tenancies and brexit

rich75

New Member
My 5yr fbt ends in september I am concerned that over the next five years we will loose our subsidie's. The rent is strong enough for the land at the moment without a reduction in subsidie. The land is all presently cropped.
What are other's doing in this situation? Hoping it will all be ok? or trying to get a shorter agreement?
 

pine_guy

Member
Location
North Cumbria
My 5yr fbt ends in september I am concerned that over the next five years we will loose our subsidie's. The rent is strong enough for the land at the moment without a reduction in subsidie. The land is all presently cropped.
What are other's doing in this situation? Hoping it will all be ok? or trying to get a shorter agreement?
How about linking your rent to the sub received?
 

pine_guy

Member
Location
North Cumbria
Yer right?
Landowners will love that when subs disappear
That they might not like, but if subs go, profit per acre will drop £90ish an acre. So rents will have to fall. But weather they will help you over the next few transition years, depends on your relationship with your landlord. I know I will have to fight mine all the way :banghead: even though they just paid their Finacial advisor his bonus despite not returning anywhere near the returns promised :rolleyes::banghead:
 

Still Farming

Member
Mixed Farmer
Location
South Wales UK
That they might not like, but if subs go, profit per acre will drop £90ish an acre. So rents will have to fall. But weather they will help you over the next few transition years, depends on your relationship with your landlord. I know I will have to fight mine all the way :banghead: even though they just paid their Finacial advisor his bonus despite not returning anywhere near the returns promised :rolleyes::banghead:
Landowners want their money and returns otherwise best kept themselves and do nothing instead of tenants gaining I would imagine.
 

rich75

New Member
Put a clause in for renegotiation of the rent if BPS changes. Current chatter amongst the big agent firms is a rent fall of half the drop in subsidies.
Not surprising, looks fair from an agents perspective but doubt many tenants will be happy! the equivalent of a £40/acre rent increase(n)
 
My 5yr fbt ends in september I am concerned that over the next five years we will loose our subsidie's. The rent is strong enough for the land at the moment without a reduction in subsidie. The land is all presently cropped.
What are other's doing in this situation? Hoping it will all be ok? or trying to get a shorter agreement?
Has the ll served notice to terminate if not then carry on as a 1 year rolling fbt till we know what the future holds


Or if not meet the ll or the agent and find out the land lords long term views
Non of us know where thing will be in 5 years
Ll are just as worried as tenants

The certainty is that some one will be needed to farm/look after the land
If it is not the ll they will need a tenant
 

Brisel

Member
Arable Farmer
Location
Midlands
There's another elephant in the room for ELM schemes. There's clearly a long way to before anyone knows anything but it wouldn't be inconceivable for landlords to sign up then pay a tenant/contractor to manage the land for the prescriptions. You can bet they will want the cash but avoid getting their hands dirty.

Dual claiming is already fairly common for some agreements where the LL gets the HLS money but rents the rest of the field out which makes the RPA sweat when working out who is really in control and cross compliant on which bit.
 

curlietailz

Member
Arable Farmer
Location
Sedgefield
We have some land rented on an FBT and I got a annual break clause put in, so either party could give 1 years notice

It’s up for renewal next year and I’m hoping we can just roll over until the financial path becomes clearer
 

soilbug

Member
The landlord-tenant business partnership is one of the most precious partnerships ever created. The land owner retains title - usually hasn't the skill or funds to farm themselves - or not daft enough to take that risk. Consequently good tenants are valuable to them. The problem arises where too many silly tenants bid too high a rent becuse they have gone 'big' - big tractor - big yields - big ideas - requiring bigger acreages without understanding that 'big bottom lines' come first, which decides how big a rent to pay. Tech colleges/universities teach 'big' and the supply industry supports 'big', knowing the SFP has subsidised the farmer to keep him in business to pass them the cash.

Where else can a landlord safely bury his capital but in land - with a good tenant husbandsman (someone to 'husband' the farm, soil and assets - for those who are prickly feminists. The tenant gets the use of the land for - how much ?. Think about it - you might pay the Ll all of 1 to 2 % interest on his investment. It is an inprudent tenant who works his or her but off for very little profit in current times and carries all the business risk.

The solution is for government to kill off the farming tax allowances to owners whose income is not mainly from farming (IHT, FBA, etc). For example, many a captain of industry buys the big estate and manor house as a future medium to pass his industrial wealth on to his/her offspring, with the trivial 1% rent return of little consequence whilst enjoying the pheasant shoot and hunting. Industry should carry its own burdens - and agricultural land would then better reflect the returns to be had from farming. Watch out if Corbyn arrives to sort it out!.
soilbug
 

som farmer

Member
Livestock Farmer
Location
somerset
the problem with fbt is knowing how long you are going to be there. this puts a damper on going into some of these environmental schemes, its fine if you know you are able to carry on, we are on a 'rolling' fbt that was designed for 15 yrs max, but we are now 25 years, the condition to end the fbt, (someones death) is now causing problems, do we invest, do we enter schemes etc. also with the passing of time our buildings etc, are no longer really fit for purpose, l/lords will not spend any money, and we all know that there are plenty of people out there that would pay £200+ just to get 'in' we are due rent review, and, despite being chased to agree, I am holding out to see what changes Brexit will bring, its one thing paying £200 and have sfp, a lot different without. if gov would stop ag relief that would help, as would land agents pushing for huge rents, that could be unaffordable in the longer term
 

soilbug

Member
I agree, Som Member. But the backlash is fbt's allow tenants to walk away after milking the land right out and the nextguy has a hard time turning it round. But fbt's are a bit better than the grazing agreements and the one year licences we had before. We have to be careful that our business wouldn't collapse if the landlord doesn't renew at the next break clause date. The very high tender allows youngsters to work three times harder than me to try to get off the ground, but also encourages them to go bust with their overblown enthusiasm - tough on young couples.

It is less the landlords than the landlords' agents - who rack everything up to improve their commission, and neglect repairs in order to maintain the cash taken out the farm. My old neighbour has shocking barn rooves - and he is on a Crown Estate farm - but that is the Treasury maximising their take; the royal family have no influence it seems. If the barn falls down it won't need painting or repairing and the rent stays the same!

The only guy enjoying collecting fbt's is the large farmer spreading the hp charges of his big tractor over more acreages. Sadly, there are better ways to earn a living nowadays. It was the farmer organisations which traded away long term tenancies for the chance to grab more short term acreages without protective clauses - both sides are free to agree anything in a fbt agreement, and the tenant usually has to if he needs the land. Hang on to the succession /86 tenancies or only exchange them for 50% the vp value (up front in cash). Sad i'nit?
soilgrub
 

glasshouse

Member
Location
lothians
The landlord-tenant business partnership is one of the most precious partnerships ever created. The land owner retains title - usually hasn't the skill or funds to farm themselves - or not daft enough to take that risk. Consequently good tenants are valuable to them. The problem arises where too many silly tenants bid too high a rent becuse they have gone 'big' - big tractor - big yields - big ideas - requiring bigger acreages without understanding that 'big bottom lines' come first, which decides how big a rent to pay. Tech colleges/universities teach 'big' and the supply industry supports 'big', knowing the SFP has subsidised the farmer to keep him in business to pass them the cash.

Where else can a landlord safely bury his capital but in land - with a good tenant husbandsman (someone to 'husband' the farm, soil and assets - for those who are prickly feminists. The tenant gets the use of the land for - how much ?. Think about it - you might pay the Ll all of 1 to 2 % interest on his investment. It is an inprudent tenant who works his or her but off for very little profit in current times and carries all the business risk.

The solution is for government to kill off the farming tax allowances to owners whose income is not mainly from farming (IHT, FBA, etc). For example, many a captain of industry buys the big estate and manor house as a future medium to pass his industrial wealth on to his/her offspring, with the trivial 1% rent return of little consequence whilst enjoying the pheasant shoot and hunting. Industry should carry its own burdens - and agricultural land would then better reflect the returns to be had from farming. Watch out if Corbyn arrives to sort it out!.
soilbug
Landlords used to need tenants to provide their income.
Not any more, they just collect the subsidy thrmselves and tip the families out
 

ste

Member
Livestock Farmer
Location
Derbyshire
Just sorting our out now as it ends in February, I'm the landlord btw ;);)

Difference with ours I suppose is the rent is a fair price and then we get 75% of the sub claimed payable on receipt of the sub, rent paid in March. Currently renewing for another 5 years to end in 2025 with a clause in that it will be reviewed on and changes to the BPS scheme.

We know we could probably get more on the open market, but the person who rents it is a family friend and farms it like its his own i.e looks after the fences, reseeds with a long term view and farms it like we would
 

chipchap

Member
Mixed Farmer
Location
South Shropshire
We know we could probably get more on the open market, but the person who rents it is a family friend and farms it like its his own i.e looks after the fences, reseeds with a long term view and farms it like we would
Well doe you.
Sometimes it must seem like you are the only landlord that takes the long term responsible approach, however you are not completely alone, and the rest deserve the tenants and relationships they deserve.
 

soilbug

Member
Well STE you understand the long term effect on the value to the holding of a good tenant. But you are on thin ice grabbing a slice of the tenant's farm subsidy - that usefully will help argue the political case for the subsidy to be ring fenced in law only for the land manager i.e. the tenant.

Your income should come from a sensible proportion of existing market rents balanced by the current profitability of farming that sort of land to which it is best suited to.1986 AHA's have a clear formula for that calculation which prudent fbt rentals would be wise to follow but human nature being what it is...... Perhaps the 'sub grab' was suggested by a qualified rics land agent, or worse, a headline estate agent who has his eye on racheting all rents up to max his commission. That sub will focus more on environmental management in the near future which will be a tenant's responsibility - if he thinks it worth jumping through all the hoops to qualify for it, which will not always be sensible. One may make a case tpo say 'stuff your subsidy Prime Minister and I can farm better without the onerous conditions'. Good farming, especially arable with a livestock enterprise, can still deliver the public goods foc so long as the consumer pays a realistic price for their food. Otherwise that part of the environmental payment the landlord doesn't grab is just a 'cheap food' subsidy to counter USA farm subsidies. Do UK citizens need cheap food aid in these affluent times? (Answer on a postcard please, Mr Corbyn).

So Mr Corbyn may say 'calculate your rent in the traditional manner as a % of the profitability of farming and owners should be grateful that the vp value of land is artificially exagerated by the tax loopholes from owning land, which is currently (see ABC or Nix handbooks) circa 1%. Without the tax loophole benefits, land values might halve and give the landlord an unearned income of over 2% and a big increase each time a new tenant comes along determined to tender a bigger rent in order to expand. Moderation in all things leads to a happy community. - soilbug
 

SFI - What % were you taking out of production?

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Red Tractor drops launch of green farming scheme amid anger from farmers

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As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
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