AHA tenant on land for sale

kiwi pom · May 21, 2021

Home Farm. said:
Hi, I'm new to the forum but thought this would be a good place to ask this question.
Our landlord wishes to sell the farm we have a AHA tenancy on. I'm the second generation tenant and may have a third to follow me in 25 years or so. We don't live on the farm so it's just the land and building with conversion opportunitys. We would not be able to afford to buy the lot and at 300ac it would not be very viable as a smaller unit. Has anyone been a sitting tenant on a farm that has sold and what can I expect if I sit tight. I have spoken to TFA but I wondered if there is anyone with experience of this process on here?
Thanks.

Do you want to keep farming there and would they give you a big payout to leave?
According to TFF UK farming is finished and 300 acres won't provide a living for you, never mind someone in 25 years.
You don't live on farm, so how about a fresh start?

Just trying to see it from another point of view.

Poncherello1976 · May 21, 2021

mjdboor said:
Are AHA tenancies a hindrance or burden for landlords ie would many / most be keen to sell.?

Depends on the landlord as said above.Our Landlord has had the land since 1270 ish it owes them less than nothing and so I can not see them selling it.

teslacoils · May 21, 2021

Bill the Bass said:
They would be pretty rare I would think, some pretty poor advice to the landlord somewhere along the line if it’s the case.

It was a quirk in the draughting of the tenancies that allowed them to be assigned etc to a ltd rather than a person. Got closed pretty quick.

Anyway, aha land values are not going to be tiny. They fluctuate along with interest rates. Last block I know was sold on the basis of the "yield" being c1.5 percent. Put in the rent, then work out the capital value.

Lincsman · May 21, 2021

Dont AHA tenancies only carry on to next generation if the land is the major part of the business? eg. it stops if the total farm is 80% owned and 20% AHA?

mo! · May 21, 2021

teslacoils said:
It was a quirk in the draughting of the tenancies that allowed them to be assigned etc to a ltd rather than a person. Got closed pretty quick.

Anyway, aha land values are not going to be tiny. They fluctuate along with interest rates. Last block I know was sold on the basis of the "yield" being c1.5 percent. Put in the rent, then work out the capital value.

Nothing to stop a company being assigned an AHA, but the landlord would be a fool to let it happen.

le bon paysan · May 21, 2021

Bill the Bass said:
As a starting figure, an succession AHA tenancy is worth about 1 third of the freehold value.

The standard buyout is 7x the rent + any extra you can negotiate for planning etc if there's a chance they'll build an estate over it.
Davis Meade and Partners are specialists in representing Tenants in matters like this.

Bill the Bass · May 22, 2021

Devil's advocate said:
Dream on. Someone like me would be glad to pay 75% of value & leave the tenant to farm the land & put the rent up at every review to a more commercial price.

That sounds bullying, but no just sensible business.

If I was the second successor of an AHA and the landlord wanted me out that is where I would start. I had the misfortune to spend three years working in an agents office, that was the figure that was banded about for what an AHA was worth.

Farmer up here went out on the second term, walked away with over a third of the land.

egbert · May 22, 2021

Home Farm. said:
Hi, I'm new to the forum but thought this would be a good place to ask this question.
Our landlord wishes to sell the farm we have a AHA tenancy on. I'm the second generation tenant and may have a third to follow me in 25 years or so. We don't live on the farm so it's just the land and building with conversion opportunitys. We would not be able to afford to buy the lot and at 300ac it would not be very viable as a smaller unit. Has anyone been a sitting tenant on a farm that has sold and what can I expect if I sit tight. I have spoken to TFA but I wondered if there is anyone with experience of this process on here?
Thanks.

If you want to continue farming the land, the safest route would be to harken to the options already outlined, and get it bought.

An old pal of mine thought he was sitting pretty in such a situation, but a scamming schemer bought the ground, and set an unscrupulous erse hole of an agent about him.
They kept at him, and he was eventually driven out.
There's more (and much uglier) to the tale, but the moral is simple...... you don't know who else is going to buy, so do your damnedest to secure it yourself.

Devil's advocate · May 22, 2021

Bill the Bass said:
If I was the second successor of an AHA and the landlord wanted me out that is where I would start. I had the misfortune to spend three years working in an agents office, that was the figure that was banded about for what an AHA was worth.

Farmer up here went out on the second term, walked away with over a third of the land.

So with your figures 66% of market value, sounds more sensible than 33%. I agree with you.

Devil's advocate · May 22, 2021

Phil P said:
But with aha the rent has to be inline with the earning potential of the land, so with the reduction in bps rents should be coming down at the same rate.

not if they were under valued before & commodity prices have greatly increased.

Devil's advocate · May 22, 2021

egbert said:
If you want to continue farming the land, the safest route would be to harken to the options already outlined, and get it bought.

An old pal of mine thought he was sitting pretty in such a situation, but a scamming schemer bought the ground, and set an unscrupulous erse hole of an agent about him.
They kept at him, and he was eventually driven out.
There's more (and much uglier) to the tale, but the moral is simple...... you don't know who else is going to buy, so do your damnedest to secure it yourself.

Liked that because it was true not that I like kicking tenants off, unless they are useless cannabis growers who sub let land for tyre disposal of course.

hally · May 22, 2021

Devil's advocate said:
not if they were under valued before & commodity prices have greatly increased.

But commodity prices haven’t greatly increased, run an inflation calculator on any farm commodity starting say 20 years ago and the prices we are getting now are no where near where they should be.

7610 super q · May 22, 2021

mjdboor said:
Are AHA tenancies a hindrance or burden for landlords ie would many / most be keen to sell.?

Depends. A " big " landlord with a sh!t hot agent could probably make an AHA tenancy work / pay.
A " small " landlord with an awkward tenant who employs solicitors / agents for fun will struggle. We've not made a penny on an inherited bit of ground in 45 years. All our meagre rent money has been spent on legal fees and insurance.

At least all these threads appear on Google, so no landlord with a bit of nous will ever grant a long term tenancy again.

egbert · May 22, 2021

Devil's advocate said:
Liked that because it was true not that I like kicking tenants off, unless they are useless cannabis growers who sub let land for tyre disposal of course.

this fella was a very genuine farmer, albeit old fashioned and steady.
I don't want to go into detail, but the subsequent events were as ugly as ugly can be. Shamefully so (his new LL wasn't a city investor, but rather someone much nearer to home).

OP notwithstanding.......I'm both tenant (mainly) and LL elsewhere, so I see a need for balance.

Bill the Bass · May 22, 2021

egbert said:
this fella was a very genuine farmer, albeit old fashioned and steady.
I don't want to go into detail, but the subsequent events were as ugly as ugly can be. Shamefully so (his new LL wasn't a city investor, but rather someone much nearer to home).

OP notwithstanding.......I'm both tenant (mainly) and LL elsewhere, so I see a need for balance.

I think most sensibly minded people see a need for a balance. There are though two problems in my limited experience;

1) massive increase in the capital value of freehold land has set off a greedy gold rush by absentee landlords and rapacious agents alike.

2) A cultural dislike of tenants by some including many land agents. An example I experienced was two agents plotting a rent review on a farm tenancy one said ‘his mother has just died so we will go soon’ the other replied ‘yes, get him when he is weak’

I won’t go into any more details - I am saving it for my memoirs!

betweenthelines · May 22, 2021

le bon paysan said:
The standard buyout is 7x the rent + any extra you can negotiate for planning etc if there's a chance they'll build an estate over it.
Davis Meade and Partners are specialists in representing Tenants in matters like this.

7 years rent sounds low to me. Aren't you entitled to six years when planning is granted? 1 extra year for a voluntary departure isn't much.

Suffolk Serf · May 22, 2021

Al R said:
A AHA tenancy in a Ltd company is almost unheard of as obviously the Ltd company can live on forever

Two examples that I know of.
One had an AHA tenancy as an individual but managed to get it changed to a Ltd company tenancy purely by the landlord inadvertently banking a cheque from the Ltd co. The landlord was fuming. Scroll on a few years and the Ltd company managed to go bankrupt for various reasons-so the landlord won in the end.
A second example is a ltd co farming company that had the tenancy on a block of land as such for a long time, in addition to a lot of land owned a few miles away and further afield. The company got sold, along with the tenancy. The new owners are being very careful about how the company is named and structured.

egbert · May 22, 2021

Bill the Bass said:
I think most sensibly minded people see a need for a balance. There are though two problems in my limited experience;

1) massive increase in the capital value of freehold land has set off a greedy gold rush by absentee landlords and rapacious agents alike.

2) A cultural dislike of tenants by some including many land agents. An example I experienced was two agents plotting a rent review on a farm tenancy one said ‘his mother has just died so we will go soon’ the other replied ‘yes, get him when he is weak’

I won’t go into any more details - I am saving it for my memoirs!

one agent said to me once (of AHAs)...'yes, it's so long until we get the farm back'
This on an estate that would never sell, and hence relies on tenants....a revealing attitude, and none to flattering since it was about me!

Surgery · May 22, 2021

Home Farm. said:
Hi, I'm new to the forum but thought this would be a good place to ask this question.
Our landlord wishes to sell the farm we have a AHA tenancy on. I'm the second generation tenant and may have a third to follow me in 25 years or so. We don't live on the farm so it's just the land and building with conversion opportunitys. We would not be able to afford to buy the lot and at 300ac it would not be very viable as a smaller unit. Has anyone been a sitting tenant on a farm that has sold and what can I expect if I sit tight. I have spoken to TFA but I wondered if there is anyone with experience of this process on here?
Thanks.

Have you another farm-buildings etc?

reason I ask , you mention that the farm for sale has buildings with conversation potential , any man or dog looking at this farm will know this and again will know that all they would have to do is apply for planning get it and you would be out with a small pay off.

If these building are of no real use to you and you have another set of buildings of your own why not do a deal of some sort with your landlord to surrender the buildings and some surrounding land and keep-buy the remaining land , likewise surrender the land and keep the possibility of barn conversations , you really won’t get another opportunity to do some thing as any new owner will be out to get you on some fashion.

we bought one out 5 years back and surrendered a big old farm house which needed a lot of money spent on it , best thing we have ever done.

egbert · May 22, 2021

Suffolk Serf said:
Two examples that I know of.
One had an AHA tenancy as an individual but managed to get it changed to a Ltd company tenancy purely by the landlord inadvertently banking a cheque from the Ltd co. The landlord was fuming. Scroll on a few years and the Ltd company managed to go bankrupt for various reasons-so the landlord won in the end.
A second example is a ltd co farming company that had the tenancy on a block of land as such for a long time, in addition to a lot of land owned a few miles away and further afield. The company got sold, along with the tenancy. The new owners are being very careful about how the company is named and structured.

I don't know what has happened, but i knew an older couple a few years back who had a large farm rented from a local municipal authority....by their ltd co business. They were bona fide farmers, but knew exactly what they had, and how it should be valued.

Last time I saw them - they're some way from me, and we met sporadically- they were wanting to retire, and angling to sell the tenancy back to the authority for several hundred £k.
They were pretty decent people, and I hope they had a sensible deal.
LL was/is a public body, who had made a major mistake originally, so I'm not overly concerned on their part. There's a fine line eh?

AHA tenant on land for sale

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