“Many years ago, after undertaking a Foot and Mouth valuation for a tenant, who was 84 years of age, the landlord’s agent was in continued presence. The agent tentatively suggested that it was time to surrender his tenancy. The matter was brought to a swift halt with the tenant retorting with a curt statement “young man, I have a ten-year plan”.

“The moral here”, says Tom Oates Director of youngsRPS, “is that even though there were no successors, the tenant was very clear about his future.”

Here Tom discusses the importance of planning for the future.

“Planning in agricultural situations is something that can be very hard to achieve. Tough conversations may need to be had and difficult decisions will often need to be made. When it comes to planning, this can take a variety of different routes and thoughts, however one thing that is undisputed, is that it is vital that it is done, and done so properly, not half-heartedly. I believe that in planning for the future there are four key areas to consider, Farming Policy, Succession Retirement and Rent Reviews.

1. Farming policy

We are now in an era of uncertainty so is now the appropriate time to take a serious look at how the business is performing? This may be in terms of past performance, current accounts and careful consideration for the future. Along with a lot of changes in valuation and income streams, like many industries, agriculture is in rapidly evolving environment. A business never stands still, it either goes forwards or backwards, and in challenging times it is easy to fall into the latter. So, taking the time to carry out a thorough analysis of what you are doing; the profitability, the potential profitability without subsidy and the practices undertaken, will be time very well spent.

Periods of uncertainty undoubtedly bring an enormous amount of opportunities and it is those farmers who are well prepared that will are best placed to move forward quickly and easily.

2. Succession

Is it right that the senior generation burdens the younger generation because of the fear they have of having a difficult conversation themselves? First and foremost, it is important to have a transparent and open discussion about the plans for succession with family members and those involved in the business. Without the conversation it is extraordinary the amount of assumptions that are made, some will be correct, some will be far from the desired thought.

The conversation needs to be had so that there is clear direction from the senior body, with the aim of establishing a format for discussion with the future generations. This will hopefully avoid the need for discussion/debate by the next generation, which potentially could be at a time of bereavement, when emotions are running high and the alluded to above assumptions then come to the fore. Even if the next generation feels the decision is wrong, it will have been made for them and they will have to get on and deal with it!

3. Retirement

Quite clearly, my man from the FMD valuation had no plans for retiring, however it is a very important discussion. Farmers are extremely optimistic people, but quite often retirement comes upon them rather than it being planned.

As a result of the changes brought forward by the 2016 Act when planning for retirement, people are much more aware of the ability to relinquish their lease for value. The sums of money involved can be quite significant and the open land market is a major factor in the valuation process. The result of this is that in the past actual land value may well not have been at the forefront of a tenant farmer’s mind, however it could certainly be more relevant now. As such, could the value of the land being leased significantly alter a potential retirement package?

4. Rent reviews

In these turbulent and forever changing times, profitability and cash is going to be king. So we should ask ourselves the question: “Are we heading towards times when we may well be looking at potential rent reductions?”.

The analysis the business undertakes in farm policy consideration could well help in this thought process. With the new rent test, the serving of notices means that this process is front loaded, with clear calculation. So any proposal for reduction will need to be well thought through and prepared well in advance of the rent review date.

So while the landlord’s agent of my 84 year old client needed to be brought down a peg or two it was great to see that he had the presence of mind to do it succinctly, but furthermore he had the plan behind him to back it up. Don’t fall into the trap of failing to plan.”

Operating across the Southern Scotland and the North of England, youngsRPS is a leading firm of chartered surveyors, planning and development advisors and property consultants, who specialise in all aspects of farming and land management. It also has a planning department and specialist residential, commercial and farm sales agencies.