Farmers and Landowners Urged to Look at Business Resilience in Testing Times
With formal discussions on how we exit the European Union now starting, now more than ever farm and land based businesses should prepare for the unexpected and plan ahead to mitigate risks.
Matthew Brown, a Rural Practice Surveyor at George F. White, said: “Tenancy succession planning is an important issue for farmers that hold Agricultural Holdings Act tenancies and their landlords. Most tenant farmers will be aware of succession and the role it plays in ensuring their tenancy has the maximum chance of being passed to the next generation however, the importance of getting it right is often underestimated with long-lasting consequences for future generations.”
Under many 1986 Agricultural Holdings Act tenancies, tenant farmers are within their rights to seek to secure succession of their tenancy, as long as the successor meets the relevant eligibility criteria.
Matthew continued: “This is what makes succession planning – in a timely manner – so vital. Succession is not automatic, or a given. Many farmers fail to plan effectively – rather they wait and deal with it when they’re ready to retire or the next of kin has to handle it in case of an unexpected death. Without preparation, the successor can fail to meet the criteria to succeed. If the process is started earlier and managed properly, this can be prevented.”
Succession planning is also important for landlords of tenanted properties as it means they can plan long-term, potentially benefit from significant tax reliefs and address any issues which may have been brushed under the carpet for years.
Tenancy succession planning involves many issues including assessment of income and livelihood, diversification, land outside the tenancy, financial position and experience. Therefore, it’s crucial that tenant farmers and landlords receive the right advice from the start.
Matthew added: “The law governing succession is complex. There is potential for disclosure and analysis of farm accounts and bank statements for seven years before succession, among other information. It really is better to act sooner rather than later to mitigate risk and allow both parties to plan for the future with certainty.”