The importance of a thriving tenanted land sector was highlighted at the NFU Tenants’ Conference last week.
Speaking at the event, NFU President Peter Kendall called for all parties involved in tenant farming to consider long-term sustainable business models to ensure a successful, flexible and profitable farm business.
Mr. Kendal highlighted that while a spiraling rental market may currently benefit landlords; such rapid growth is making it increasingly difficult for tenants to cover their costs or indeed access new land. With government ambitions to increase food production across the UK however, the tenanted sector must be able to plan for the future, something that will prove increasing difficult without a functioning rental market that is profitable for all parties concerned.
Calling on landlords to consider longer term leases that both incentive tenant farmers and benefit landlords would deliver the “win-win we all want to see” according to Mr. Kendal.
There is no doubt that the provision of such secure land tenure is vital for the creation of a sustainable farming future, understandably however both landowners and tenants may have concerns about entering into such long-term agreements.
For farming landlords what happens, for example, if your tenant does not live up to the agreement? While landowners may be comfortable entering into a long-term agreement with a tried and trusted tenant farmer, they may be far more reticent to do so with a new unknown tenant.
Farming tenants on the other hand many favour a shorter term lease to allow them to renegotiate the terms at more regular intervals. With farming outputs, land values and regulations subject to change, what may seem like a fair deal one year, may prove to be extremely difficult to uphold the next.
Whether you are a landowner or a tenant looking to establish a long-term business agreement there are measures you can take to make sure your interests are protected.
Primarily it is vital to make sure that any legal agreement drawn up includes specific clauses that set out exactly what is required of both parties and what happens if these obligations are not met.
For tenants worried about committing to a longer term lease it many be possible to include in a farm tenancy a right for the tenant to bring the tenancy agreement to an end earlier than the end of the original term ( known as a break notice). As with all legal agreements, this must be drafted very carefully to ensure that it can be effective.
For landlords it is also worth getting to know any potential tenant. Where possible references should be sought from previous landowners and it may also be possible to ask to see their business plan to make sure you are comfortable with the sustainability of their plans.
At Linder Myers we have extensive experience with regard to the legal implications and issues relating to agricultural tenancies and can advise both landlords and tenants in the drafting, negotiations and amending of such agreements.