Section 12, rent review 2021.

[Jon]

We are due a second meeting with Landlords agents .

Seem very chatty at the moment, which feels ominous.

Anyone else in discussion with their Landlords regarding a section 12 served Sept 2020 ?

 

[Gormers]

Who served it ?
You or landlord

 

[DRC]

TFA said some landlords agents are trying to push through rent rises before BPS disappears .

 

[Manny]

We had one served on use but there agent has been out to the farm once since and has said there will be no chance of getting a rent rise. I don't know weather this means I should be pushing for a reduction.

 

[Jon]

Who served it ?
You or landlord

Landlord.

 

[Gormers]

At best discussion should be about reduction & at worst stay as thing’s are.
I served one on landlord and suddenly they are v quiet

 

[Flat 10]

It’s difficult isn’t it? I’m an fbt tenant so not sure how the formula works exactly for aha tenants. Is it last year’s earnings, current prices or future prices? Because grain isn’t currently that bad, the bps reduction has yet to hit and some of the SFI looks more achievable than expected.

 

[Jon]

I think we are supposed to look forward three years.

 

[Flat 10]

I think we are supposed to look forward three years.

Blimey. That is tricky. Well you know how much bps will decline so that’s handy.

 

[Jon]

Well possibly.

But I know where sfp is going, and we're constantly told elms etc are not replacement schemes.
Cereals are volatile, costs to produce can be expensive.

I really feel aha rents should reflect this now, and reduce.

 

[Mixedupfarmer]

Well possibly.

But I know where sfp is going, and we're constantly told elms etc are not replacement schemes.
Cereals are volatile, costs to produce can be expensive.

I really feel aha rents should reflect this now, and reduce.

I am FBT as well. It looks like the SFI might be doable for most at some level, but requires land to be taken out of production to claim, and on current payment rates will not overall produce a margin on that land any better than a mediocre combinable break as far as I can make out, a bit like mid tier options (unless payment rates increase when the scheme is rolled out). With known reductions in BPS going forwards, and massive increases in fertilizer and other inputs, I would have thought a reduction in rent should be possible on a aha, but guess you would need to do some forward budgets to show drop in profitability. DEFRA have also stated that they expect rents to fall. Obviously some commodity prices have risen (grains in particular), but with loss of many chemical actives, and further restrictions on things like manure/sludge spreading, it is going to be increasingly difficult to maintain productivity going forwards. Is a difficult one, but not as difficult as getting an FBT rent down

 

[ajcc]

Your last sentence......Then you know your answer. Tenants often very reluctant and agents peddle propaganda about “damaging relationships.”

You got a AHA agreement so I would recommend enjoying the benefit by going for a decent rent reduction in these times of ELMS uncertainty as your negotiating stance. You may not get a better chance.

 

[farmer james]

Keen to hear others thoughts on this, we are on an aha tenancy thinking of serving notice this sept to review next year, as my budgets with Wheat at 160 and declining BPS Show a clear drop in profits.
Our agent was cautious in his response to my suggestion and budgets, does his crystal ball show wheat prices climbing

I have heard of FBT rents linked to wheat prices, has anyone heard of AHA rents linked to wheat prices?

FJ

 

[Manny]

Aha should be worked out on earning capacity of the holding. Wheat price will factor into this but so to will a high fert price.

 

[teslacoils]

If wheat is up £30/t since three years ago, and bps is £90/AC, surely one cancels the other quite easily with a bit to spare to cover fert?

 

[Gormers]

FBT tenancy are linked to market rates, ie what the land would make rent wise if it came up to let.
AHA tenancy rents are judged on what the holding can profitably make.
But at the end of the day it comes down to how well you can negotiate & what plans if any the landlords have for your holding & who has the whip hand as regards the agreement

 

[chipchap]

Perhaps there is a place for a retrospective rent formula? It might be the easiest way for both sides, but I can’t see the land agents being keen.

 

[yellow belly]

Fbt should be down by the fall in bps
high price of grain is based on lower yields last year
higher Fert and machinery fuel and labour

fbt here down by the bps reduction

aha formula will reflect the lower bps higher costs

it is important than some tenants do not agree increases as these will be used as comparables by agents

 

[Mixedupfarmer]

If wheat is up £30/t since three years ago, and bps is £90/AC, surely one cancels the other quite easily with a bit to spare to cover fert?

Yes piece of pee this FBT lark

 

[Jon]

Fbt should be down by the fall in bps
high price of grain is based on lower yields last year
higher Fert and machinery fuel and labour

fbt here down by the bps reduction

aha formula will reflect the lower bps higher costs

it is important than some tenants do not agree increases as these will be used as comparables by agents

Yes, I feel rents are at a turning point, (downwards).

It's getting the argument together, and stay doing your ground that can be tricky.