Friday, September 25, 2020
Real EstateUK

Landlords urged to reduce farm rents amid Covid-19 disruption

Landlords

The Scottish Tenant Farmers Association has asked Scottish Land and Estates to encourage landlords to withdraw existing rent notices and consider rent reductions during the coronavirus crisis

Landlords have been urged to reduce farm rents to allow tenants to recover from Covid-19 disruption.

With an economic recession looming – ‘the likes of which we haven’t seen’ according to UK Chancellor Rishi Sunak – the Scottish Tenant Farmers Association has asked Scottish Land and Estates to encourage landlords to withdraw existing rent notices, consider rent reductions and call a moratorium on rent increases until some economic stability and certainty has returned to the sector.

The association has already urged the Scottish Government to make progress with a new rent test, based on the productive capacity of the farm, which would allow rents to be adjusted in light of economic conditions.

STFA claimed that a number of tenants had been in touch expressing surprise and disappointment that some landlords appear to be pursuing rent increases despite the current climate. It also highlighted reports of others serving notices to increase rents for next May, despite saying their tenants have had rent reviews in the last two to five years.

We think it is unreasonable and unfair to seek rent increases at this time from tenants who are up to date with rent reviews, given the uncertain effects and associated stress caused by Covid-19 and Brexit on agriculture, commented STFA chair Christopher Nicholson.

Indeed, all sectors are showing poorer profitability compared with recent years except for the pigs, fruit and veg sectors, which are largely absent from the tenanted sector, and the general outlook is uncertain with widespread predictions for the worst depression for 300 years, Mr Nicholson continued. As well as acting insensitively, seeking rent increases and serving rent notices at the moment can be seen as an opportunistic attempt to increase rents using the current open market rent test before a fairer productive capacity test can be introduced which would allow rents to vary up or down in line with farm profitability, he said.

Responding to STFA’s call for rent reductions, Scottish Land and Estates chief executive, Sarah-Jane Laing, said: We have evidence from landlords that they have been taking the impact of the Covid-19 pandemic into account in relation to rent reviews. In some circumstances, that has meant reviews being deferred or rents held at current levels. Any allegation of landlords acting unreasonably should be supported by transparent evidence and brought to the attention of the Tenant Farming Commissioner.

Rent reviews are a two-way process, and if any tenant is experiencing difficulties they should contact their landlord without delay. Communication is vital, especially at the current time. As well as direct communication between landlords, tenants and their agents, we would encourage anyone who has concerns to speak to the Tenant Farming Commissioner or to organisations such as ourselves, STFA, NFUS, RICS and SAAVA, urged Laing.

Serving rent notices for reviews to take place at a future date is a necessary part of the administrative process and should be done in line with the guidance from the Tenant Farming Commissioner which encourages regular and open discussions, she explained. The rent review process allows the parties to look at the rent, it does not automatically result in an increase and the covering letters from landlords and their agents will make this clear. Any rent review which does takes place in the next 12 months will of course take into account the many factors which will affect farming.

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