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Andrew Lawes BSc (Hons) MRICS, Head of Professional Services, Cornwall, sets out some thoughts and tips to help guide you on the journey of applying for a Farm Business Tenancy.
Opportunities to fulfil the ambition of living and working full-time on a farm are rare. A Farm Business Tenancy could provide such an opening but the tender application process, which some may find daunting, should not be underestimated. Tendering for a farm can be life-changing. You may only apply once or twice in your farming career, so it is important to prepare your application and present yourself to the best of your ability. We set out below some thoughts and tips which we hope will help guide you on that long journey.
Before making your application for a farm, you should read the particulars carefully, together with any supporting material that may be included in the tender pack, such as Management Plans, Ecology Reports or Agri-Environment Agreements. There may also be a draft tenancy agreement to review or a summary of the proposed repairing liabilities for the landlord and tenant. Large estates and organisations often have websites that can be a source of further information. If you want to be a farming partner on the estate, you will need to understand, and preferably share, the estate’s aims and objectives. For example, many estates have ambitious environmental strategies to which you will be required to demonstrate empathy and commitment.
Having identified and researched a suitable farm, you should then focus on yourself by understanding your objectives, strengths and weaknesses and what motivates you. Ask yourself why you want the farm? Do your skills and knowledge match the tenant profile/letting particulars? Being honest with yourself at the beginning of the journey will save time and energy applying for a farm that is not suitable for you.
You should attend the viewing day, even if you know the farm. It is important to introduce yourself to whoever is hosting the day or acting for the landlord. Be polite and ask questions to develop a relationship with the hosts and sell yourself by showing good communication skills and a positive, enthusiastic, approach. You may also get the opportunity to meet the outgoing tenant who will be an invaluable source of additional information. Make the most of your time by walking the farm, evaluating the land and buildings and getting a sense of the place. Gather as much information as you can and ask yourself what improvements you need to make and how much they would cost. Take a friend or professional for a second opinion. Consider what farming system you will adopt and what suits the farm and the landlord’s wider objectives.
Most landlords will require you to submit a tender, CV and your Business Plan. Additionally, some larger organisations (such as County Councils) may require an Application Form to be completed which will capture personal and financial information and also carry out a Credit Check on shortlisted candidates. The Business Plan is your one chance to prove you have this ability to balance the books, run a successful farm business and, ultimately, afford the rent.
The Business Plan is also an opportunity to demonstrate your successes and achievements to date on your own land and should include a personal profile and background. Consider including photographs of livestock, crops or conservation work you are proud of. Set out your vision and ambition for the farm in the first part of the Business Plan. Cross-reference your vision with the landlord’s strategic aims.
Your Business Plan should include detailed financial information, including Profit and Loss accounts, Cashflow Forecasts and Balance Sheets. As you work through these financial processes you will scrutinise your proposed farming system, including the costs of production, liquidity and profit analysis of the different enterprises. You will also be able to demonstrate that you have adequately provided for repairs and maintenance of the Landlord’s assets in accordance with the terms of the tenancy. Additionally, remember that your farm rent tender is likely to be based on a typical farming year and, therefore, should the farm operate at a loss during the early years, while the business becomes established, the full rent will still need to be paid. If the tenancy has a Break Clause in favour of the landlord (for example at year 5) any financial facility provided by a bank or other lender may not extend beyond this point. Short-term financing (including off-farm income) will therefore need to be transparent in your business plan with a realistic breakeven point shown in the cash flow. Do not attempt to exceed someone else’s tendered rent. Your offer of rent should be specific to your proposed farming enterprises. The landlord will want your business to succeed. Do not over-estimate viability and rental value, as the business may fail. Expect to be questioned on the figures at the interview. Therefore, if you employ a consultant to prepare the budgets, make sure you take full ownership of the figures and implications of a change in the levels of income and expenditure. The interviewers will undoubtedly probe and stress test your figures and we, therefore, advise that an early discussion with your bank Relationship Manager may help you prepare for this scrutiny.
Shortlisted applicants will be invited to interview. Most applicants will have little experience of formal interviews. You should therefore rehearse talking through and summarising the various sections of your Business Plan. We also strongly advise that a friend or professional adviser reads the Business Plan and sets out in writing what questions they would ask. You can then rehearse these answers until confident. The answers must be actually spoken in full as part of the preparation. Furthermore, most landlords will want to inspect the applicant’s existing holding at either the first or second interview. Some early consideration should therefore be given as to how this visit could best be managed in order that you fully reveal your strengths and achievements. You will also be required to provide good references before a final offer can be made.
The tender process is a long journey, often taking weeks to complete. A great deal of time and emotion is all too often invested in preparing the Business Plan and keeping the ambition alive. However stressful you may find the process, we strongly advise that throughout the whole journey, you remain optimistic about the industry and the current direction of travel for farming and the environment, show enthusiasm and dedication to the future of the farm and the added value you can bring. Farm lettings are very competitive. If you are unsuccessful on the first attempt make sure you get feedback on what you can improve on and try again when a suitable opportunity arises.
And remember, Stags is here to help. We regularly act for landlords seeking new tenants and also support applicants on their journey to realising their ambition to secure a farm tenancy. Having such informed 360-degree insight puts Stags firmly in the right place to navigate you on that journey.
For more information or advice, get in touch with Stags Professional Services on 01566 771808.
