Shropshire Farming Talk: Davies Meade Property Consultants

When approached in this way, it is vital to consider any offer being made very carefully because lifetime tenancies especially are becoming a rare commodity and should not be surrendered lightly.

The offers we are seeing vary hugely from straight forward lump sum payments which in themselves vary hugely from a few tens of thousands of pounds to several hundred thousand pounds and in some cases into seven figures.

Other offers involve offers to contract farm the land or enter into some sort of joint venture with the landlord - these sort of deals are usually for tax purposes.

One of the key issues to consider in all cases is for the tenant and his/her family to ask themselves where they want to be when they reach retirement age.

The important point to realise is that a lifetime tenancy does exactly what it says and gives security for life.

That is very difficult to replace.

A forty year old tenant being offered a deal including a new 25 year tenancy may feel encouraged by the length of the tenancy being offered, but at 65 years old, he will feel very differently about farming and if he has no tenancy beyond his retirement age, he needs to make sure that he has somewhere to live after the age of 65 and an income to support him.

Alternatively, whilst being offered a significant lump sum can seem to be a better option, again consideration needs to be given on whether or not that lump sum adequately replaces what is being lost, i.e. a roof over your head and an income for the rest of your life.

Remember that a tenant does not necessarily have to keep farming beyond retirement, it is perfectly acceptable for other members of the family or trusted friends or neighbours to farm in partnership with the tenant. Whilst many tenancy agreements will forbid subletting, very few will prevent farming in partnership as long as the partnership is drawn up properly.

It is also important to consider any tax implications when receiving a lump sum.

Capital gains tax is likely to be payable and could swallow a considerable proportion of any payment.

Plans for development or alternative uses of the tenanted farm (solar farms are becoming one common option) do not necessarily put the landlord in the driving seat. Whilst it is true that tenancies can be terminated in many cases for non agricultural use, developers are usually much keener to agree a deal with the tenant rather than fight for possession through arbitration or the courts.

Negotiation from a position of knowing your strengths (and weaknesses) is key.

Is is very difficult to summarise all of the considerations to be given to any offer to vacate in a short article, but all that glitters is not necessarily gold.

Knowing what you’ve got and the position you are in as tenant (both strengths and weaknesses) is vital because ideally any deal that is done will need to account for this and provide viable alternatives for what is being surrendered .

by Philip Meade, of Davies Meade Property Consultants