Jeremy's Blog 26th May 2023: The Important Future of the Let Sector

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 25th May 2023

The tenanted sector of agriculture is important. Around a third of England’s farmland is let while a larger fraction of land is farmed by those with some let land. As with other lines of business, it is a way to farm without carrying the capital cost of premises in the balance sheet, releasing funds for active business. It is a means of entry and equally important, for flexibility, progression and exit as a wearying owner can let land out for a more secure income. Its vitality is one measure of the health of our farming.

With the challenging times ahead, we are at a point where it is more important to look to create the future, seeing opportunities, than to freeze the past against threats. That is why the Government’s statements responding yesterday to the Rock Review put to it last October are welcome in setting out official policy for flexibility and diversity in lettings, promoting good practice and recognising the interests of the very wide variety of both tenants and landlords to be found in practice. A topic that can become dominated by caricatures is opened for individuals finding their responses to specific situations.

The Government statement expressly approves the diversity offered by a mixture of long term lettings and short lettings with the different purposes and cases they serve, rejecting the straightjacket of one size imposed on all, accepting “flexible tenancy lengths that benefit both landlord and tenant”. It sees that natural balances, aided by the promotion of good practice, are to be found between:

• a tenancy as a commercial contract (with a clean separation of interests, control, risk and time horizons) and the mutual benefit that can come from co-operation and good relationships
• the tenant farmer’s business of farming and the landlord’s interest in the value and potential of the land he owns.

That latter tension has seen DEFRA develop its “farming schemes”, accompanying the tenant farmer’s “primary role” in producing food without requiring landlord’s consent. That consent becomes more important as options move along the spectrum from changes in land management (for example, planting cover crops to reduce soil loss; reducing fertiliser use to prevent water pollution) to changes away from agricultural use (for example to woodland or restored peat).

The implementation of Government policy is to be supported by a new Farm Tenancy Forum, moving on from TRIG in a more formal structure representing owners, farmers and advisers. It is to act as a vehicle for evidence and feedback to DEFRA as to what is happening on the ground as the Agricultural Transition unfolds. With concerns expressed in the Rock Review and elsewhere, there is to be a Code of Practice for the behaviour of all concerned – whether landlords, tenants or agents.

The let sector is a sector for businesses with a central role in achieving productivity improvement and change needed, earning from the business of farming to modern environmental standards. At the heart of a letting is the business deal between the two parties, needing to be understood and properly recorded in the appropriate form of agreement, needing good advice, negotiation and testing.

Fundamentally, a necessary condition for the let sector thriving is that owners are attracted to let. CAAV Surveys show more letting opportunities enable more entry into farming. A smaller let sector would do less for farming. This moment when the constriction of area payments has gone is the time to enable that flexibility, attract owners to let, welcome good tenants, support good practice and stimulate practical imagination in finding the better answer in each case – making a better future built on good businesses.

With the critical role of good advice, the CAAV is ready for that.