Property & Business - Winter 2020

Farm Tenancy surrender - a new chapter Tenancy surrender is not, as it sounds, the last resor t of a desperate tenant but the beginning of a new chapter - for the Tenant, for the Landlord and for the holding. However, it is not as straight forward as just ‘banking the cheque’ and shutting the gate! After 30 years of working for both tenants and landlords, it can be said that the crucial negotiation of the surrender payment (if any is to be paid) is only half the story - it is the rest of the detail that can take the time and is just as impor tant in making sure that the surrender works for both sides. There is no automatic right for a Tenant to be paid for surrender - that depends on whether the Landlord wants a surrender and is willing to pay for it. Many factors may affect the surrender terms. For example, how is the Landlord to fund any surrender payment? (e.g. is the land to be sold/re-let on higher rent?); Landlord’s tax position; and the Tenant’s age, health and potential successors which can determine how otherwise the Landlord might regain possession... Is it wor th the Landlord just waiting? Whether the Tenant decides to surrender or not can depend on their financial viability and alternative options to carry on farming (e.g. bringing in contractors). The reality is that the Tenant may have to rehouse himself as well as losing working farmer tax status plus all the ‘hidden’ benefits of having a farming business. Ultimately, a surrender payment will probably not replace all the income that could have been earnt, if every year’s was a ‘good’ year, and a lump sum ‘in the hand’ will always be less. However, it is real money/value that can be left to the family - as there is no surrender payment due to a Tenant who dies in the harness. The surrender deal itself can involve ongoing tenancies of the farmhouse, exchanging AHA tenancy for FBT, transfer of CSS schemes without serious financial penalty, purchase of par t of the freehold and is very often far more complex than just the amount of money. In addition there are significant tax consequences for the Tenant if the timing and manner of the surrender is not well planned. Then there are the practical issues such as tenant’s improvements, farm machinery sale, sor ting out sub -tenants who may or may not need to vacate, outstanding repairs, cropping and fer tiliser records, transfer of BPS units and land parcels... The list goes on! However the experienced Agent can lead the way, negotiating both the best terms and, just as impor tant, identifying and dealing with all the practical issues to reach a surrender deal that works. And as for that next chapter - the Landlord may decide to farm themselves or re-let on a new more flexible tenancy or even sell the holding, without the lifetime tenant in place and release the increase in value. The Tenant may well not be the only person in the family for whom this surrender opens a whole new chapter - or even book! The younger generation of our clients have gone on to follow whole new careers - sometimes following a lifelong passion of a non-farming interest and make a career out of a hobby they never had time for whilst farming. Some even forge their new lives as far afield, as Australia. For the older generation, it can be the release from the daily commitment to the farm or concerns over what the future bureaucracy/markets etc, which brings about the change, and the benefits to them and their family can be life changing. The whole concept of ‘retirement’ no longer means the beginning of the end but the oppor tunity to travel, spend time with grandchildren, move to the house of their own choice. Many older clients fear retirement will bring about their early demise - but a year later we see then looking younger, healthier and chasing the grandchildren! A successful surrender is not just about the amount of any surrender payment but recognising the oppor tunity for a new star t. One thing is for cer tain, whilst our ‘surrendered’ clients may sometimes miss the odd “good old day” on the farm, none of them is ever bored or not busy - far from it! It is the experience gained over many years of assisting clients through this whole process that enables us to bring the wider perspective to any Landlord and Tenant surrender discussions. We can help either par ty see the oppor tunities of a successful agreement of terms, offering the guidance and reassurance that clients need at the impor tant time and provide the practical advice to make the surrender agreement successful. For Landlord and Tenant advice contact Ellie Allwood 01522 504 320 or 07919 694 227 Ellie Allwood BSc (Hons) LL.M FRICS FAAV Partner, Chartered Surveyor e t 01522 504320 14 PROPERTY | BUSINESS | PLANNING | ENERGY