Changing from AHA to FBT

neilo

Member
Mixed Farmer
Location
Montgomeryshire
An FBT is a blank sheet of paper that can have anything you chose incorporated in to it.

Depending on your landlords situation there may well be tax advantages to him with you moving to an FBT. It would be quite possible to have an FBT that ingnored the residential value of the houses and where the rent was calculated on its earning potential.

^this. There is absolutely no reason an FBT agreement can't have anything an AHA agreement has in it, provided both parties are in agreement, including security for whatever term is agreed. What the OP should be wary of, as correctly pointed out by others, is being shafted by a shift to an agreement where those houses are included in the rental value, and the land based on whatever some other eejit will pay in the mustard cords guys' made up world.

He should take advice from an agent with a good knowledge of tenancy law, who could be suggested by the TFA. Don't necessarily be afraid because of the letters FBT.
 
fbt have different rent formular which at current and in the last 20 years has been higher than aha but this may not be the case if agriculture gets different tax and subsidy system or lack of subsidy

fbt could be written with same terms as aha but no one has given one yet

better to negotiate the transfer of aha as a succession and then the fbt as additional land
the biggest problem is that the new agriculture bill may not give any single payment to new land so the existing claimant on the new fbt land may get the sfpayment

get good tenant based legal advice
 

glasshouse

Member
Location
lothians
Depending on the details this could just as easily work very well for both parties, as be a disaster. Don’t be too put off by the above comments not to have the discussion.

You are talking about a term that could take your son to retirement and doubling the size of your farm.

Slip in some aha rent rent formula and it soon looks quite attractive.

Of course professional advice is a must.
What about the grandson? and the capital value?
 

glasshouse

Member
Location
lothians
Hi folks. I am currently a second generation tenant with my son set to take over as I retire. From our end, we think all succession tests will be satisfied for him to take over the AHA tenancy.
Landlords have offered us the next door unit, which would double our farm size. But they want us to have the lot on an FBT. There would be a total of two farm houses and two cottages. Both cottages currently occupy retired workers of ours and are in need of modernisation.
The extra farmhouse would be nice for my recently married son to bring up a young family in, he is currently renting a property. It would allow me and my wife to stay in the current farm house.
The extra capacity would be nice, but we are aware this situation is a lot more beneficial to the land lord than us.
My son is 30 so would want a tenancy to see him through to retirement age.?
What should we ask for off the landlord? Ownership of a cottage? Or two cottages?
This has only just been mentioned by the landlords so no idea of any details. Will seek advice from the TFA asap.
Initial thoughts from everyone would be great though.
Generally the thought of changing from AHA to FBT fills me with dread.
Your gut feeling is correct. A bird in the hand is worth 2 in the bush.
 
the biggest problem is that the new agriculture bill may not give any single payment to new land so the existing claimant on the new fbt land may get the sfpayment
I'm in the position of having been given notice on my FBT land (100acres) as the landlords decided before the Bill to put it all into an enviro. scheme and keep the Sub payment themselves . I don't know how the bill will affect their plans, but I'm determined to keep going on my 200 acres of aha at least until we discover how it is going to pan out, as there may be a payout for outgoers in a couple of years. I haven't any children so I have no one to worry about after I finish. The estate tried to get rid of several aha tenants but couldn't, so they decided to get rid of the FBT and graziers instead.
 

Mixedupfarmer

Member
Location
Norfolk
I'm in the position of having been given notice on my FBT land (100acres) as the landlords decided before the Bill to put it all into an enviro. scheme and keep the Sub payment themselves . I don't know how the bill will affect their plans, but I'm determined to keep going on my 200 acres of aha at least until we discover how it is going to pan out, as there may be a payout for outgoers in a couple of years. I haven't any children so I have no one to worry about after I finish. The estate tried to get rid of several aha tenants but couldn't, so they decided to get rid of the FBT and graziers instead.
I can see this happening re FBT's and the new environmental scheme, it could well mess up the future tenanted sector.
 
It is always worth remembering that FBTs can come to an abrupt end if they want them to. It is easy to be on good relations with the landlord for 30 years and not give much thought to the tenancy as the aha and fbt land are adjacent and you just send off the rent every 6 months. I hadn't really banked on losing 100 acres altogether in my planning, as I figured that the estate and NE would still need the cattle to graze the meadows for the 9 years left until I was going to retire.However, the arrival of a new landlord changed the status quo overnight and a recorded delivery "notice to quit" was the only communication I have had from them. It does make the future of my sucklers very doubtful, and I will have to sell half of the cattle off in the coming months. Luckily I have no borrowing and am reasonably well set up, and also have my own 40 acres with lettable buildings, so that is where the future lies.
 

Hampton

Member
BASIS
Location
Shropshire
Depending on the details this could just as easily work very well for both parties, as be a disaster. Don’t be too put off by the above comments not to have the discussion.

You are talking about a term that could take your son to retirement and doubling the size of your farm.

Slip in some aha rent rent formula and it soon looks quite attractive.

Of course professional advice is a must.
Might be worth clarifying your comments with your background profession.
 

Gormers

Member
Location
east yorkshire
It is always worth remembering that FBTs can come to an abrupt end if they want them to. It is easy to be on good relations with the landlord for 30 years and not give much thought to the tenancy as the aha and fbt land are adjacent and you just send off the rent every 6 months. I hadn't really banked on losing 100 acres altogether in my planning, as I figured that the estate and NE would still need the cattle to graze the meadows for the 9 years left until I was going to retire.However, the arrival of a new landlord changed the status quo overnight and a recorded delivery "notice to quit" was the only communication I have had from them. It does make the future of my sucklers very doubtful, and I will have to sell half of the cattle off in the coming months. Luckily I have no borrowing and am reasonably well set up, and also have my own 40 acres with lettable buildings, so that is where the future lies.

Was you on a year on year basis after a fixed term FBT @Red Fred
Have they given 12 months notice?
 
Was you on a year on year basis after a fixed term FBT @Red Fred
Have they given 12 months notice?
Yes, it rolled on and they gave me year's notice in March. I can't blame them in a way, as the water bailiff says, the money they make from the fishing is far more than the farm rents are worth so putting it all in a scheme helps their fishing.I guess it is only a few grand rent to the estate, but it is everything to the smaller tenants. I'm not the biggest loser either, one grazier is losing all his 170 acres. I shouldn't have been so complacent! :)
 

Gormers

Member
Location
east yorkshire
As a FBT tenant myself I can understand your angst
The only way I’ve found to deal with landlords & their agents is to find “leaverage” something to do a deal around, something no mater how small or maybe insignificant.
Creating a need or a perceived future landlord liability often helps in negotiations.
If I was on AHA lifetime or retirement age tenancy I wouldn’t swap to FBT for a gold pig.:)
Having said that as to the op question : get the sons succession sorted first and foremost, cannot stress that enough then go from there
 
It is always worth remembering that FBTs can come to an abrupt end if they want them to. It is easy to be on good relations with the landlord for 30 years and not give much thought to the tenancy as the aha and fbt land are adjacent and you just send off the rent every 6 months. I hadn't really banked on losing 100 acres altogether in my planning, as I figured that the estate and NE would still need the cattle to graze the meadows for the 9 years left until I was going to retire.However, the arrival of a new landlord changed the status quo overnight and a recorded delivery "notice to quit" was the only communication I have had from them. It does make the future of my sucklers very doubtful, and I will have to sell half of the cattle off in the coming months. Luckily I have no borrowing and am reasonably well set up, and also have my own 40 acres with lettable buildings, so that is where the future lies.
They may have to graze the land or cut it for forage to get the payment for the environment so keep in with them all the details on the new systems will not be known for a while
They may be just keeping their options open
Better them with all the risk of late payment when you have already paid the rent
Land owners will still someone to maintain the hedges and keep the weeds out environmentle payment will not allow thistles and ragwort
To proliferate
 

Salopian_Will

Member
BASE UK Member
Location
Shropshire
Might be worth clarifying your comments with your background profession.

Yup a qualified land agent but tenant farmer too. I’ve negotiated a lot of long term fbts on aha rent terms where there were genuine reasons why everyone has been better off acting for both tenants and landlords.

Going forward a lot of farms might not e bu enough to support a family - if I were offered the opportunity to double the size of my farm I would be looking closely but of course the terms would have to be right.

It is easy to be cynical but it might be that the landlord backs the tenant and there might be benefits for both- who knows the op might own 500 acres themselves and so might not be eligible to succeed. There are too many unknowns!

.... What hasn’t been mentioned is the status of the landlord. If you have a landlord who may want to sell at some point and you are i a position to buy I would always like to negotiating from an aha position regardless of the terms of the fbt.
 

Brisel

Member
Arable Farmer
Location
Midlands
Landlords prefer FBTs for several reasons, many listed above but also because a FBT is more tax efficient. If the land is owned by a trust it has to pay a 10 year charge on what would have been the IHT liability. This does not apply to a FBT. Surrendering an AHA and regranting a FBT has a value to them so this is one of your bargaining chips in negotiations. My employer has just done this with a 3rd generation AHA tenant so his son who has no right of succession has the security of a 40 year FBT which will see him right for his ag career.

You certainly need specialist tenancy advice on this - the devil is in the detail, as always. Both parties have something to offer and both parties want something so that's the making of a deal.
 

Rowland

Member
Hi folks. I am currently a second generation tenant with my son set to take over as I retire. From our end, we think all succession tests will be satisfied for him to take over the AHA tenancy.
Landlords have offered us the next door unit, which would double our farm size. But they want us to have the lot on an FBT. There would be a total of two farm houses and two cottages. Both cottages currently occupy retired workers of ours and are in need of modernisation.
The extra farmhouse would be nice for my recently married son to bring up a young family in, he is currently renting a property. It would allow me and my wife to stay in the current farm house.
The extra capacity would be nice, but we are aware this situation is a lot more beneficial to the land lord than us.
My son is 30 so would want a tenancy to see him through to retirement age.?
What should we ask for off the landlord? Ownership of a cottage? Or two cottages?
This has only just been mentioned by the landlords so no idea of any details. Will seek advice from the TFA asap.
Initial thoughts from everyone would be great though.
Generally the thought of changing from AHA to FBT fills me with dread.


DO NOT DO THIS !!!!!!!!!
THEY WILL PUT THE RENT UP ON YOUR ON YOUR OLD AHA and theres nothing you be able to do about it when its an FBT
Keep your AHA in the long term it would be better for you . Get very good advice on this matter if I were you .
 

Rowland

Member
To the OP
Also I’ve been in a similar situation it was more beneficial to the landlord than me but I had no choice but to swap to FBT,s .

I’d get a land agent from out side your immediate area so the boys club doesn’t affect your situation. Agents don’t like upsetting each other too much as they have to deal with each all the time. Chances are they’ve been to college together see each other at work and Social events they don’t like to sh?t in there own backyard
 

colhonk

Member
Arable Farmer
Location
Darlington
A serious question. Is anyone going to be able to afford to pay rent when the payments go? I rent a 1/3 of my farm but cannot see how to make it pay in a few years time.
 

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