Treatment of farmhouses in rent reviews 'still flawed'

The Tenant Farmers Association continues to be concerned that some agents for landlords are using inappropriate methods to value the residential aspects of farms during rent reviews.

TFA Chief Executive, George Dunn said, "The value of a farmhouse in the context of a whole farm rent review has always been a contentious issue between landlords and tenants. For this reason, the TFA took the unprecedented step of issuing publicly available and simple guidance based on Statute, case law and good practice which was aimed at finding a fair balance between the competing views of tenants and landlords on this issue. It is therefore disappointing that some landlords’ agents continue to use inappropriate methods to assess farmhouse values".

"A popular ploy amongst landlords agents from some leading firms of Chartered Surveyors, particularly when reviewing rents on traditional tenancies, is to argue that it is appropriate to settle a rent based on the profitability of the holding and then to add to that a separate rental value for the farmhouse being occupied by the tenant. This approach not only tends to produce rent levels far beyond what is affordable but it also has no basis in Statute or case law. The rent for the holding has to be assessed for the whole of the holding and not with or without the dwelling. Having assessed the profitability of a holding subject to a rent review the right thing to do is to look at profitability and rents being paid on comparable holdings to assess the reasonable and correct share of the profit between the landlord and tenant", said Mr Dunn.

"Another common practice is to seek to argue that rents paid on Assured Shorthold tenancies (AST) should be used to impute a rent for a farmhouse within a traditional farm letting. However, AST lettings are as different from farm lettings as chalk is from cheese and cannot be taken to be direct comparables in the farm rent review process," said Mr Dunn.

"There have been a number of instances recently where arbitrators appointed to settle disputes on rents have dismissed arguments tabled by landlords’ agents that farmhouses should be viewed separately or that AST rents are relevant and yet we continue to see the same approaches being peddled. The TFA wants good landlord tenant relationships built on mutual trust, understanding and fairness. The approach of some landlords’ agents is hampering this by pushing landlords and tenants into opposite corners," said Mr Dunn.