What impact will the loss of subsidy have on farm rents?
It’s been a common theme in conversation with tenant farmers just recently, the assumption that farm rents will be reducing in light of the loss of the Basic Payment Scheme.
That may well be the case, but when that may bite, and whether it will in my opinion, is not a given.
Farm Business Tenancy agreements will be driven by the market, affected by supply and demand and commodity prices. We may well see rents underpinned by proactive farmers looking to increase efficiencies and productivity, but ultimately, I can see that rent levels are likely to become increasingly localised.
Farmers with tenancies under the Agricultural Holdings Act are advised not to expect automatic rent reductions.
Traditionally on lower than market rents, the legislation behind rent reviews for AHA tenancies makes the assumption of a ‘prudent’ tenant. In my view this means that where appropriate, every opportunity to increase productivity, seek out new or alternative markets and request landlord’s consent for improvements or diversification including stewardship schemes, should be exhausted before considering serving notice.
So, when might we see rent review notices being served? That remains to be seen but simply doing nothing about the loss of BPS is unlikely to be argument enough for tenants seeking a rent reduction.
Melanie Holt, Moule & Co
