Tenant farmers and the future

Robw54

Member
Location
derbyshire
As a relatively recent farm tenant without the benefit of an AHA what are you generally doing to ensure provision for the future with regards to property (and somewhere to live in old age)?

Following the governments decision yesterday to effectively pass on letting fees to landlords - it seems now without a doubt, that the government of the day (and Corbyn would be even worse) has declared war on B2L - tax rises and allowance cuts already for the un-incorporated. Future interest rates increases must be nailed on. I'm sure many farmers are both tenants and landlords - using income from the B2L and also keep a hand in the property market should they need somewhere to live later in life (lets assume property has increased massively during your 30yr tenancy). Those properties will also be subject to CGT which means staged and careful disposal. The strategy is now looking deeply flawed and I fear further attacks on the lets - even when you are renting yourself and not benefiting fully from the private residence relief is my understanding.

As a big advocate of pensions, assuming the 25% allowance is in place - the maximum you could draw in today's money would be 250k - which doesn't buy much property in these parts and might well not exist in 20 yrs - and that's a 1 million pot. I wouldn't want to be 100% equities.

What, if anything are tenants doing about this?
 
It used to be that, if you were in a "tied occupation" that required you to live in the house that went with the job, you could buy a house and let it out, but for CGT purposes, you could nominate it with HMRC as your main residence.

This applied not only to the employed, but also to the self employed such as tenant farmers, who were required to live in the farmhouse by their tenancy agreement. This would have been the case with most AHA tenancies. How this has been effected by the introduction of FBTs, I am not sure. If there is a house with an FBT, it might still apply.
 

Robw54

Member
Location
derbyshire
It used to be that, if you were in a "tied occupation" that required you to live in the house that went with the job, you could buy a house and let it out, but for CGT purposes, you could nominate it with HMRC as your main residence.

This applied not only to the employed, but also to the self employed such as tenant farmers, who were required to live in the farmhouse by their tenancy agreement. This would have been the case with most AHA tenancies. How this has been effected by the introduction of FBTs, I am not sure. If there is a house with an FBT, it might still apply.

My accountant doesn't seem to understand this when I discussed PRR with him (perhaps I need a different one). That being the case - it would make sense to buy the house you are likely to want to live in and rent it out should circumstances change? The slight problem being, that the sort of houses I would want don't tend to offer an effective rental yield meaning potentially subsidizing the mortgage (and they will even lend on that criteria).
 

Danllan

Member
Location
Sir Gar / Carms
My accountant doesn't seem to understand this when I discussed PRR with him (perhaps I need a different one)...
:eek: Yes, you do! If you've a better grasp of the situation than he does, what are you paying him for other than paperwork? I'd be pretty sad if my accountant didn't know everything inside-out and to a much better level than me.
 

nelly55

Member
Location
Yorkshire
I read with horror over the letting agency fees on property ,having just had the tenant from hell who removed the kitchen.On house rentals does it mean joe bloggs can walk into an agency ask to rent a house,knowing the landlord has to stand the search charges etc only to find joe stands no chance of renting on checks.So landlord looses out ,
 

Robw54

Member
Location
derbyshire
I read with horror over the letting agency fees on property ,having just had the tenant from hell who removed the kitchen.On house rentals does it mean joe bloggs can walk into an agency ask to rent a house,knowing the landlord has to stand the search charges etc only to find joe stands no chance of renting on checks.So landlord looses out ,


Our agent charges the tenants £300 or £350 for couples - so guess who they will be passing that onto.. So we've lost RR allowance (10%), now interest no longer deductible from April.

Its become a pretty unattractive asset class and as you rightly point out tenants can be a nightmare.

Whats the alternative for a farm tenant? Sell up your houses - and how do you hedge against massive property inflation.
 

ewald

Member
Arable Farmer
Location
Mid-Lincs
Letting charges are avoidable if you do it yourself - I have become increasingly disenchanted with the service and charges from local agents and would expect to do more myself in the future. Obviously this is easier when dealing with nearby properties.
 

Robw54

Member
Location
derbyshire
I think the days of asset inflation are over.
Many new houses being built and the chancellor giving fair warning to pensioners that their day in the sun is coming to an end.
Deflation is more likely IMO.

Possibly in some areas of the country and some are still pre-crisis level. If you take inflation into account, property in our areas hasn't really done that great over the last 10, the big gains were early 2000s. Plenty high end stuff changing hands at well below advertised price. I am however, pretty sure that in 20yrs+ time, it will be more expensive in cash terms and very likely real.

These changes are under a Tory government and heavan help us under a Labour one where they might even give the tenant the right to buy.

Equities - too risky over 5-10yr at current levels, cash sub 1% won't cut it, commercial property or funds? so i'm stumped. Land?

Wife would invest the lot in the business.
 

Robw54

Member
Location
derbyshire
Letting charges are avoidable if you do it yourself - I have become increasingly disenchanted with the service and charges from local agents and would expect to do more myself in the future. Obviously this is easier when dealing with nearby properties.

Mine are local and I do everything except the lettings. It's not that cheap DIY letting by time you protect deposit, searches, viewing and so on - and it can be helpful having a 3rd party. I tend not to engage too much with the tenants and keep it professional and business like.
 

rob1

Member
Location
wiltshire
IIRC most of the new charges etc are for second homes that are rented out, as has been said if you buy a house that would be your first so the tax benefit should still apply. As for getting tenants many firms look for houses for their workers also the army round here rent a fair few and return property in the same condition, then there are housing associations that rent properties, I have a friend that has two houses like that , the HA take responsibilty for the tenants . There are ways of avoiding agents and to be fair they are in business to find tenants and get acut of rent, some are very good some dont care who they find
 

ewald

Member
Arable Farmer
Location
Mid-Lincs
Agree that there are some costs, and a third party can be useful in a dispute - we will all make up our minds whether it is worth the expense
 
If you are doing the letting yourself, having interviewed the prospective tenant and had them view the house, before you make up your mind, go and see them again in their current house. The state of that property will tell you something about them.

The same applies to prospective employees, who would be living in your farm cottage.
 

rob1

Member
Location
wiltshire
If you are doing the letting yourself, having interviewed the prospective tenant and had them view the house, before you make up your mind, go and see them again in their current house. The state of that property will tell you something about them.

The same applies to prospective employees, who would be living in your farm cottage.
I have a retired couple in one of mine, they were in it when I bought it, they have no desire to own a house so hopefully will stay a long time, in many ways older tenants would be better than a young couple with kids
 

D14

Member
As a relatively recent farm tenant without the benefit of an AHA what are you generally doing to ensure provision for the future with regards to property (and somewhere to live in old age)?

Following the governments decision yesterday to effectively pass on letting fees to landlords - it seems now without a doubt, that the government of the day (and Corbyn would be even worse) has declared war on B2L - tax rises and allowance cuts already for the un-incorporated.

Extremely short sighted of them because who do they think are going to buy all the houses being built? Where are all the homeless people on the streets needing houses? If they tax the B2L people then houses prices could fall because there will be a surplus of houses with no potential buyers.
I suppose the people living with family could then possibly get onto the market but for the sake of the building industry collapsing?
 

Robw54

Member
Location
derbyshire
One thing that struck me, if we didn't own B2L property we could then buy up development property without the 3% extra stamp and flip on. Much more time consuming though.
 

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Red Tractor drops launch of green farming scheme amid anger from farmers

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As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
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