Mutually beneficial deals can be struck but the full value of a tenant’s interest in the land must be acknowledged.
Discussions around surrendering and re-granting old tenancies have been commonplace since the 2006 Tenancy Reform Industry Group’s amendments when they were driven by a landlord’s inheritance tax position. Deals could be amicably struck as the surrender didn’t prejudice the tenant’s long term interest and rights.
Now, at a time of uncertainty in the principal investment markets, we are seeing cases of new owners of land regarding the tenancy and land as separable parts of an investment.
The value of land subject to Agricultural Holdings Act tenancy can be discounted by anything up to 50 per cent depending on the terms of the lease.
These recent cases show the purchaser recognising the potential uplift in the value of their investment if they can achieve either an agreed surrender or forced lease termination. The AHA provides a tenant with a significant level of protection which these investors are not familiar with.
Take advice from a tenancy specialist or your agent before accepting a deal.
Edward Page, associate director Davis Meade Property Consultants