Tenant farmers only have a few days left to serve notice for a rent review, and potentially benefit from a reduction in rents to reflect falling profitability.
Most farmers with an Agricultural Holdings Act agreement have a tenancy year-end of Michaelmas; the 29th September. To trigger a rent review in the coming year, they must serve notice on their landlord by this date, warns Mike Butler, chairman at accountant Old Mill.
“Farm incomes have dropped considerably this year, which should be reflected in rent levels. Although serving notice now may not trigger a rent review until September next year, leaving it until after the deadline will result in a further year’s delay,” he says.
Typically, rents are reviewed every five years – or sooner where notice is served – and for many farmers’ profit levels will have dropped by around 50-60% since 2010. “Tenants should consider the level of rent they’re paying in relation to profit levels,” says Mr Butler.
“It’s only fair that tenants have the option to reconsider rent levels when times are tough, in the same way that landlords do the same when profits are healthy. Rents that properly reflect economic circumstances make for much better long-term relationships.”
If landlords or their agents fail to initiate a review within the necessary timescale, or do not reach an agreement with the tenant, the case will go to arbitration. “The arbitrators will take account of the economic circumstances at the time of arbitration, not at the time the notice is served,” says Mr Butler.
“Missing the Michaelmas deadline could therefore have a considerable impact on the ultimate, delayed, decision.”
