(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.