Tenant farmers are at the heart of the rural economy, managing a third of all farmland in England.
To meet our food security and environmental objectives, we must make sure that all farmers, including tenant farmers, can access our schemes and build thriving farm businesses.
The Rock Review, an independent report published in 2022, set out to explore how the new government financial schemes should be accessible, open, and flexible to tenant farmers. It also looked at the longer-term changes needed to ensure a robust and vibrant tenanted sector for the future. A summary of the Rock Review, with recommendations, is available on GOV.UK.
In our response to the Rock Review, we set out our commitment to supporting tenant farmers. We wrote a blog post about or response too.
In this post, we’ll explain how we are continuing to design our schemes with tenant farmers in mind. We’ll provide an update on how we're embedding an understanding of the tenanted sector across Defra and summarise the progress we’ve made so far.
Removing barriers for tenant farmers
We know that tenant farmers can face additional barriers when accessing environmental schemes. We’re continuing to make progress, adapting our policies and schemes so that tenant farmers can access them.
The Sustainable Farming Incentive (SFI) has been designed to remove the barriers that tenants previously faced.
For example, SFI offers 3-year agreements. This is in line with the average length of farm business tenancies. We designed the rules so that tenants who expect to have management control for 3 years (even if their formal tenancy agreement or license does not extend that far) can still apply. This means that many farmers with annual rolling tenancy agreements can access SFI.
We also changed the rules so that penalties are no longer applied for tenants who may have to exit a scheme early if their tenancy ends unexpectedly.
In addition, SFI does not require the tenant to gain landlord consent to enter the scheme. However, tenants should check the terms of their tenancy agreement before applying to SFI and, in the spirit of collaboration, they should communicate with their landlord about the SFI activities they will carry out.
These changes have had a real impact with thousands of tenant farmers applying for SFI agreements.
Acting on insight
We’ve taken what we learned while designing SFI into the development of Countryside Stewardship (CS), our combined offer for 2024 and the Farming Investment Fund.
As we developed the offer for 2024, we assessed the impact on tenant farmers and the opportunities too.
We are working closely with the new joint Defra/industry Farm Tenancy Forum (representing tenants, landlords and professional advisors) using their expertise to help us consider when landlord consent might be needed. For example, when a permanent land use change is required.
As a result, we will introduce 16 new actions with a 3-year duration. We are exploring whether we can offer a further 41 existing CS actions of 3-year duration to make them more accessible to tenant farmers in 2024.
As recommended by the Rock Review, the themes under Farming Investment Fund large grants include second hand equipment.
We are also working with the Farm Tenancy Forum to examine the practical detail and implications of further changes to our environmental land management schemes to encourage and support tenants.
We’re exploring a range of measures. These include:
- making the Facilitation Fund more accessible for tenants, looking at the potential for introducing joint landlord and tenant applications
- tenant consultations when landlords apply to our schemes
- understanding how we can make our schemes more flexible, for example through rolling application and payment windows.
We are also exploring whether landlord-led, or collaborative/joint tenant-landlord applications can be delivered for our large Farming Investment Fund grants.
Monitoring the impact of our schemes
Through regular engagement with industry, we are aware of concerns about landlords taking land out of tenancy agreements.
Our data currently shows the area of tenanted land rented for one year or more has remained very stable over the last 5 years at 2.9 million hectares.
However, we recognise there is a lag between changes on the ground feeding into national data so we are working with the Farm Tenancy Forum to monitor this issue and act as needed.
We want landlords to maintain their tenancies and work with tenants to access our schemes.
Progressing commitments
The government response to the Rock Review offers an overarching framework for our work to support tenants through our policies and schemes.
We established a dedicated Farm Tenancy Policy Team to coordinate, monitor and support this work and track progress.
We have already actioned over a quarter of the commitments in our government response, including making our environmental land management schemes more accessible as mentioned above.
We are making good progress on the other actions, most of which are ongoing or will take longer to deliver, as set out below.
Tenant/landlord relationships
We strengthened our engagement with the sector by establishing the joint Defra/industry Farm Tenancy Forum.
We’re facilitating the development of a new industry-led code of practice to encourage more collaborative tenant/landlord relationships.
We issued a call for evidence on the proposal for a Tenant Farming Commissioner and we continue to monitor farm tenancy rents.
Trees and net zero
We amended the England Woodland Creation Offer application process to include questions to monitor land resumption. We’re analysing the data to inform policy development.
We reduced the minimum scale of woodland creation in EWCO and are testing a farm woodland standard through SFI including smaller-scale agroforestry more suitable to tenant farmers.
We’re designing our agroforestry offer in a way that is responsive to the needs of tenants.
Tax
We delivered a consultation on expanding Agricultural Property Relief to allow for non-agricultural land stewardship schemes and explore issues of taxation as a driver for length of tenancy agreements. We're working with Treasury to consider the responses and will respond in due course.
Learn more
We recently set up a series of monthly sector-specific webinars for farmers, which tenant farmers are very welcome to attend. We plan to host a specific webinar for tenant farmers in the months ahead, so do look out for updates here on the blog once we have a date in the diary.
Finally, if you have any questions about our work with tenants, do leave a comment below.
5 comments
Comment by George Hosford posted on
There is so much more to Tenant issues than simply adapting agreement lengths to match tenancy lengths, removing early exit penalties, and removing the requirement for landlords permission to join schemes, much though those are welcome.
The Rock review covers many more of the structural factors that need to be addressed urgently before the English tenanted sector will feel remotely comfortable or confident going forward. Firstly I would point out that already, tenants with expiring agreements are being threatened with losing their farms because some landlords figure they will be better off putting all their land into the most lucrative CS and SFI schemes. No more pesky tenants to worry about. Maybe forgetting to ask themselves who is going to establish and maintain the new flowery acres. If tenants really are, as you say at the top, "at the heart of the rural economy, managing a third of all farmland in England", then we need some pretty urgent action to prevent their further loss through unintended consequences. FBTs have, since the Agricultural tenancies act of 1995, driven rents through the roof, and shortened agreement terms to an average of less than 3 years. These two factors alone have probably caused more environmental destruction than almost anything else. High rents generally force farmers to drive the land as hard as possible to try to make a living, and short term lets remove any incentive to do anything of long term benefit to the land or environment.
Add to this the taxation law which allows landlords 100% inheritance tax avoidance, through Agricultural property relief (APR), on land let under FBTs, whereas the relief on land let under Agricultural holdings act tenancies (1985) (the tenancies which generally have longer terms, and can allow for succession), only attract APR at 50%. Is it any wonder that landlords, or more likely their advisors, prefer to end AHA tenancies where possible, and replace them with FBTs, on shorter tenancies?
One of the recommendations from the Rock review, which aims to redress this problem to a degree, runs as follows:
Restrict 100% IHT APR to farm business tenancies under the Agricultural Tenancies Act 1995 of at least 8 or more years and secure agreements under the Agricultural Holdings Act 1986.
I am willing to bet that a relationship could be drawn between the passing of the act of 1995 when FBTs began, and the increase in the degradation of tenanted agricultural land and the widespread drop in biodiversity which farmers are often criticised for, eg farmland bird numbers, insects, wild flowers, river pollution and so on.
These hidden factors are rarely given the attention they need, they are serious structural errors in the healthy functioning of the English land economy, responsible for environmental damage and the gradual erosion of the tenanted land sector. To echo the statement in paragraph 3 at the top, serious "changes are needed to ensure a robust and vibrant tenanted sector for the future."
Comment by John W Baxter posted on
My biggest fear is that the electricity generators, in cahoots with landlords are the biggest threat to the tenant farming network that produces so much of the food in the U.K.
The threats from these alliances cast a long shadow over long time relationships between tenants and landlords and without support, tenant farmers stand to be overpowered by the bandits in the system which currently needs more tenant rights protection.
Comment by The Team posted on
Hi John,
Thanks for visiting and for sharing your thoughts.
We understand your concerns about the impact of energy developments on agricultural land. The National Planning Policy Framework sets out clearly that local planning authorities should consider all the benefits of the best and most versatile (BMV) agricultural land, when making plans or taking decisions on new development proposals that change land use.
We also understand your concerns about the balance of power within the tenanted sector and the need to ensure a fair balance of the rights, interests, and obligations of both tenant farmers and of landlords to ensure the tenanted sector can thrive.
We know that many tenants and landlords work well together but sometimes that is not the case. To help address that we are pleased that key industry bodies including the TFA, the NFU, the CLA, RICS, the CAAV and the ALA are developing a Code of Practice to set out expected standards of conduct for all parties to tenancy agreements to be launched in the spring which will help to embed improved practice across the sector.
Best wishes,
The Team
Comment by George Hosford posted on
I am very sorry you didn’t feel able to post my comment the other day, or perhaps you missed it. Just in case I am posting again. If you simply didn’t like it please let me know what in particular you didn’t like about these vital issues for tenants.
There is so much more to Tenant issues than simply adapting agreement lengths to match tenancy lengths, removing early exit penalties, and removing the requirement for landlords permission to join schemes, much though those are welcome.
The Rock review covers many more of the structural factors that need to be addressed urgently before the English tenanted sector will feel remotely comfortable or confident going forward. Firstly I would point out that already, tenants with expiring agreements are being threatened with losing their farms because some landlords figure they will be better off putting all their land into the most lucrative CS and SFI schemes. No more pesky tenants to worry about. Maybe forgetting to ask themselves who is going to establish and maintain the new flowery acres. If tenants really are, as you say at the top, "at the heart of the rural economy, managing a third of all farmland in England”, then we need some pretty urgent action to prevent their further loss through unintended consequences. FBTs have, since the Agricultural tenancies act of 1995, driven rents through the roof, and shortened agreement terms to an average of less than 3 years. These two factors alone have probably caused more environmental destruction than almost anything else. High rents generally force farmers to drive the land as hard as possible to try to make a living, and short term lets remove any incentive to do anything of long term benefit to the land or environment.
Add to this the taxation law which allows landlords 100% inheritance tax avoidance, through Agricultural property relief (APR), on land let under FBTs, whereas the relief on land let under Agricultural holdings act tenancies (1985) (the tenancies which generally have much longer terms, and can allow for succession), only attract APR at 50%. Is it any wonder that landlords, or more likely their advisors, prefer to end AHA tenancies where possible, and replace them with FBTs, on shorter tenancies?
One of the recommendations from the Rock review, which aims to redress this problem to a degree, runs as follows:
Restrict 100% IHT APR to farm business tenancies under the Agricultural Tenancies Act 1995 of at least 8 or more years and secure agreements under the Agricultural Holdings Act 1986.
I am willing to bet that a relationship could be drawn between the passing of the act of 1995 when FBTs began, and the increase in the degradation of tenanted agricultural land and the widespread drop in biodiversity which all farmers are often criticised for, eg farmland bird numbers, insects, wild flowers, river pollution and so on.
These hidden factors are rarely given the attention they need, they are serious structural errors in the healthy functioning of the English land economy, responsible for environmental damage and the gradual erosion of the tenanted land sector. To echo the statement in paragraph 3 at the top, serious "changes are needed to ensure a robust and vibrant tenanted sector for the future."
Comment by The Team posted on
Hi George,
Thank you for your two comments, we welcome your feedback and views and we're sorry for the time it's taken us to reply.
We are pleased that you welcome the important changes we have made to make environmental land management schemes accessible to tenants.
We are aware of feedback that some tenants are concerned their landlord may take land back in hand and out of food production in order to enter environmental schemes themselves. Defra monitors the area of tenanted land and land for food production through our annual large-scale survey of farmers.
The latest survey shows that areas of tenanted land and land for food production have remained broadly stable with no significant changes showing over the last five years.
However, we know there may be a lag in more recent changes being picked up in our national data sets therefore we will undertake further monitoring of this through sample surveys and industry data such as from the CAAV’s annual land occupation survey, as well as adding specific questions on this issue to Defra’s annual large scale survey this year to pick up any new or emerging trends in more detail.
We want to see landlords maintaining their tenancies and working collaboratively with tenants to access our schemes, therefore we will continue to monitor this issue carefully to inform scheme development and ensure there are no widespread unintended impacts for tenanted sector.
We recognise that longer term tenancy agreements are important for many tenant farmers to enable investment in productivity and the environment, whilst other tenant’s may want the flexibility of shorter terms for more seasonal arrangements. The average length of tenure covers a large range of needs from seasonal grass lettings of under a year to longer term Farm Business Tenancies (FBT’s).
The length of tenure is influenced by a wide range of factors including as you have highlighted taxation but also often by the size, quality, and location of the land, with larger land areas and equipped holdings often let for longer terms.
Last year, the Treasury issued a consultation to explore in more detail the Rock Review recommendation to restrict the application of 100 per cent agricultural property relief to longer tenancies of 8 or more years. The Treasury are analysing responses and will provide an update on next steps in due course.
As you have highlighted the introduction of the Agricultural Tenancies Act in 1995 (the 1996 Act) was a significant change to the structure of the industry. Before 1995 the let sector was in significant decline loosing on average 60,000 to 90,000 acres a year as landowners were unwilling to let land under the Agricultural Holdings Act 1986.
The aim of the 1995 Act was to stop this decline and bring more land into the let sector and more opportunities for tenant farmers. The 1995 Act did achieve this reversing the decline with an average gain to the let sector of 35,000 acres a year between 1996 and 2003, with the area of tenanted land remaining broadly stable since 2003. Whilst the 1995 Act has been beneficial to the tenanted sector by bringing in more land and more opportunities for tenants, as you have highlighted the resulting shortening of tenure terms since 1995 makes it more difficult for tenants to focus on productivity and environmental improvements which need a longer-term focus.
This is an issue we are keen to work with the industry to address for example through disseminating the benefits of longer-term tenancies for both landlords and tenants rather than defaulting to a short term FBT whilst ensuring we retain the confidence of landowners to let land maintaining access and opportunities for new and progressive tenant farmers.
Best wishes,
The Team