Starting up in farming5 FBT Essentials

(prepared for our “Down on the farm: stepping back, starting up” seminar, 22 October 2013)

Identity of the tenant: Who are you?

  • Be clear about who the tenant is and why.
  • Align the farm business (ST/Partnership/Company) and the tenant where possible. 
  • Otherwise difficulties may arise (e.g. with mortgages, on death).
  • Landlord may want to consider personal guarantees/3rd party guarantors.

Term: How long do you need?

  • If the term is more than 7 years, the FBT will need to be registered at the Land Registry.
  • Take Stamp Duty Land Tax considerations into account (tenant pays).
  • Consider break clauses.

Repairs and similar – what are you agreeing to?

  • Take care with “to repair” clauses!
  • They may be acceptable in long-term FBTs (where part of whole package).
  • Watch for onerous “to comply with all statutory requirements” clauses in short-term FBTs.

Subsidies and schemes – who does what and when?

  • Be clear about what schemes are in place and who is to be the claimant.
  • Watch for dual claims.
  • Watch for implications of CAP Reform, and changes to Rural Development schemes.

End of tenancy issues – what are you leaving behind?

  • Make sure it is clear who will have subsidy entitlements (and accommodate changes).
  • Deal with improvements (what about the new shed you’re putting up?).
  • Agree how disputes will be resolved.