Let land sector more nuanced than is assumed – CAAV survey

Concerns that landowners are taking growing amounts of land back in hand so they can put it to environmental uses are not supported by the data for 2023, according to the Central Association of Agricultural Valuers (CAAV) annual survey on the let land sector.

The organisation’s latest Agricultural Land Occupation Survey shows the size of the let sector remains broadly static in England and Wales, with Scotland seeing a long-term trend of steady decline continue.

See also: Tenants’ rights if asked to quit land planned for development

It reveals that in England and Wales there was a net loss of 1,532 acres in the year ending 31 October 2023.

This amounts to a “virtual standstill” given there will always be some land lost each year, because of land going to development or other uses.

Scotland

In Scotland the net loss was 5,083 acres, which is consistent with recent years, although less than the more substantial declines seen during the period 2012-16.

Just 291 acres of new land entered the let sector in Scotland in 2023, compared with 4,706 acres in England.

The CAAV says this is largely down to the impact of legislative changes made as part of the Scottish land reform programme, which have made being a traditional agricultural landlord high risk and low reward.

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Where retiring owners do want to let their land, they are tending to use a non-tenancy arrangement.

“Nothing seems to encourage private landowners in Scotland – including retiring farmers – to offer land on a tenancy, ultimately the only source of land for a growing and vibrant let sector to be achieved,” says Jeremy Moody, secretary of the CAAV.

“In effect, the system is in palliative care while it declines.”

Although there have been concerns raised about government grants incentivising landowners to take land back in-hand for environmental purposes, the CAAV’s analysis says the data does not show this to have happened last year.

It is the first year that the CAAV has attempted to analyse how far this happens for land if it is not re-let and it points out that this is a complex area for the collection and -interpretation of data.

However, the reasons why landowners have taken land back in-hand appear to be quite varied, with no obvious patterns.

In its dataset of 66 tenancies that ended and were not re‐let, 20 were being sold, 19 going to contract farming and grazing arrangements, with 15 taken in hand for farming, five for development and seven earmarked for either forestry or an environmental scheme.

“While it might be that the mix of -opportunities and motives could be changing, there is no marked change in the overall total area of land lost,” says Jeremy.

“There is more variety and less stereotype.”

The survey also shows that the length of farm business tenancy (FBT) can also be more variable than people tend to assume, he says.

In England and Wales, the average length for all FBTs in 2023 was 3.84 years, slightly up on the 10-year average of 3.52 years.

If lettings for one year or less are excluded to discount the many that are seasonal and rotational arrangements, the average term increases to 5.42 years and the average length of FBTs let for more than five years was 11.5 years.

It is generally the case that larger units and more equipped units are let for longer terms.

However, the survey confirms that the average length of letting does tend to shorten during periods of policy uncertainty – for example, in 2018 when post-Brexit policies were first discussed in detail, because people want to try and retain flexibility.

Overall, Jeremy says 25 years ago, England and Scotland had similar proportions of land in the let farming sector and both were in steady decline.

However, the different roads taken by policymakers have resulted in radically differing outcomes.

The introduction of FBTs in 1995 have effectively stopped the haemorrhaging of land from the let sector, so in England it remains at about 35% of the agricultural land area. In Scotland it is now down to about 20%.

Each system now faces a potentially more challenging and commercial environment, as well as the increased focus on climate change mitigation, biodiversity and the management of soil and water.

Let sector policy future

This leaves discussions about future policies for the let sector at an important junction.

“In all parts of the United Kingdom, the tenanted sector will only grow if owners who do not want to farm directly themselves see letting land as an attractive and normal option for them to adopt,” says Jeremy.

“Increasing the use and flexibility of our land occupation markets seems a critical reform for the future commercial success of agriculture as a creator of value, offering opportunities for progressive and new farming businesses and managing change.

“The Republic of Ireland’s decision to offer income tax relief for letting farmland for more than five years is showing strong signs of success in attracting -retiring farmers to let out their land to an extent that merits serious attention in the United Kingdom.”

Source: The CAAV’s Agricultural Land Occupation Survey 2023 summarises the decisions taken about land occupation in the year from 1 November 2022 to 31 October 2023.  It covers a total of 101,467 acres.