News
Farm rent reviews on the increase
Many landlords will almost certainly be looking to secure substantial increases in rent for 2008, and it is conceivable that some increases of as much as 50% are proposed.
In recent years we have seen little or no change in agricultural rents while the industry has digested the impact of CAP reform, poor commodity prices and reduced profitability, writes Mary Crawford.
But with last Autumn’s dramatic increase in commodity prices many landlords responded fast with the inevitable flurry in the service of Michaelmas Rent Review Notices for tenancies held under both The Agricultural Holdings Act 1986 and The Agricultural Tenancies Act 1995.
Many landlords will almost certainly be looking to secure substantial increases in rent for 2008, and it is conceivable that some increases of as much as 50% are proposed.
It is essential that any increase in rent can be sustained by farming businesses and while any rental dispute between landlord and tenant may be referred to arbitration it is always hoped that agreement between the parties can be reached.
Proper professional advice and market led knowledge is vital to achieve a satisfactory review. Important areas which may impact on a rent review are:
• Higher commodity prices
• Single Farm Payments and additional ELS income
• Residential element
• Non agricultural or diversified income
• Substantial increases in input costs
• Increasing labour and machinery costs.
THE BASIS OF YOUR RENT ASSESSMENT UNDER...AGRICULTURAL HOLDINGS ACT 1986
1986 Rents are assessed taking into account, inter alia, the terms of the tenancy agreement and statutory provisions, the character and situation of the holding, the productive capacity, related earnings capacity and recent comparable lettings.
AGRICULTURAL TENANCIES ACT 1995 (FARM BUSINESS TENANCY AGREEMENTS)
Unlike 1986 Act tenancies, the agreement can contain its own rent review mechanism and criteria - care should be taken to check this in the tenancy agreement. If the agreement is silent, the statutory provisions will apply and the rent must be reviewed to a level which the holding might reasonably be expected to be let on the open market, taking into account all relevant factors.
Please contact any of our offices for further information or advice.