Opportunities within Agricultural Tenancies
Whether you have an Agricultural Holdings Act tenancy or a more recent Farm Business Tenancy, there can be opportunities for your farming business.
Rents can go down as well as up and we have seen a few Agricultural Holdings Act 1986 rent reductions over the past 12 months, as well as a number of Farm Business Tenancy rents being renegotiated at a static or reduced rent. Notice to review the rent must be served at least 12 months prior to the review date, so forward planning is essential. Be aware that notices served by the tenant in the hope of a rent reduction twelve months hence, can be utilised by the landlord to seek a rent increase.
If your landlord has served notice, this is a good time to discuss other opportunities on the holding. You may want to explore the possibility of sub-letting a building, a diversification scheme or giving up a property the landlord may want in return for a change in tenancy terms.
If your tenancy has succession rights, are you planning for this and preparing in order to have the smoothest possible transition to the next tenant. Succession can take place once a tenant is 65 (or on death) and a landlord will look at the potential successor’s suitability and eligibility based on the previous 5 -7 years. Many families we have helped through the succession process did not realise that, for example, the income of potential successor’s partner, having a buy to let property or running another business could have a detrimental effect on the succession. However, with careful planning, most obstacles can be overcome.
Planning ahead is imperative to present a robust case to the landlord at succession, whether that be on retirement or death. Significant cost savings can be achieved by having accurate records proving eligibility to succeed. Never underestimate the benefits of being prepared.