With the 25th March now less than 2 months away it is worth thinking about whether to serve a notice to review your farm rent. Likewise some landlords served notices in March 2014 hoping for rent increases, so with these rents needing to be agreed by the 25th March action should be taken now.
Agricultural tenancy expert Andrew Troughton comments, “The arable sector has had a difficult 12 months with prices falling by up to 50%. Not all landlords appreciate that we now have much more commodity price volatility over which farmers have no control. The weather extremes also leads to huge variation in output, which again the tenant farmer has no control over, but has to work with.”
Dairy farmers are also facing falling prices and the low point appears to be some way off still. Andrew adds, “Many dairy farmers are facing a loss making price and need to cut costs to balance the books. Expensive rents that have been paid in the past are probably not sustainable based on the current prices. Whilst rents tend to lag behind the movement in prices, sensible discussion need to be had to ensure the farming business remains profitable and the rent is affordable.”
Some landlords will try and use high FBT rents as a reason to increase 1986 Act tenancy rents but this argument should be strongly resisted. Andrew says, “The formula for traditional 1986 Act tenancies is very specific and an comparable analysis of similar traditional tenancy rent reviews should be undertaken rather than looking at FBT rents. The ’86 Act rent formula also requires an analysis of what can be earned off the farm.”
If you wish to have your farm rent reviewed or have been approached by your landlord or their agent do contact Andrew for advice.