No justification for arable farm rent increases

The Tenant Farmers Association has moved to quell suggestions, emanating from the offices of landlords' agents, that arable rents should increase this year on the back of improved prices for cereals recently experienced.

Speaking at the Cereals Event at Wendy in Cambridgeshire TFA National Chairman Reg Haydon said, "One swallow doesn't make a summer. Yes we have seen an uplift in cereal prices but this has come after a period of years with very low prices and coincides with a rise in costs particularly for oil based and energy dependant inputs, so margins continue to be very tight."

"We have seen a small flurry of rent review notices from over eager landlords' agents in the spring and we are expecting more to come in the autumn but the evidence needed to support an argument for an increase is difficult to sustain. The danger is that both sides will end up paying the costs for a dispute which will produce little or nothing in return for either side except bad feeling. A fully argued rent review including an arbitration could easily cost £30,000 and when the argument is about a difference in rent of about £5 an acre it really does put things in perspective," said Mr Haydon.

Landlords' agents are also attempting to use Single Payment Scheme (SPS) receipts to justify their arguments for rent increases. However it is clear from recent arbitration hearings that they will have no joy there either.

"The TFA has never said that the SPS payments are not relevant in a rent review. However care is needed to ensure they are handled correctly in preparing the budgetary evidence by looking at average SPS levels, rather than what is held by the sitting tenant, taking account of modulation and ensuring that the true crop margins are recorded properly. When this is done any SPS related argument for an increase quickly fades," said Mr Haydon.

"Nevertheless, with the possibility that tenants will have to argue their case before an arbitrator it is essential that they are properly prepared. In that respect I would encourage all tenants to take out the TFA's Farm Business Protector insurance policy which, amongst other things, will cover the costs of a rent review arbitration. It is essential that it is taken out before any rent review notices are served," said Mr Haydon.