Extreme Server Lag

What I expected to happen was a two player game to run smoothly through the server I created.

What actually happened was the lag was so bad it was completely unplayable. We could walk around, but when it come to breaking (e.g.) trees, nothing would happen until literally minutes later. when the block would finally fall.

I've tried different codes in the server files, but nothing has worked. It's never done this for any other version of minecraft. I'm running the same computer that I always have. This also happens in the server when I am the only player.