On the 20th anniversary of the introduction of Farm Business Tenancies, the TFA launched a campaign under the banner FBT10+ to argue for longer term tenancies. These webpages record details of the campaign which continue to inform the TFA’s lobbying today.
Question: Why then is the average length of farm business tenancy in England and Wales less than 4 years?
Answer: With much higher demand for land than supply, landlords can offer short-terms, for high rents at very little risk whilst at the same time pocketing generous and unconstrained tax benefits.
The short-term nature of tenancies is holding back progression, investment and sustainable land use.
Farm Business Tenancies have been too short for too long and now is the time for that to change.
FBT10+
The TFA wants average lengths of term on Farm Business Tenancies to be 10 years or more.
To achieve this the Government needs to consider the following:
- Restricting the generous 100% relief from Inheritance Tax, currently available to all landlords regardless of the length of time for which they are prepared to let land, only to those prepared to let land for at least 10 years or more.
- Clamping down on those land owners using share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity to gain tax advantage when in practice they take no risk, have no entrepreneurial input and lack any management control.
- Offering landlords prepared to let for 10 years or more the ability to declare their income as if it was trading income for taxation purposes.
- Providing landlords prepared to let for 10 years or more with easier mechanisms to end tenancies where the tenant is in breach of the terms of the agreement or where landlords have the opportunity of development – subject to proper compensation to the departing tenant.
- Reforming Stamp Duty Land Tax to end the discrimination against longer tenancies.
The Great FBT10+ Debate
On 17 June the TFA held a special debate in Committee Room 4A of the House of Lords which was very kindly hosted by Lord Curry of Kirkharle with sponsorship from HSBC. The topic for debate was why the TFA is right to be seeking legislative and fiscal changes to encourage longer term FBTs.
The debate was chaired by Allan Wilkinson, Head of Agriculture for HSBC and taking part were TFA Chief Executive George Dunn and CLA Chief Surveyor, Andrew Shirley.
A note of the introductory speech made by George Dunn can be viewed here and a media release issued by the CLA covering points made by Andrew Shirley can be found here.
Special Conference on the Future for Farm Business Tenancies
On 01 September the TFA held a special conference on the Future of Farm Business Tenancies. The 01 September 2015 marked the 20th anniversary of the coming into force of the Agricultural Tenancies Act 1995 which ushered in Farm Business Tenancies.
The conference was chaired by the TFA’s National Chairman Stephen Wyrill. The conference was kindly sponsored by HSBC.
A list of the speakers and copies of their presentations are listed below.
Setting the Scene – George Dunn, TFA Chief Executive
Current and Future Trends in Letting Land – Jeremy Moody, CAAV
Revisiting the University of Plymouth’s 2002 Evaluation of the 1995 Act – Nick Millard, Michelmore Hughes
Responding to the Challenge of Extending Lengths of Term on FBTs – Henry Robinson, CLA President
Tenancies and the Business of Farming, a Bankers View of the Need for a Longer Term Perspective – Euryn Jones, HSBC
Case Study: Developing Good, Long-term Landlord/Tenant Relations in the Duchy of Cornwall – Alastair Martin, Duchy of Cornwall
Case Study: The view from a New Entrant Tenant Farmer – Steven Powley, Young Farmer, Cumbria
If the Landlord is committed to letting farms for other than short term gain, then the minimum term for new tenants should be at least 10 years to give them any sort of chance.
Short term FBTs are commercially useful to landlords but give little chance to aspiring tenants to invest and build up a business.
Alex Meletiou, Somerset County Council
Flexibility and a good working relationship between landlord and tenant are more important than a minimum fixed term which will reduce the amount of land available to tenants.
Ken Jones, The Crown Estate
For the benefit of the Land, the Landowner, and the future of farming by committed tenants it is difficult to accept rejection of FBT10+ which is not predicated on damaging short term self-interest.
Retired professional, Kent
This campaign is highly relevant to the future of agriculture in England and Wales. The custodianship of the soil requires a long term prospective, and we ignore it at our peril.
Ian Walter, JHWalter
Short term FBT’s work against the long term vision, planning and investment which is so critical to farming success.
Tenant farmer, Hampshire
Although largely working in my view I welcome a 20 year review of the FBT system and the TFA initiative on this.
Anita Symington, Thrings LLP
National Sheep Association is very supportive of TFA’s proposals to incentivise longer-term Farm Business Tenancies. The ability for tenants to invest in the long-term is good for businesses, livestock and land management.
Joanne Briggs, National Sheep Association
The tenanted sector needs stability, particularly to encourage new entrants, and 10 year lettings potentially provide this.
Charles Coats, Charles Coats Associates Ltd
I support the TFA’s FBT10+ campaign. In my opinion short term FBTs and the Single Payment Scheme (now Basic Payment Scheme) are preserving out dated farming systems and preventing expansion of commercial farm businesses. However, landlords agents love the short term tenancy agreement and seem to have convinced their clients of its virtues. I am therefore concerned that little will change.
Mike Keeble, retired tenant farmer and Columnist for the Northern Farmer
The Uplands need stability and continuity, this cannot be achieved through the use of short term tenancies.
Eddie Eastham, Uplands Spokesman for the National Sheep Association
Every decision we make for our estate is about the long-term. We are interested in entering into long-term relationships with tenants whom we know and with whom we can work well. I think there will be a range of products to ensure successful farming relationships – share farming and contract farming agreements are in the mix but FBT’s are certainly important and many of these will be appropriately long term in nature; some however may from both the tenant and the landlord point of view need break clauses / opt outs on both sides, at least initially.
Lord Downshire, Clifton Castle
A worthy campaign the importance of which cannot be underestimated. Short-term tenancies are standing in the way of investment in the countryside.
Richard Brown, Richard Brown & Partners
Whatever your views, the fact that the TFA has raised the awareness of this issue and activated this debate can only be positive for the landlord and tenant relationship by enlightening and explaining the issues from both sides. The TFA are to be congratulated for their proactive approach to this issue.
Ellie Allwood, JHWalter
I think it is an excellent idea and worthwhile to debate it.
Michael Powell, Stags
FBT’s have been too short for too long, longer terms would allow confidence to invest in the land.
Tenant farmer, Cumbria
Any steps which diminish the area of land available to let could be retrograde in so far as that will encourage more land to be taken in hand and contract farmed. That land may thus be removed from the tenanted sector for generations. To attack contract farm agreements as “sham farming” is also not going to improve the business prospects of a number of tenant farmers who carry out contracting to supplement and increase their businesses.
Christopher Findley, Bircham Dyson Bell LLP
The timing is right for change. Landlords need sustainable tenancies as much as tenants and sustainability can only be achieved through security of tenure which means time!
Tenant farmer, Devon
Conducting research into FBT’s, the rate of rent hikes in recent years is astounding and seems unsustainable in the context of current agricultural markets. The FBT10+ campaign is necessary to ensure the long term viability of tenant farming in the UK and ensure the role of farmers as custodians, and not pillagers of the land.
Rachel Lawrence, University of Cambridge
Not to provide an incentive for the long term management of agricultural land is to diminish the future value of our most valuable asset, deprive the commitment of the young aspiring farmer and deny the wisdom of our most eminent landowners of the past.
TFA Trustee