The Tenant Farmers Association (TFA) is pressing for greater innovation within agricultural tenancies in 2022 and beyond.

TFA National Chairman, Mark Coulman, said “We urgently need a new dynamic in the landlord tenant system in agriculture. For nearly 30 years, Farm Business Tenancies (FBTs) have been too short, too restrictive and too slanted in favour of landlords. This pattern has stunted innovation, entrenched short-term thinking and created a culture of distrust. With major changes underway in public support for agriculture and with new markets being developed in carbon, biodiversity and ecosystem services we need to see an urgent step-change in landlord tenant relationships”.

“Some of the major, institutional landlords are leading the way. Whilst there will always be specific problems in individual circumstances, landlords such as the Duchy of Cornwall, Duchy of Lancaster and the National Trust do look to provide longer, more flexible agreements than we see elsewhere in the sector. However, it is more often in private estates, advised by national firms of land agents where we see the biggest issues. Rather than being the conduit through which we see the development of innovation, growth and long-term agreements that bring rewards to both landlords and tenants, very often landlords’ agents advise their clients to keep things unnecessarily short, restrictive, and insecure for the tenant,” said Mr Coulman.

“This is not just an issue for private business, but it also impacts the extent to which the tenanted sector of agriculture is able to deliver wider, public benefits in terms of soil health, public access, landscape improvement, biodiversity gains and carbon sequestration. Tenants with only short-term and restrictive agreements cannot reasonably engage in delivering these outcomes. We need to see landlords’ agents advising their clients to be more openhanded and at the same time, the State being more willing to incentivise longer, more flexible agreements."

The TFA has long argued for changes to the taxation framework within which landlords make decisions on letting land to encourage longer term agreements. In particular, the TFA has called for the generous 100% inheritance tax relief available to landlords to be restricted only to those who are prepared to let for 10 years or more whilst at the same time, allowing landlords to lock in their capital taxation position on day one of a lease for as long as the lease continues. This provides certainty for landlords and security for tenants.

Along with longer and more flexible agreements, we need to ensure that tenant farmers have fair and reasonable access to new Government initiatives.

“DEFRA and the Welsh Government are listening carefully to the concerns we are raising with them about ensuring fair access to the successor schemes to the Basic Payment Scheme already underway in England and yet to come in Wales. It is vital that tenant farmers are not disenfranchised from these schemes and that they do not find themselves dislocated by landlords resuming possession to take part in the schemes themselves,” said Mr Coulman.

“The advent of new Environmental Land Management schemes in England and the Sustainable Farming Scheme in Wales provides an ideal opportunity to refresh the landlord tenant system in agriculture. This will ensure tenants, as the active land managers, have the ability to meet the Government’s objectives for longer term stewardship of land through extended and more secure tenancy agreements.

“I see this as very much a crunch time for the landlord/tenant system in agriculture. With further reductions expected in the amount of land let under secure Agricultural Holdings Act tenancies we really need to see improvements in FBTs. The 1995 Agricultural Tenancies Act which underpins FBTs provides a broad, flexible framework for agricultural tenancies, but the extent to which the landlord community uses this flexibility is severely limited. We need much more constructive thinking from landlords’ agents set within a taxation framework which incentivises long-term arrangements. This will produce tenancies providing rewards to landlords and tenants alongside the production of wider public benefits,” he concluded.