Tenants' improvements amnesty - an agent's view
Wed 9 January 2019
Written by Michael Halliday, Farm Business Consultant
As an agent I’ve come across three distinct tenant viewpoints regarding the amnesty. There are highly engaged tenants who have drawn up extensive lists of improvements and are keen to progress things as a matter of urgency. There are tenants who know it is important and have been meaning to do something about it, but day to day farming has been getting in the way. There are also those who believe the whole thing isn’t for them as they have no intention of leaving their tenancy.
The first thing to be made clear is that the amnesty is a one off opportunity to correct the errors of the past - where improvements were agreed on a handshake and no paper record was created or something needing doing, so rather than serving notice the tenant just got on and did the job. The registration of tenants’ improvements and tenants’ fixtures is certainly important for any tenant looking to receive compensation at the end of their tenancy. The crucial point, which I think is being missed by the people who think it is not for them, is that the amnesty is the starting point for calculating productive capacity.
Productive capacity will be the foundation block for the new rent test. Once the test is implemented rent will be primarily determined by what a farm can produce with what has been provided by the landlord. The amnesty is important because it helps identify clearly what has been provided by each party. Even if a tenant decides not to use the amnesty, they will have to undertake the same piece of work to establish the productive capacity of their farm – but in the event of a way-go taking place, there would be no obligation on the landlord to compensate for the improvements.
A tenant farmer stated at a recent meeting, totally unprompted I may add, that the amnesty is potentially the most important thing a tenant farmer will ever do in relation to their business. With that point in mind, what are the benefits of using an agent?
An agent can:
- Review your Lease and any Post Lease Agreement to determine which “improvements” are lease requirements and which are actual improvements.
- Help identify improvements you might not have thought of e.g. hedges; drains; yard concrete.
- Produce a schedule and plan of all the farm improvements.
- Meet with your landlord or his/her agent to discuss any queries.
- Once agreement is reached, record it in an appropriate legal format.
There are two ways to approach your landlord regarding the amnesty. The recommended method is to use a voluntary agreement. This allows anything to be agreed, even if it is not strictly a tenants’ improvement as defined by the 1948 Schedule of Improvements. Unfortunately, this route can be quite slow as there are no statutory time requirements for the landlord to reply to your initial approach. The second method requires a reply within two months from the landlord or the items are automatically accepted as improvements. If this approach is used, items are restricted to those from the 1948 list.
The time requirement needed to come to a voluntary agreement will become an issue once the amnesty enters its final year. For those leaving it until the “last minute” the voluntary approach won’t be available.
To achieve the best possible amnesty result, act today as time is quickly slipping away.