FARM LANDLORDS have been advised to carefully consider the impact of reviewing farm rents before the implications of Brexit become clearer.

Scotland's tenant farming commissioner, Bob McIntosh, stated this week that consideration of the "prevailing economic conditions" in the agriculture sector had to be an important component of rent review discussions.

Mr McIntosh explained: “Rent reviews initiated this year will fix rents until 2021 and that period will overlap with the UK’s planned withdrawal from the European Union. Given the uncertainty over the impact of Brexit on agricultural commodity prices and, possibly, the level of support payments, there is a risk that rents fixed now may turn out to be significantly out of kilter with the market place within two years.

“While rent reviews provide a good opportunity for landlords and tenants to meet to discuss current issues, there are good reasons to consider whether this is the right time to make changes unless there are pressing reasons for doing so.”

The Scottish Tenant Farmers Association welcomed Mr McIntosh's intervention, pointing out that it had already warned its members to take account of the Brexit factor in rent negotiations and noted that, although farm commodity prices have improved in the short term, the real challenges lie ahead.

STFA chairman Christopher Nicholson said: “The TFC’s call to think again about rent reviews is a common sense suggestion and a sign of the gravity of the situation. Previous calls for a rental standstill from STFA have been rejected by landlords and their agents, however the TFC has no axe to grind save a desire to see fair play and this move must be taken seriously by all parties.

“The agricultural industry faces huge uncertainty as we contemplate leaving the EU and there is little sign that the UK government has any idea how we will cope with the loss of export markets and the potential imposition trading tariffs on top of much reduced support payments," said Mr Nicholson.

"Farm Business Incomes seem to be in freefall with a 48% fall in 2015/6 representing a 75% decrease in real terms in farm incomes since 2010/11," he added. "In these circumstances there can be no justification for any increase in farm rents."

Scottish Land and Estates chairman David Johnstone commented: “It is recognised good practice to regularly review rents and Brexit should clearly be considered as one factor, alongside many others, when undertaking such a review. It should also be remembered that the service of a rent review notice does not mean that a landlord is necessarily seeking an increase, it simply allows the matter to be looked at on the due date.

"Brexit may bring both negative and positive effects in the short and longer-term, but our message for both landlords and tenants is to take account of each other’s business circumstances and maintain positive and constructive dialogue throughout future rent reviews.”

NFU Scotland president Andrew McCornick said: “Both landlords and tenants face an unparalleled level of uncertainty as a result of the Brexit decision. With little clarity on future support levels or what direction our agricultural policy may take, it makes sense to consider whether this is the right time to make changes until a clear picture emerges.”