Short-term lets blocking progress and productivity
The tendency towards short-term agricultural tenancies is holding back progression, investment, sustainable land use and productivity on farms.
Pointing the finger at fiscal policy which allows landowners to access generous tax benefits, even for short term lets, tenant farming organisations on both sides of the Border are calling for reforms of the current regime.
Chairman of the Scottish Tenant Farmers Association, Christopher Nicholson said that it was becoming obvious that taxation reform could play a pivotal role in encouraging more land to be let, increasing opportunities for new entrants and increasing the productivity and the efficiency of agricultural land use.
With the recent consultation on landholding legislation in England now over, he said that his organisation would join the Tenant Farming Association south of the Border in lobbying the UK government to bring forward changes to the taxation regime.
He said that the issue of taxation changes had been omitted from the Defra consultation, despite calls from the industry for it to be included.
However, Nicholson said that despite negative comments from some quarters, there was evidence that the new types of tenancy in Scotland designed to encourage longer leases were becoming more popular with more land being let for periods of more than ten years.
He added that despite the rhetoric from some of the landed interests extolling the benefits of freedom of contract, the tenanted sector in England and Wales had remained largely static over the last 15 years in spite of the introduction of the free-market Farm Business Tenancies (FBT) in 1995.
George Dunn, chief executive of the English TFA confirmed that under the FBT system there had been no move towards longer term leases, with the average term standing at only four years.
“Worryingly, fully equipped holdings, which would be expected to be let for much longer terms, have an average duration of less than ten years,” said Dunn. “As we approach half of all land let being under FBT’S it is worrying, to say the least, that 85 per cent of new farm tenancies are let for terms of five years or under.’
He added with demand outstripping supply landlords were able to get high rents for short term lets – yet still cash in on generous taxation benefits.