UK: Agricultural Holdings Act 1986 - What Relevance Are FBT Rents?

Last Updated: 22 November 2013
Article by Christopher Findley

This article originally appeared in TFA News.

The  AHA 1986  provides in schedule 2 and Section 12, a statutory 3 year cycle for rent review.  Tenants who may recently have received a Notice to review the rent in 2014 must take advice on how the review is conducted. The rent is reviewed in accordance with the formula set out in Schedule 2:

" taking into account (subject to sub-paragraph (3) and paragraphs 2 and 3 below) all relevant factors, including in every case the terms of the tenancy (including those relating to rent), the character and situation of the holding (including the locality in which it is situated), the productive capacity of the holding and its related earning capacity, and the current level of rents for comparable lettings..."

It is nearly 30 years since the rent review formula for AHA tenancies was included in the AHA 1984. The political background to its introduction, in the early days of the TFA, was that it was a trade-off for abolishing succession rights for any tenants taking a new AHA tenancy after 11 July 1984.

Comparable evidence is viewed as the best evidence of what is happening in the marketplace and therefore what rent prudent and willing tenants are prepared to pay.  Until the introduction of the open market for farm rents was introduced for FBT's, the only comparable evidence was existing AHA rents. Since 1995 it has been argued that FBT rents are not relevant because a holding let on an FBT is not let on comparable terms.

Schedule 2 provides that when determining the rent, "the arbitrator shall take into account with respect to the rents (whether fixed by agreement between the parties or by arbitration under this Act) which are, or (in view of rents currently being tendered) are likely to become, payable in respect of tenancies of comparable agricultural holdings on terms (other than terms fixing the rent payable) similar to those of the tenancy under consideration, but shall disregard—

(a) any element of the rents in question which is due to an appreciable scarcity of comparable holdings available for letting on such terms compared with the number of persons seeking to become tenants of such holdings on such terms,

(b) any element of those rents which is due to the fact that the tenant of, or a person tendering for, any comparable holding is in occupation of other land in the vicinity of that holding that may conveniently be occupied together with that holding, and

(c) any effect on those rents which is due to any allowances or reductions made in consideration of the charging of premiums"

Any available evidence?

The formula refers to rents (whether fixed by agreement between the parties or by arbitration under this Act).  The words "under this Act" apply to both rents fixed by agreement or determined by arbitration; however none in the remainder of the subclause excludes tender rents. FBT rents appear therefore not to be totally outlawed as evidence.

How comparable is comparable?

An Arbitrator's task according to the Courts is to have regard to all the evidence and to decide (and give his reasons) what weight he attaches to a comparable. Every farm rent produced could potentially be a rent for a comparable holding, but the Arbitrator is entitled to rule that he has attached no weight to a rent because the circumstances are too far removed from the subject holding, i.e. evidence is capable of being ruled to be useless.

How to tackle the weight to give to FBT rents

An FBT rent does not factor out the element of scarcity, which is what leads farmers to bid high to get the limited amount of land available.

The terms for an FBT are usually markedly different from those in an AHA tenancy for example restrictive of where the tenant has to live.

Each comparable farm rent should be analysed with the holding to see how much , if at all its rent is relevant.  Part of that exercise is to look at all the terms in the tenancy agreement, to analyse the rent  being reviewed by reference to farm budgets to distinguish between the productivity of and any constraints on ability to crop the proposed comparables and the Holding itself.  There are FBT agreements which contain an AHA rent review formula. The rents payable under these will be interesting to watch.


  • When faced with a rent review - do your homework.
  • Question what is being said by the landlord and require his rent proposal and breakdown of how it is configured in writing.
  • Look at your farm and those of other farms in the area, particularly those let on the same estate or by the same landowner under AHA terms.
  • Ensure that you instruct a Valuer who is experienced and well briefed in looking at these issues.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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