Farm Tenancy Rent Review Calculator

Farm tenancies in England and Wales fall into three main types. Agricultural Holdings Act 1986 tenancies carry full security and succession rights, but they are close to extinct because no new ones have been granted since 1995. Farm Business Tenancies under the Agricultural Tenancies Act 1995 have been the standard ever since, running for a fixed term of typically 5 to 15 years with limited security and no automatic succession. Grazing or seasonal licences cover short-term arrangements, usually a year at most, with no security of tenure at all. Share farming, where landlord and tenant split the inputs and the outputs between them, sits outside all three.

FBT rents vary widely by region and land quality. Arable land in the East of England may let for £200 to £400/ha, while grassland in the West might be £80 to £150/ha. Permanent pasture generally runs £80 to £180/ha and mixed ground £120 to £200/ha, with premium land, either irrigated or close to London, reaching £300 to £500/ha. AHA rents are typically lower due to the stronger tenant protections. Grazing lets are usually seasonal at £80 to £120/ha for 6 to 8 months. A farmhouse included in the letting adds £6,000 to £15,000 a year on top of the land rent.

This calculator compares the annual cost and flexibility of different tenancy types. It factors in rent, tenant's improvements, dilapidations risk and notice period requirements, which together decide whether a cheaper rent is really the cheaper deal. Sixty hectares of arable ground on an FBT in the East Midlands at £250/ha costs £15,000 a year on a typical 5 year term with 12 months' notice, against roughly £150/ha, or £9,000, on an AHA where one is available. That £6,000 gap is the price of being able to walk away.

Farm Business Tenancy terms repay close reading. The minimum is 2 years, below which the arrangement becomes an annual periodic tenancy, and there is no statutory maximum, though very long terms sometimes complicate mortgageability. Notice periods typically run 12 to 24 months, and rent reviews happen at the stated intervals, usually every 3 years, on an open-market basis. The agreement can specify which non-farm uses are allowed or prohibited, covering Airbnb, glamping and holiday lets, and sub-letting is normally barred without consent. Capital improvements revert to the landlord at the end, with compensation due to the tenant.

Tenant Right governs what you get back for what you put in. Improvements paid for by the tenant attract compensation at the end of the tenancy, covering drainage, fencing, hedging, accumulated manure, growing crops and fixtures, although the valuations are rough rather than exact. Improvements made without the landlord's consent cannot be recovered at all, which makes the paperwork worth completing before the work starts. Disturbance compensation applies only on AHA tenancies, typically 1 to 2 years' rent where a notice to quit is not fault-based. A new FBT is usually less generous on this front than an old AHA, in exchange for more flexible terms.

Tax shapes the comparison more than most tenants expect. Rent is a business expense, deductible against farm income. Capital allowances cover tenant fixtures, with the Annual Investment Allowance giving 100% relief up to £1M a year. Tenant improvements count as capital expenditure and may attract Agricultural Property Relief for inheritance tax. Income from diversification such as Airbnb or glamping is subject to income tax and possibly business rates once the use is classed as commercial. Most farm activities are VAT-registered once turnover passes £90k, while rent itself is generally exempt, so no VAT is charged or recovered on it. A specialist farm accountant earns the fee here.