Plan ahead for agricultural rent reviews in 2017
As many agri-businesses find themselves facing the continued pressure related to farm incomes, now is the time to consider the potential impact of tenancy reviews and whether the existing rent is appropriate or a rent review is required.
It is important to remember that rent formulas are different for Farm Business Tenancies (FBTs) and Agricultural Holdings Tenancies, so consideration will need to be given to the correct basis and whether there is scope to review the rent.
With a minimum of one year’s notice required, notices would need to be served this autumn to enable the review to take place in autumn 2017. This gives time to consider the economic climate and prepare for discussions with the other party.
Rent formulas under FBTs don’t have to follow the normal market value approach. It is worth considering whether more flexible or creative rent formulas could be of benefit for both parties. For example, arable rents could be linked to the price of wheat.
It is also worth considering adding a Brexit clause to your tenancy agreement, preparing for the possibility of changes to EU support payments.
- This article was first published in the Autumn 2016 edition of our quarterly newsletter Outlook
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