Agricultural letting market is in ‘stasis’ warns CAAV

UK governments are being urged to incentivise farm owners to let out land for longer periods with higher income tax relief, as new data shows that the overall area let in the UK has been static for two decades.

A survey by the Central Association of Agricultural Valuers (CAAV) has found the let land market at an “unnatural equilibrium” since 2003.

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CAAV secretary and adviser Jeremy Moody says this is partly due to the “stifling effect” of area‐based entitlements and subsidies.

He is calling on the UK government to open up new opportunities in the tenanted sector by adopting the model that has been in place in Ireland since 2015.

In Ireland, a higher rate of income tax relief is offered to landlords who let out their farmland for more than five years.

Mr Moody says this is showing “strong and continuing signs of success” in inducing retiring farmers to let out their land.

“That merits serious attention in the UK,” he said.

Net losses

The CAAV survey shows that in England and Wales there were marginally more lost tenancies than new ones in 2023, resulting in a net loss of 1,532 acres.

Around two-thirds of 1986 Agricultural Holdings Act tenancies, which represent 69% of the let land area, were re-let on farm business tenancies (FBTs) for an average of 7.26 years.

Bare land accounted for the vast majority of lettings – fully equipped farms made up just 6.6% of that market.

The greater the acreage and equipment, the longer the average length of agreement; holdings with a house and buildings let for an average of nearly 10 years compared to the overall average of 3.84 years.

This included everything from seasonal grass lets upwards so, where lettings of a year or less are excluded, the average term was 5.42 years, says Mr Moody. 

New entrants

New entrants secured 20% of lettings where occupation changed and were offered longer tenancies – 35.6% for more than five years.

In Scotland, just 42 units covering 8,695 acres changed hands – down from 130 units covering 34,657 acres in 2020.   

There was a net loss of 5,083 acres year-on-year in Scotland, with most lettings being for bare land.

“With the political risks seen in letting in Scotland, it could appear to be more closely resembling Ireland as a country of short‐term non‐tenancy arrangements,” Mr Moody warned.