AHA to FBT

[Terry75]

I am in the process of succeeding on the AHA tenancy here. My landlord has offered me more land in return for a fixed term FBT. 30yr term with 10yrs as same terms as today.
Has anyone taken an offer similar to this and been pleased or regretted it?

 

[Matt Crooke]

What generation of succession are you on in your tenancy second or third? and how much extra land to what you are already renting have you been offered? Your AHA
tenancy is quite valuable I would imagine if you are on the second generation.

 

[snarling bee]

Picture yourself in 30 years time. How will you be feeling?
What will the last 20 years FBT rents be?
Personally I wouldn't switch, but we don't know much about you and your circumstances.

 

[Banana Bar]

I am in the process of succeeding on the AHA tenancy here. My landlord has offered me more land in return for a fixed term FBT. 30yr term with 10yrs as same terms as today.
Has anyone taken an offer similar to this and been pleased or regretted it?

Have you got succession in the business? I would be trying to negotiate a further 10 years of known rent ( linked to productivity if possible ). What do you want to be doing in 20 or 30 years, if the answer is retired and you want to farm more in the medium term go for it.
I know someone who did this ( not FBT but similar ) over 20 years, the 20 years came rather quicker than he thought and he was left without any land at the end of the agreement.

BB

 

[Bramble]

Depends very much on your circumstances, but....

Be very careful, get some good advice. You will be opening yourself up to FBT rents, not AHA rents, in 10 years time.

Your landlord will also benefit from 100% IHT relief with you on a FBT, rather than 50% relief on an AHA (I think)

If you’re on solid ground regarding the succession, offer to just take the ‘new’ land on a FBT and leave the rest on AHA

Generally speaking don’t give up a AHA tenancy lightly!!

 

[Surgery]

If you have a house , yard , buildings under your aha you would be completely mad to be buttered up by extra land to go on fbt if your not the last succession , ten years rent the same and then ad boys rent.

 

[neilo]

DON'T DO IT!

The only way I would consider such a move, is if the FBT was written in such a way as to convey the same succession rights (I'm assuming you're not the third generation already) and the method of calculating rents was based on earning capacity of the holding, the same as AHA rents are. I doubt they would be agreeable to that though, which gives you the answer as to why all land agents are so keen to move AHA tenants on to FBTs.

There is no reason at all that, if they want to rent you the extra land, you can't carry on with the AHA succession and take the extra land on a separate FBT.

 

[holmes65]

we went through a similar issue after my dad died, ended up with a 30 year FBT which takes me to 72 years old with no kids to follow me, BUT we are on AHA terms for the full duration. I would not accept a change to FBT after 10 years unless there was a large lump of money to do so. I would recommend you get in touch with the Tenant Farmers Association they were very helpful when our usual land agent recommended that we cave in to the landlord.

 

[Terry75]

OK, Third generation AHA, so I am the last one. I have 350 acres at present another couple hundred being offered. I am 45 yrs old.
I have been taking advice from TFA etc.

 

[teslacoils]

Have they offered to remain on the same area, but give you a cash lump sum right now to swap from aha to fbt (same rent term) for 30 years? Personally, the idea of getting to 75 then loosing my house would not be appealing.

 

[Surgery]

Have they offered to remain on the same area, but give you a cash lump sum right now to swap from aha to fbt (same rent term) for 30 years? Personally, the idea of getting to 75 then loosing my house would not be appealing.

And loosing the chance of possibly buying the aha holding outright to be able to flip for a nice little retirement fund

 

[teslacoils]

I'd presume that at today's interest rates, that aha land I'd not at a hefty discount. The £££ here is for the tax saving of a fbt over an fbt.

I'd see if there's mileage in that. 30yr fbt. Right to stay in the house until you die after that rent free. And half the tax saving in cash upfront before they muck with the entrepreneur relief etc a tempting offer. Gets cash out to set any kids up / enjoy life before retirement.

 

[snarling bee]

Is the landlord wanting a surrender and regrant of the AHA which will be advantageous to him for tax reasons. If he is, then suggest you will consent to that if you get the extra 100 acres on an FBT but on AHA rent.

 

[Terry75]

And loosing the chance of possibly buying the aha holding outright to be able to flip for a nice little retirement fund

I will NEVER be given the option of buying this holding from the landlord due to its location on his estate.

 

[snarling bee]

Another question

Is an additional 100 acres REALLY going to give you any more profit when extra expenses are taken into account?

 

[Billboy1]

Don’t do it !

 

[Surgery]

I will NEVER be given the option of buying this holding from the landlord due to its location on his estate.

sorry to hear that

 

[betweenthelines]

I will NEVER be given the option of buying this holding from the landlord due to its location on his estate.

I wouldn't bet on that. A lot can happen in 30 years. Untimely deaths, divorces, unexpected need for funds etc. etc

Just look at the situation farming was in in 1930 and thirty years before.

 

[redsloe]

We did the change 20 years ago and haven't yet noticed any difference. I'm third generation, no one to really carry on, secured tenancy until at least 65 and like you will never get chance to buy the farm due to being right in the middle of an estate.
I would like to think that after being a tenant family for well over 100 years by that time on this farm that if I wanted a few more years I could!

 

[Terry75]

We did the change 20 years ago and haven't yet noticed any difference. I'm third generation, no one to really carry on, secured tenancy until at least 65 and like you will never get chance to buy the farm due to being right in the middle of an estate.
I would like to think that after being a tenant family for well over 100 years by that time on this farm that if I wanted a few more years I could!

My family have been tenants on this farm for nearly 400yrs!! I am sure I will be the last.