Farm Tenancies – how your share has created stability in an uncertain world

Here I share some of the factors that led to the Fordhall Community Land Initiative offering a 100-year tenancy to Ben Hollins in 2006, and why it is so important.

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There are two main types of tenancy that can exist over farmland. Until 1995, the tenancy was likely to be an Agricultural Holdings Act 1986 (AHA) tenancy. This Act gave the tenant virtual security of tenure for life; generally they would have a modest rent and its provisions usually provided for rights of succession to the tenancy for the tenant’s family provided they met eligibility and suitability requirements. For most AHA’s, two tenancies by succession could be granted, so it was possible for the tenant’s family to work the holding for three generations - from grandfather, to son, to grandson.

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Succession rights are incredibly important to a farm as they allow future generations to continue under the tenancy and maintain an income from the farm. Most importantly, they provide an incentive for the farmer to invest within the fertility of the soil, knowing that his/her investment will be passed safely onto the next generation. For landowners, they can build a trust with the family and an understanding of shared values when it comes to the management of the land.

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This is the tenancy that Dad (Arthur Hollins) had at Fordhall, as did many others. The AHA tenancy provided security for Dad and because of that, he believed that his life’s work within the soils at Fordhall would be safe, an investment that he had spent his life cultivating, and one that he had hoped he would pass on to me and Ben.

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However, the estate that Fordhall was part of was split up and sold privately during the War, and later the chance of industrial development at Fordhall in the 1990s created a financial opportunity for the landowner. This resulted in many legal battles as the landowner tried his hardest to evict us. It was the strength of the Agricultural Holdings Act tenancy that made this eviction so hard for the landlord in the 1990s.

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Nevertheless, after 13 years of fighting through the courts, the family were worn down, funds were depleted and the farm was in disrepair. The landowner had eventually won. After hundreds of years of tending the land at Fordhall, the courts had concluded that our family should be evicted in March 2004. A lifetime of organic farming and research at Fordhall was about to be lost; the soil about to be destroyed by development.

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However, at the eleventh hour in 2004, a new tenancy was offered to Ben and me. It was an 18-month Farm Business Tenancy. This fell under a new legislative framework.

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The new Farm Business Tenancy Agreement

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By the early 1990s it was clear that the Agricultural Holdings Act 1986 was not working for everyone. The 1986 Act and those before it, had given security to agricultural tenants and held down rents, and the effect on landlords was so onerous due to the long tenancies that the amount of new farmland available to let in the UK was declining by more than 50,000 acres a year. Of course, the land was still being farmed, but by the same families and it was therefore not available to new entrants. For financial reasons, this was seen as a problem.

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A loophole in the law was found that enabled landlords to avoid the security of tenure conferred by the 1986 Act. This loophole was known as Gladstone v Bower agreements, which granted security of tenure for a mere 12- to 24-months at a time. By 1994 more than 70% of new agricultural tenancies used this loophole. Suddenly, landowners had more freedom over the use of their land in the short-term.

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In February 1991, the MAFF (Ministry of Agriculture, Fisheries and Food, the body that later became DEFRA) published a consultation paper. The aim was to deregulate, simplify and encourage the letting of land. In the proposals as originally drafted there was to be no security of tenure, the Common Law on Notice to Quit would apply and there would be near-complete freedom of contract. The power had moved away from the tenant, the steward of the land, to the landowner. From the steward to the breadbasket.

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Soon after came the basis of the Agricultural Tenancies Act 1995. The 1995 Act has caused land to be let for a shorter term and at a higher rent, since values are not based on the agricultural capacity of the land, but on the ‘market value’ that land has. This means rents and sales are based on the 'potential use' of the land.

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The new kind of tenancy introduced in the 1995 Act was called a Farm Business Tenancy (FBT) and, since 1 September 1995, almost all new agricultural lettings have used this framework.

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The 18-month FBT that Ben and I were offered in 2004 had so many break clauses in it, we had no real security at all. We could be evicted without reason within four weeks. We had all the responsibility of maintaining the land, fences and buildings in good condition, but very little security of what may happen in the next 2-3 months. Would all our work and investment be wasted if we were suddenly evicted?

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At the time, we were just grateful for the extra time at Fordhall. However, these new tenancies provide no incentive for the tenant farmers to manage the land or soil for the long-term. According to the gov.uk website most FBTs are five to ten years in length with five years, eight months (±14 months) in 2021/22 being the average.

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When managing a farm, you are principally managing the soil within it. This soil can increase in fertility or decrease depending on how it is managed. According to a government report published in 2019, soil holds three times as much carbon as the atmosphere, it reduces the risk of flooding by absorbing water, it is a wildlife habitat and it delivers 95% of global food supplies. And yet, today, there is still less known about the soil than any other part of the environment.

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Farmers manage 70% of the UK’s landscape and, sadly, the report states that intensive agriculture has caused arable soils to lose about 40 to 60% of their organic carbon over recent decades. The report also acknowledges that we need to support farmers to nurture the soil if we are to meet our net zero targets.

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Plus, it takes between 500-1,000 years to create just one inch of topsoil.

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‍We need long-term solutions.

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‍This is widely acknowledged, but the legal system still fails to facilitate it. Instead, many private landowners (some estate-owned land aside) continue to offer short-term tenancies without security, which understandably encourages farmers to think short-term. After all, they cannot take the soil with them if they are forced to farm elsewhere. They can only take the financial assets, livestock or machinery, so this is where their focus often sits.

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There seem to be unintended consequences of the legislative change. Occasionally, some landowners who have no intention of selling their land or farming it themselves, do continue to offer much longer-term tenancies, sometimes of over 30 years. This follows the same principles as much of British farmland did a century ago, where the advantage of a long-term relationship benefits everyone. Sadly, these longer tenancies are few and far between and over the years many estates have been split up and land is now bought and sold far more frequently, leading to values escalating far beyond their pure agricultural value. This in turn pushes rents higher and encourages more landlords to think short-term.

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Your community shares have helped to show there is another way, and we believe it is something to celebrate.

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It was throughout the time of our 18-month FBT tenancy, that the campaign to save Fordhall Farm developed and the community ownership scheme was born. During this time, we had experienced first-hand the dramatic effects of each of these tenancies on how we viewed our time at Fordhall and, indeed, where we spent our efforts, all the time thinking if we are not here in 18-months, what will we have to take with us?

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So, when creating the new structures we have at Fordhall today, generating security for the tenant farmer was of paramount importance. When we were successful in placing 128-acres of Fordhall into community ownership in 2006 the tenancy we offered to Ben Hollins, as your tenant farmer, was not your standard off-the-shelf FBT.

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With the support of incredible land agents and solicitors, we took aspects of the old Agricultural Holdings Act tenancy (such as succession rights and security) and incorporated them into the new Farm Business Tenancy agreement (the only legal agreement you are now permitted to use for new lettings of agricultural land). We co-created a structure which is more balanced and collaborative, and, most importantly, one that encourages investment within the soil and landscape by our tenant farmer.

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In offering such a long tenancy the value of Fordhall Farm has dropped dramatically. From being purchased for £800,000 in 2006, the farms market value dropped to less than £400,000 the moment the new 100-year FBT tenancy agreement was signed.

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This is because, for the duration of the tenancy, Fordhall can only be sold as a working farm with a sitting tenant farmer. It cannot be sold for development or otherwise whilst that tenancy exists. This is the fundamental reason that few landowners wish to offer such long-term leases. Who would choose to de-value their ‘asset’, and reduce their ability to release capital for retirement or inheritance? Money unfortunately drives most decision-making at this level.

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However, at Fordhall, this is not why the land exists. The soils, the trees, the rivers and the birds are not there to make us rich. As community landowners we do not own it because we want extra cash in our pockets. We own it because we believe that the land should be stewarded sensitively, organically, and in a way that builds fertility, produces healthy food and supports nature.

We are collectively investing in this land for a better future.

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Hope is on the horizon nationally too. The recently published Rock Review (2023), is a government report that recommends that long-term tenancy agreements are one of the best ways to cope with short-term uncertainties. It allows the tenant to plan beyond the uncertainty knowing that they will still have access to land for their business and that they can carry out environmental actions, and access the associated payments, that require longer-term agreements.

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It is the view of the report that their recommendations will move the tenanted sector towards a number of familiar Fordhall principles including:

·        collaborative and transparent arrangements which respect the ambitions of both parties and that these arrangements should become the norm

·        a relationship of trust, collaboration, and alignment between landlords and tenants with guidance for best practice and recourse for those who do not follow it

·        longer-term agreements that allow tenants to diversify and access multiple sources of funding without impacting the landlord’s interests, so that both the landlord and tenant benefit and can invest in the productive capacity and environmental health of the holding

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The value of Fordhall to us all is incalculable. The long-term tenancy created by the Fordhall Community Land Initiative has allowed this. By being landowners of purpose, rather than financial gain, you have allowed this.

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The value of Fordhall is no longer what it can fetch on the open market. The value of Fordhall now is an ecological investment with ever-evolving benefits to us as a community. It is full of symbiotic relationships that make it fly and indeed thrive.

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This is key to our unique structure, and something that we will go on fighting to retain, hoping that others, too, will see the value in community ownership and the value in seeing the long-term stewardship of land as something more than a breadbasket.

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We truly hope that the recommendations in the Rock Review, together with our learning at Fordhall, can encourage a more collaborative and long-term future for land management in the UK. We look forward to being part of that journey, where possible.

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If anyone wants to discuss this further, please do get in touch.

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Charlotte Hollins, FCLI Manager.

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