The Tenant Farmers Association (TFA) has urged the Chancellor to change the fiscal environment within which rural landlords make decisions about letting land to encourage longer term Farm Business Tenancies (FBTs).
TFA Chief Executive George Dunn said over two decades of FBTs has resulted in the legislation failing to meet its objectives of increasing the supply of land into the let sector of agriculture.
He said it has failed in improving the efficiency of land use within the agricultural sector.
The TFA has been advocating fiscal changes to stimulate 'a more sustainable approach' to letting land.
This includes restricting the 100% Agricultural Property Relief from Inheritance Tax to only those who are prepared to let for 10 years or more.
'Inefficient'
Mr Dunn said: “Whilst we saw an increase in the amount of let land through the early years of the new legislation this has, by and large, tailed off.
“However, the biggest failing of the legislation has been the perpetuation of short lengths of term leading to inefficiency. Year on year the statistics show that the average length of FBTs in England and Wales is less than four years.
“Given that farming is a long-term endeavour requiring significant capital investment, patience, good soil management and the ability to balance profitable years against the bad it is of grave concern that only a few landlords are prepared to let for sufficiently long periods of time.
'Holding back progression'
Mr Dunn said short term tenancies are 'holding back progression, investment and sustainable land use'.
“FBTs have been too short for too long and now is the time for that to change,” said Mr Dunn.
“The TFA believes that average lengths of term on FBTs should be 10 years or more and that the Government should be using fiscal levers in order to encourage a more sustainable position.
“There is a growing consensus that the taxation environment within which landlords make decisions is encouraging a plethora of short term interests in land and that this is leading to unsustainable economic and environmental outcomes. We cannot allow this situation to perpetuate,” said Mr Dunn.
