tenancies and brexit

glasshouse

Member
Location
lothians
Well doe you.
Sometimes it must seem like you are the only landlord that takes the long term responsible approach, however you are not completely alone, and the rest deserve the tenants and relationships they deserve.
Taking a rent AND 75% of the subs is hardly a long term responsible approach.
 

ste

Member
Location
Derbyshire
Taking a rent AND 75% of the subs is hardly a long term responsible approach.
How do you work that out?? You don't know the figures so cannot possibly comment. I'm not going into figures but from quotes on here and knowing what some went for locally we're at the lower end of the price range as a total figure paid for the land including the % of the sub where as theres is just a figure for the rent and the farmer keeps the sub. Either way its dressed up the landlord is getting a % of the sub.

We could have done it the other way, set a rent alone from what they are paying in rent alone now and added 75% of our last year farming it SPF to the total and called that the set rent for the 5 year period, that would satisfy what your all saying. That's the way most seem to have gone, but as SPF goes less your rent stays the same.

We took the approach of a sensible base rent and then a % which changes year on year and at the time of this starting there was talk of the SPF declining as the years went on, a more open way of doing it that both parties are happy with.
 
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ste

Member
Location
Derbyshire
Well STE you understand the long term effect on the value to the holding of a good tenant. But you are on thin ice grabbing a slice of the tenant's farm subsidy - that usefully will help argue the political case for the subsidy to be ring fenced in law only for the land manager i.e. the tenant.

Your income should come from a sensible proportion of existing market rents balanced by the current profitability of farming that sort of land to which it is best suited to.1986 AHA's have a clear formula for that calculation which prudent fbt rentals would be wise to follow but human nature being what it is...... Perhaps the 'sub grab' was suggested by a qualified rics land agent, or worse, a headline estate agent who has his eye on racheting all rents up to max his commission. That sub will focus more on environmental management in the near future which will be a tenant's responsibility - if he thinks it worth jumping through all the hoops to qualify for it, which will not always be sensible. One may make a case tpo say 'stuff your subsidy Prime Minister and I can farm better without the onerous conditions'. Good farming, especially arable with a livestock enterprise, can still deliver the public goods foc so long as the consumer pays a realistic price for their food. Otherwise that part of the environmental payment the landlord doesn't grab is just a 'cheap food' subsidy to counter USA farm subsidies. Do UK citizens need cheap food aid in these affluent times? (Answer on a postcard please, Mr Corbyn).

So Mr Corbyn may say 'calculate your rent in the traditional manner as a % of the profitability of farming and owners should be grateful that the vp value of land is artificially exagerated by the tax loopholes from owning land, which is currently (see ABC or Nix handbooks) circa 1%. Without the tax loophole benefits, land values might halve and give the landlord an unearned income of over 2% and a big increase each time a new tenant comes along determined to tender a bigger rent in order to expand. Moderation in all things leads to a happy community. - soilbug
The 'sub grab' is there which ever way its laid out, we chose to go down the route we have and had nothing to do with any land agent just a mutual agreement between the 2 parties. Tbh it was the tenant that suggested it, as he has a similar arrangement elsewhere and it works for him.

If the sub goes tomorrow rents will adjust accordingly as there is no way some of these big rents can be paid without it. So the 'sub grab' is there no matter how its dressed up.
 

chipchap

Member
Location
South Shropshire
Taking a rent AND 75% of the subs is hardly a long term responsible approach.
I think it may be a very sensible and responsible approach.
The rent is always going to be a proportion of the earning capacity of any holding. The sub forms a significant part of the earning capacity.
In agreeing to base the rent partly on the sub in an anvironment where the sub is expected to fall, the landlord is basically agreeing that the rent is likely to fall.
Tender rents around me seem to have gone stratospheric.
 
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soilbug

Member
Any landlord or his agent or any landlord's representative body claiming that the environmental payments (SFP et al) are part of the earning capacity of the land is being either disingenuous or misunderstanding what those subsidies are for.

SFP's and similar used to be calculated/politically negotiated as compensation for 'markets forgone', that is farm output incapacitated/lost because of business resources directed towards 'public goods' - landscape and wildlife enhancement or maintenance valued by society as a whole. Most such funds rarely cover the full cost to the land manager of compliance and need extra input; i.e. try planting hundreds of trees for the minimum wage with all the backache and toil that requires in exposed autumnal weather on Exmoor!

There are many rational land agents out there who will estimate the output and profitability of a farm and then suggest a proportion as landlord's earnings, in line with facilities he has provided and other rents for similar land but without influence of the risky 'key money' tenders of the desperate/brave brigade' Any environmental payments would be regarded as part of the land manager's income for proper eco-management. Charge the tenant more and he will export more farm resource than he can maintain - i.e. the soil will become slowly but surely degraded - nutrients and microorganisms reduced, tenant's investment reduced. Poor husbandry will eventually prevail.

Taxpayers' contributions are generally intended for the tenant to support the environmental values which he cannot obtain from the market and to divert such into the landlord's wallet is inequitable and imoral in my book. Shame on those who practice it.
soilgrub
 

ste

Member
Location
Derbyshire
@soilgrub do you actually farm or have experience of tendering for land rent? Whilst you're view is probably how it should be its not how it actually is. Regardless of how the sub is claimed both the tenant and the landlord take this income into account when either setting the rent or tendering an amount. So which ever way you look at it the landlord is getting some of the subsidy claimed, although maybe not in quite a direct way as we do.
 

glasshouse

Member
Location
lothians
@soilgrub do you actually farm or have experience of tendering for land rent? Whilst you're view is probably how it should be its not how it actually is. Regardless of how the sub is claimed both the tenant and the landlord take this income into account when either setting the rent or tendering an amount. So which ever way you look at it the landlord is getting some of the subsidy claimed, although maybe not in quite a direct way as we do.
Soilgrub is right.
Although farming the land with low or no rent and letting the owner claim subsidy with all the hassle of that is preferable to paying a fixed sum up front , financing your landlords lifestyle up to 12 months in advance of harvest or up to 3 yrs in advance of subsidies paid
 
My 5yr fbt ends in september I am concerned that over the next five years we will loose our subsidie's. The rent is strong enough for the land at the moment without a reduction in subsidie. The land is all presently cropped.
What are other's doing in this situation? Hoping it will all be ok? or trying to get a shorter agreement?
This important thread seems to have drifted off the topic.

I have a block of land which I have had on FBT's for 15 years. It is all grass and of very average quality being low Grade 3 land.
The landlord feels that as the rent has not increased for a long time it is due to be renegotiated from this September.
There are no buildings and no handling facilities, it is just small fields on wealden clay, which gets wet in the winter but will grow grass if fed in the summer. There are a number of hedges which we have to keep in good order and we have replaced some of the fencing (at our cost but is reclaimable from the landlord up to 10 years pro rata).

With the present uncertainty I am at a loss to know what rent to offer and I certainly do not want to commit to anything long term. This type of land with no BPS and nothing to get it an environmental payment has no value at all. Trying to keep sheep on it (it won't finish lambs) at store value looks like a losing battle.

I have suggested to the agent that we take it on a one year basis, but for obvious reasons the landlord wants longer. I am tempted to walk away.

Remember this is not in an area where everyone is chasing the last blade of grass. At present cattle are losing money and if sheep prices continue their downward trend then store lambs will be a lower price than last year which hardly gave a profit.

I would guess I am not alone in this situation. What are others doing?
 

Brisel

Member
Location
Dorset
How about a grazing licence on an annual basis for now? No reason why you can't put a formula in for a reduction in BPS e.g. if your rent is £85/acre now, drop the rent by £1 for every £1 reduction in BPS then have another clause to say both parties can renegotiate if anything major changes in the subsidy system. If they won't have any flexibility, walk away.
 

chipchap

Member
Location
South Shropshire
This important thread seems to have drifted off the topic.

I have a block of land which I have had on FBT's for 15 years. It is all grass and of very average quality being low Grade 3 land.
The landlord feels that as the rent has not increased for a long time it is due to be renegotiated from this September.
There are no buildings and no handling facilities, it is just small fields on wealden clay, which gets wet in the winter but will grow grass if fed in the summer. There are a number of hedges which we have to keep in good order and we have replaced some of the fencing (at our cost but is reclaimable from the landlord up to 10 years pro rata).

With the present uncertainty I am at a loss to know what rent to offer and I certainly do not want to commit to anything long term. This type of land with no BPS and nothing to get it an environmental payment has no value at all. Trying to keep sheep on it (it won't finish lambs) at store value looks like a losing battle.

I have suggested to the agent that we take it on a one year basis, but for obvious reasons the landlord wants longer. I am tempted to walk away.

Remember this is not in an area where everyone is chasing the last blade of grass. At present cattle are losing money and if sheep prices continue their downward trend then store lambs will be a lower price than last year which hardly gave a profit.

I would guess I am not alone in this situation. What are others doing?
Not sure how old you are, but maybe the ideal chance to wind things down a little?
 

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World Food Day: NFU Cymru celebrates Welsh food producers at the Senedd

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Written by Rachel Martin

NFU Cymru members and Assembly Members have been celebrating the role that Welsh farmers play in producing nutritious, high quality, safe affordable food during an event at the Senedd today on World Food Day (October 16).

The lunchtime event, which was sponsored by Llyr Gruffydd AM, included a special menu of fine Welsh produce.

Speaking at the event, NFU Cymru...
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