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Rising numbers of landlords refusing farm diversification consent

The Tenant Farmers Association (TFA) has released a statement suggesting tenant farmers are being prevented from starting diversification projects by inflexible landlords utilising blanket bans.

As it stands, most tenancy agreements contain clauses that require the holdings to be used for agricultural purposes only and therefore specifically exclude diversification without landlords’ consent, leaving tenants in a difficult position.

George Dunn, TFA’s chief executive says that getting landlords’ consent has recently become even more difficult.

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“Sometimes this is because landlords are concerned about the effect on their taxation status for inheritance tax,” said Mr Dunn.

“For example, a farm rented under a farm business tenancy would provide the landlord with 100% agricultural property relief in respect of inheritance tax, but this might change if the holding is significantly used for non-agricultural purposes.”

Landlords often use this leverage to secure unreasonable commitments from tenants, including loss of security or unsustainable levels of rent.

“Landlords are subject to tighter advice these days and are therefore less inclined to be as flexible as they have been in the past,” said Mr Dunn.

“Advisers to landlords tend to take a blanket approach rather than looking at each individual matter on a case-by-case basis.”

However, this is not always the case and there are examples across the country of well-thought-out projects being granted consent by landlords.

Top tips for tenant farmer looking to diversify:

  1. Consult early with your landlord
  2. Discuss the project with your financial adviser
  3. Prepare detailed proposals including a business plan and budgets
  4. Document what has been agreed  

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