The Tenant Farmers Association has announced that it will launch a campaign to lengthen the term of Farm Business Tenancies.

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Shortly before Christmas, the Association went public with plans to campaign for longer tenancies under the banner 'FBT10+: Too short for too long'. TFA aims to dramatically increase the length of terms offered by landlords on Farm Business Tenancies (more than doubling the current average length).

2015 will mark the 20th anniversary of the introduction of Farm Business Tenancies (FBTs). FBTs were introduced with the coming into force of the Agricultural Tenancies Act 1995 in September of that year.  Designed to promote economic efficiency in agricultural land-use, TFA maintains that the Act has singularly failed to meet its intended objective with average lengths of term on new tenancies only four years.

TFA National Chair Stephen Wyrill commented, "Four years is no time at all if we want to see sustainable farm businesses.  We have seen significant volatility in all agricultural sectors with particularly severe downturns in profitability for dairy, livestock and arable farms in 2014.  That reduction in profitability looks set to continue for the foreseeable future.  Farm businesses need long term security to ride these economic storms and to service the borrowing necessary to support business development."

Wyrill continued, "Landlords appear reluctant to use anything like the full extent of the flexibility of the legislation. Too often we see landlords using short term agreements to maintain maximum flexibility but leaving tenants in very difficult situations.  The lack of security also provides little incentive for investment by farm tenants. 

"In fact landlords – particularly private estates – have gained considerably from the new legislation and its associated tax changes.  With much higher demand than supply, landlords can offer short-terms, for high rents at very little risk and obtain, into the bargain, 100% Agricultural Property Relief from Inheritance Tax.  The short-term nature of tenancies is holding back progression, investment and sustainable land use."

Commenting on the TFA's arguments for further reform Mr Wyrill said, "We do not want to set a statutory minimum term.  If landlords want to let on a short-term basis they should be able to do so but without the advantage of significant tax benefits.  The TFA suggests that only those land owners prepared to let for 10 years or more should be in receipt of the generous advantage of Agricultural Property Relief from Inheritance Tax whilst, at the same time, the Government should clamp down more heavily on those owners of land who are using other vehicles such as share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity to gain tax advantage when in practice they are taking no risk, having no entrepreneurial input and lacking any management control."

“FBTs have been too short for too long and in 2015 this must change."