Surrender value of AHA tenancy

Stockwell · Jan 7, 2018

Hello there everyone.
Currently farming a 300 acre farm on an aha. Second generation at the moment, with third eligible for succession. (Second generation retiring age now)
We have other land on FBT’s and run a good sized sheep and beef operation, profitable, very forward thinking and as well placed as anyone for the uncertain future. With family to soon increase in size, it’s time to think about securing a future for generations to come and to think about buying a Farm. Currently in Emgland, but a family dream to farm in Scotland...don’t need telling we are mad to think that.
What I really want to know is...If we were to surrender the aha, would there be a value received from the landlords? And how much?

Got a rent review due and would ideally like the landlords to compensate for surrender, sell the farm to us as sitting tenants, or if neither of the above, invest a considerable amount in the farms minimal, and dating livestock housing.
Agents aren’t very helpful and haven’t invested in any of the estate farms for years so they will probably just ask for another tenner per acre and tell us to get on with it.

Many thanks

Formatted · Jan 7, 2018

Before you do or decide anything, join the www.tfa.org.uk, costs £75 and they're experts. They'll talk to you and work it through but you'll need your own agent at some point but start with them

Surgery · Jan 8, 2018

You can only ask the question but I would suspect you asking them your in a weaker position then them asking you.

I would be inclined to have your tenancy looked through by a top AHA tenancy agent for a start , should cost no more than 1-2k , then as you mention you will see who has to update-repair-replace your buildings. It will become clearer then if surrendering might be an option but somehow I would be inclined to stay put and tidy up for now , let them come to you !

The only reason I mention this is purely down to the fact we were in the same posistion as our LL'S had let our farm get into a mess , had it looked at by an agent , wrote several letters. Met with the LL'S and it was then put in front of us a deal , in the end we bought.

Nearly · Jan 8, 2018

@B&B Pig Man

B&B Pig Man · Jan 8, 2018

It’s a bit of ‘how long is a bit of string’ type question. So many variables.

My advice would be to get a top agent ASAP.

It is often the case that an agreeement is in place where the tenant get a % of sale price. Fairer for all concerned than just a flat agreed amount.

chickens and wheat · Jan 8, 2018

Landlord is unlikely to offer you much if you volunteer to leave. The very offer might put succession in danger as you are showing outside interests.
tread carefully

multi power · Jan 8, 2018

I'd ask for a new set of buildings, and a very nice handling system, make sure it's more than they want to spend and hopefully they will say they would be better to sell the farm

Flat 10 · Jan 8, 2018

As already said. Join TFA. Get a good agent. Your tenancy most definitely has a considerable value IF the 3rd gen are definitely eligible to take it on.

Stockwell · Jan 8, 2018

Thank you for all the helpful comments so far. Will definitely take the advice of becoming a tfa member and will also get an agent to have a look.

glasshouse · Jan 8, 2018

i would suggest that mentioning surrender is the last thing you should do.

Paul E · Jan 9, 2018

multi power said:
I'd ask for a new set of buildings, and a very nice handling system, make sure it's more than they want to spend and hopefully they will say they would be better to sell the farm

This.
And the house needs a new roof. And rewiring. And re plumbing.

glasshouse · Jan 9, 2018

If landlords of farms had to bring their houses up to the samestandard as town. Landlords, they would all be selliing

chickens and wheat · Jan 9, 2018

I tend to agree,I believe the prospect of renovating the farmhouses/cottages was one of the reasons my ex landlord sold the estate. new energy certificates needed etc.

glasshouse · Jan 9, 2018

chickens and wheat said:
I tend to agree,I believe the prospect of renovating the farmhouses/cottages was one of the reasons my ex landlord sold the estate. new energy certificates needed etc.

Sadly the law doesnt apply to existing lets , agricultural landlords have squirmed out of all that legislation

chickens and wheat · Jan 9, 2018

What if the cottage is sub let by tenant to a third party.landlord takes a cut of the rent. What is the Epc liability?.

glasshouse · Jan 9, 2018

chickens and wheat said:
What if the cottage is sub let by tenant to a third party.landlord takes a cut of the rent. What is the Epc liability?.

Tenant is landlord

chickens and wheat · Jan 9, 2018

So at rent review tenant wants compensation for all the improvements needed on the cottages the landlord get half the rental income from.
at end of the day the estate landlord will have to pay toward the EPC improvements needed. landlords return on capital is already poor so he bails out and sells the estate

glasshouse · Jan 9, 2018

Landlords return on capital these past ten years has been stratospheric

bankrupt · Jan 9, 2018

glasshouse said:
Landlords return on capital these past ten years has been stratospheric

Does that mean that they're more likely to give half of it to their tenants, or less?

chickens and wheat · Jan 9, 2018

looking at the rent we paid vs the value of the land I doubt our landlord was making stratospheric returns. we were long term aha tenants

Surrender value of AHA tenancy

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0 %

Up to 25%

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50-75%

75-100%

100% I’ve had enough of farming!

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