a reasonable basis to promote resilient, sustainable farm businesses. This is compounded by the imposition of other restrictive terms on user clauses, repairs and rent.
Several institutional landlords are beginning to use 10 years as a minimum term for many of their leases and research conducted by the CLA shows a tendency towards longer terms amongst its membership. However, the overall statistics show there is still a long way to go.
Dunn added: “We need the Government to take its responsibilities seriously. The Tenancy Reform Industry Group has provided a raft of sensible, legislative changes which should form part of the Agriculture Bill.
“The TFA has also given the Chancellor of the Exchequer a package of tax changes that he could introduce, without disturbing the public finances, giving a disincentive to shorter-term lettings, maximise opportunities for sustainable growth and creating the basis for strong environmental outcomes.”
