May 22 2020
STFA calls for farm rent reductions amid Covid19 crisis and looming economic recession
Scottish Tenant Farmers Association
News Release
20th May 2020
STFA calls for farm rent reductions amid Covid19 crisis and looming economic recession
As the May term date approaches, the Scottish Tenant Farmers Association is calling on landlords to agree to reduce farm rents, or at the very least a rent standstill, to allow tenant farmers to recover from the havoc caused by the Covid19 pandemic and to prepare to cope with the prospect of a no-deal Brexit compounded by the spectre of an imminent recession.
In a letter to The Tenant Farming Commissioner, Bob McIntosh and recently appointed Chair of Scottish Land and Estates, Mark Tennant, STFA Chairman Christopher Nicholson said that a number of tenants had been in touch expressing surprise and disappointment that not only are some landlords intent on pursuing rent increases in the current climate but there are others who are serving notices to increase rents for next May, despite their tenants having had rent reviews in the last 2 to 5 years. STFA is also aware that there have been a number of rent notices served last year for reviews in November this year.
Christopher Nicholson continued; “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. 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. 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.”
Many tenant farming businesses have become reliant on diversified enterprises, such as tourism, farmers markets and farm shops and are now seeing their diversification income disappear. Both UK and Scottish governments recognise that businesses are under pressure – and have made emergency support available. Unfortunately, many of these diversified businesses are not eligible for aid schemes and will now be suffering from much reduced incomes.
In recent months, STFA has become increasingly frustrated at the continuing delay by the Scottish Government in implementing the new rent test, based on the productive capacity of the farm which would allow rents to be adjusted in light of economic conditions. Instead, rents continue to be reviewed under the current open market test making rent reductions very difficult to achieve and tenants fear that they may be pressurised into either accepting an unsustainable rent or face a costly dispute with the landlord which will not only sour relationships but may also end up in the Land Court. Concerns over mental health in agriculture have risen up the agenda and worries over rental disputes on top of falling incomes will inevitably increase the levels of stress tenants will be feeling as the economic and social repercussions of Covid-19 and exiting the EU begin to be felt.
STFA has expressed tenant farmers’ concerns to Bob McIntosh and has urged Cabinet Secretary Fergus Ewing to make progress with the new rent test and is now asked Scottish Land and Estates to encourage landlords to withdraw existing rent notices, consider rent reductions and call a moratorium on rent increases until we see some economic stability and certainty in the sector. After all, in the spirit of good relationships, landlords should be prepared to take a share in any downturn in economic fortunes.