Changing from AHA to FBT

[DRC]

Your landlord sounds a lot fairer than I think ours (or his agents) will be, don’t think We’d be able to manage a negotiation like that

That was over 20 years ago when we had fair agents. The ones we have now wouldn’t sanction that deal.

 

[chipchap]

The Devi, as always, will be in the detail.

I wouldn’t believe a word most land agents say, although there are one or two exceptions.

You need to understand exactly what all documents say. What has been said verbally is of no value whatsoever with most of these people. Even with somebody trustworthy their word or promise is worth nothing in twenty years time when they have moved on, retired, or died. All you will have to rely on in the future is what has been documented and signed.

You cannot be too careful.

 

[glasshouse]

Although we are yet to be presented with an official proposal, we have been given an outline.
The landlords would like us to surrender our AHA on 350 acres (split in three separate blocks) and take on a 700 acre ring fenced unit on an FBT for 35 years. My wife and I would remain in the current farmhouse, no details of rent/length of time etc for this have been discussed yet.
My son would move to the new unit which includes a large well kept farmhouse and large range of modern cattle housing. As I’ve said, no details have been discussed yet, this is too take place over the next few months.

Made contact with the tfa and the have recommended a local professional who is extremely experienced in tenancy matters/law.

No doubt the size and quality of this farm would take the farming side of our business forward considerably. But obviously the times we live in our more uncertain than ever.

Any advice is much appreciated, the landlords have ‘stressed’ how good this would be for us but I’m under no illusion that the benefits to them are great as my son could remain on this aha for maybe another 50 years if our succession application was successfull.

So what should we look for? The rent formula calculation is a major one for us so we don’t get hit with ‘digester rents’
Thanks again

Dont do it
You have a major capital asset now
Which the landlord desires
The fbt has no capital value, unless it was a 100yrs
But still nothing like what you have
Ask for 100 yrs to test them

 

[Clive]

Although we are yet to be presented with an official proposal, we have been given an outline.
The landlords would like us to surrender our AHA on 350 acres (split in three separate blocks) and take on a 700 acre ring fenced unit on an FBT for 35 years. My wife and I would remain in the current farmhouse, no details of rent/length of time etc for this have been discussed yet.
My son would move to the new unit which includes a large well kept farmhouse and large range of modern cattle housing. As I’ve said, no details have been discussed yet, this is too take place over the next few months.

Made contact with the tfa and the have recommended a local professional who is extremely experienced in tenancy matters/law.

No doubt the size and quality of this farm would take the farming side of our business forward considerably. But obviously the times we live in our more uncertain than ever.

Any advice is much appreciated, the landlords have ‘stressed’ how good this would be for us but I’m under no illusion that the benefits to them are great as my son could remain on this aha for maybe another 50 years if our succession application was successfull.

So what should we look for? The rent formula calculation is a major one for us so we don’t get hit with ‘digester rents’
Thanks again

my original advice stands - do not give up the AHA under any circumstances

offer to rent the additional on a FBT, if they will not then that is clear evidence of their real plan for your AHA.

do your really want the extra land that badly ? seriously think about that ? can you really make money out of a 700ac fbt these days ?

do not be blinded by the light of additional scale fbt farming - it’s more often a route to bankruptcy than success !

your AHA has value - protect that at all cost, a fbt is worthless

 

[Clive]

Dont do it
You have a major capital asset now
Which the landlord desires
The fbt has no capital value, unless it was a 100yrs
But still nothing like what you have
Ask for 100 yrs to test them

even if they offered a 1000 yr FBT. it make no difference as they can be easy broken ....... unlike a AHA

 

[glasshouse]

even if they offered a 1000 yr FBT. it make no difference as they can be easy broken ....... unlike a AHA

How do they break an fbt?

 

[glasshouse]

my original advice stands - do not give up the AHA under any circumstances

offer to rent the additional on a FBT, if they will not then that is clear evidence of their real plan for you AHA.

do your really want the extra land that badly ? seriously think about that ? can you really make money out of a 700ac fbt these data ?

do not be blinded by the light of additional scale fbt farming - it’s more often a route to bankruptcy than success !

your AHA has value - protect that at all cost, a fbt is worthless

They will put your house on short assured tenancy at stockbroker rated
Far better to sit still and find other income streams

 

[Clive]

How do they break an fbt?

put the rent up to whatever they choose or use one of many clauses they can write in to trip you over - if they want to end a FBT. there will always be a way to do so

unlike a AHA you have no protection

 

[glasshouse]

my original advice stands - do not give up the AHA under any circumstances

offer to rent the additional on a FBT, if they will not then that is clear evidence of their real plan for you AHA.

do your really want the extra land that badly ? seriously think about that ? can you really make money out of a 700ac fbt these data ?

do not be blinded by the light of additional scale fbt farming - it’s more often a route to bankruptcy than success !

your AHA has value - protect that at all cost, a fbt is worthless

They will put your house on short assured tenancy at stockbroker rents
Far better to sit still and find other income streams

 

[Surgery]

as clive mentions why not keep your AHA holding and tender for the FBT ground separately , it you get it you do , if you don’t who cares as you still have your AHA holding.

reading one of your earlier posts it seems to me your LL was trying to shaft you getting you to sign off your AHA tenancy onto FBT , very underhand in my books as it’s happened around here before and it never worked out very well in the end.

 

[Bramble]

I was under the impression that adding a ‘substantial amount‘ of FBT ground to an AHA tenancy from the same landlord risked turning the AHA tenancy to a FBT???

Again, get advice on this

 

[glasshouse]

An AHA tenancy is a great asset, created by the labour party in 1947
How many farmers thank labour properly for the difference it has made to their lives?

 

[chipchap]

Landlords and agents will have the shirt off your back without a second thought.

A big FBT tenant near me, who farms the land very very well in my opinion, is reputedly being turfed out next autumn.

 

[Clive]

I was under the impression that adding a ‘substantial amount‘ of FBT ground to an AHA tenancy from the same landlord risked turning the AHA tenancy to a FBT???

Again, get advice on this

i believe generational transfer of a AHA can be compromised if the income from it is not significant to the overall business viability

so if you farm 4000ac it would be hard to argue the importance of say a 100ac AHA to next generation

As long as the AHA remains a significant and important part of your business (area or maybe buildings location) then adding fbt land holds no risk

 

[DRC]

An AHA tenancy is a great asset, created by the labour party in 1947
How many farmers thank labour properly for the difference it has made to their lives?

How do you realise that asset, if the landlord doesn't want to let you

 

[DRC]

Agents here have taken all the FBT land that various people had, and told one prefered tenant to take the lot or loose his FBT. You can see their point of view in only wanting to deal with one person, but some have lost significant acreage overnight.

 

[chipchap]

i believe generational transfer of a AHA can be compromised if the income from it is not significant to the overall business viability

so if you farm 4000ac it would be hard to argue the importance of say a 100ac AHA to next generation

As long as the AHA remains a significant and important part of your business (area or maybe buildings location) then adding fbt land holds no risk

The term of any FBT tenancy is also relevant. For example I was advised that taking land on a FBT with five year term would not affect my eligibility for succession to an AHA tenancy. However a longer term may have been more problematic.

 

[glasshouse]

How do you realise that asset, if the landlord doesn't want to let you

You realise it evry day with affordable rent and being able to plan your life

 

[glasshouse]

Landlords and agents will have the shirt off your back without a second thought.

A big FBT tenant near me, who farms the land very very well in my opinion, is reputedly being turfed out next autumn.

Removing a tenant should invalidate the land for subsidy purposes

 

[dinderleat]

We’ve been in a similar situation but my dad had a retirement aha on one farm and an fbt that would take him to retirement on the other.
We managed to negotiate a mirrored a fbt to the aha clauses and made it s joint tenancy with my self and my dad. The new tenancy’s are exactly the same as the old ones but takes me to retirement. The new fbt that was the aha has the same rent calculation as a aha. It is doable but hold your nerve and don’t forget the main reason they want to do this is for tax purposes as a aha only creates a 50% inheritance tax relief where as a fbt is 100% at the moment. Happy to chat through things privately if you want @Stockwell