Changing from AHA to FBT

Discussion in 'Tenant Farming, Subsidies, BPS & Legal Issues' started by Stockwell, Sep 30, 2018.

  1. Stockwell

    Stockwell 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.
  2. Adeptandy

    Adeptandy Member

    You'll probably be able to buy a cottage with the difference in rent going from AHA to FBT :whistle:
  3. The first thing to find out what your rent would be tomorrow if calculated on an FBT basis.

    I'm in the same situation in that I'm 34 and farming on my parents lifetime AHA tenancy. It's only part of the land we farm but it is where we live. I talked about it with my landlord last year and it would have trebbled my rent so I turned down their offer bought 15 acres with a couple of houses on next door and the mortgage is covered by the difference between the AHA and FBT rents.

    They offered me the first 2 rent reviews to be calculated on an AHA basis but this just wasn't enough. I hope at some point they will offer me the next door farm when it becomes available and at this point I will be forced onto an FBT if I chose to accept their offer.

    If you are giving up a full generation of AHA I would be asking for the next 20 years of rent to calculated on AHA terms and a 40 year tenancy.
    Last edited: Sep 30, 2018
  4. Clive

    Clive Staff Member

    its a trap !

    once on a FBT they can get rid of you / your son very easy

    don't do it !

    Offer to take the additional farm on FBT but do not give up your AHA under any circumstance
  5. Banana Bar

    Banana Bar Member

    Bury St Edmunds
    DO NOT DO THIS UNDER ANY CIRCUMSTANCES. Take the new on FBT but don’t risk the lot, it’s a nasty trick I’ve seen played out.
    Oh bullocks, Hampton, mezz and 5 others like this.
  6. Formatted

    Formatted Member

    You need professional advice, not from a forum. Contact the Tenant Farmers Association -
  7. Don’t assume you meet succession, it’s a mine field. If landlords believe they have a chance they’ll fight all the way and ask some very intrusive questions such as wife’s bank statements even if she has no part in business. Then there is the costs up to £30k if goes to court
  8. Durry cows

    Durry cows Member

    How could they get rid of him/the son very easily?
  9. glasshouse

    glasshouse Member

    Dont do it, its a favourite landlord eviction trick.
    I have seen plenty of tenants who were offered extra land if they signed away their secure tenancy, and now they have nothing.
    By all means take on the new land on fbt, but dont get caught like a rat in a trap surrendering an AHA.
    In scotland, if you look to give up a secure tenancy, the landlords are paying at least 25% of vacant possession value, or you assign it to a 3rd party.
    Hampton and mezz like this.
  10. glasshouse

    glasshouse Member

    not renew the fbt
  11. Clive

    Clive Staff Member

    FBT's carries much less security than AHA - there are numerous ways for a landlord to break a FBT but hardly any to get rid of a AHA tenant

    he should take professional advice but no way I would give up a AHA in favour of a FBT
    chipchap, Ffermer Bach and Purli R like this.
  12. Durry cows

    Durry cows Member

    As we are on fbt would be interested to know the numerous ways a landlord can break fbt
  13. 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.
    borderterribles and neilo like this.
  14. glasshouse

    glasshouse Member

    They dont have to break it, just wait till it runs out.
  15. Clive

    Clive Staff Member

    an FBT can only be 7 yrs IIRC without tax implications for a start and there is no succession right as there is with a AHA

    rents are subject to whatever the FBT decides to ask, there is no protection re rate of increase

    as above a FBT can have whatever terms landowner and agent decide to put in it pretty much
  16. Above 7 years there will be some stamp duty to pay but it is pretty minimal.

    I was offered a 35 year FBT to surrender an AHA but politely declined.
    glasshouse likes this.
  18. WillB

    WillB Member

    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.
    Flat 10 likes this.
  19. Cow1

    Cow1 Member

    Be very careful. I have incredibly bad experiences of underhand agents stitching you up when converting an AHA to FBTs despite taking what appeared to be solid advice from experts.

    You benefit the landlord in multiple ways for the lure of trying to expand/improve your business to make it more viable and sustainable.

    The reality is once they've got all they want, those three little letters FBT are a stick to beat you with on rent reviews.

    In my case 270% increase in rents within 7 years despite thinking you've signed an agreement with the intention of mirroring AHA rents.
  20. Purli R

    Purli R Member

    If he'll sell you the farm/ farms.
    If you drop the AHA in favour of a FBT you deserve all that the landlord will shaft you with.
    Maybe not today, maybe not tomorrow, but screwed you will be.
    glasshouse, worker and hally like this.

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