Our overdraft was up for review last month.  We had the bank manager visit us, accompanied by the banks insurance salesman, and everything went well.  The following week the insurance man called on us again but we were not buying.  Now checked the online statement and we have been charged 1.5% arrangement fee!  When we first moved to the bank three years ago the arrangement fee was zero, then it was 1% and now 1.5%.  They cant loose.  Massive security held and able to take our money as and when they see fit. 

 Change your bank?

You have another bank signed up as a plan B? If not do the necessary paperwork before you need it, then when the overdraft comes round again, haggle. Or split it between 2 or 3.

I cant understand why people stay loyal to one lending institution.

Didn't even know bank managers did house calls, must leave the dog out, just in case.

mursal, Very strange that this thread should appear. I have just finished dinner. Whilst my wife was washing the dishes, my mother in law and I were discussing, over a final glass of Moscatel, this very subject of bank managers visiting. I have always expected my bank manager to visit if he wanted to know anything about my business. After all, I am the customer. If some business is interested in lending me money then it needs to know about my business, and the only way to do that is to come and have a look at it. In whichever country I have lived I have had the bank manager visit when I needed to borrow money. Sometimes it has been by way of overdraft and sometimes as a mortgage. Either way, a prudent lender should check out what he is lending against. Perhaps this is why so many banks have run into trouble. Nobody has bothered to check where, and against what, they are lending.

mursal:

I cant understand why people stay loyal to one lending institution.

Ditto insuring institution. 

Given the potential for enormous banking catastrophe, and huge crop prices, I would be considering ways of making any overdraft vastly smaller, or swapping it for something that cannot be "called in". The poop hasnt even got close to the fan yet. Bank runs in Spain - its not like cash in the bank is earning anything. Bad times ahead. Bad. Bad. Bad. 

if a farmer spends all his time inside the house , playing internet poker or away on holiday. and forgets to sow his crops, he will be burst pretty quick. you cant neglect your core business.

This is what the banks have been doing, playing poker against the value of our mortgages. They have neglected the basics, and expect us now to pay for their mistakes.

glasshouse:

if a farmer spends all his time inside the house , playing internet poker or away on holiday. and forgets to sow his crops, he will be burst pretty quick. you cant neglect your core business.

This is probably why our bank regularly sends out one of it's Agri managers to do an annual review. It's so much more than just a paper excersise when they can see for themselves what's actually going down on the farm. A bank manager once told me how he had gone out to a farm to see how their barn conversion was getting on. He found the barn hadn't been started and the money spent on a new Range Rover. Needless to say, the farmers overdraft was called in on the spot and rightly so.

mursal:

I cant understand why people stay loyal to one lending institution.

If you have received good service from a bank over the years then I can't see a problem with being loyal to them. Besides, changing banks would be such a hassle. You wouldn't want to bother unless you had to surely?

No, but it's understandable with base rates at 0.5% that the bank has to cover costs somehow. They are after all in business just like us farmers.

I'm not here to defend the banks, but I can't complain about ours fortunately. Perhaps that's more down to local staff than company policy though.

            the bank has to cover costs somehow

Fair enough, welshnwilling, but arrangement fees have to be considered in conjunction with lending margins.

A farmer acquaintance of mine told me the other day that his latest arrangement fee is £50, enormously far less than recently charged to me.

He later happened to mention in passing, however, that his IR is now 9.9% over base, having risen in four or five stages from 2% over base back in 2007.

bankrupt:

            the bank has to cover costs somehow

Fair enough, welshnwilling, but arrangement fees have to be considered in conjunction with lending margins.

A farmer acquaintance of mine told me the other day that his latest arrangement fee is £50, enormously far less than recently charged to me.

He later happened to mention in passing, however, that his IR is now 9.9% over base, have risen in four or five stages from 2% over base back in 2007.

Yes well that is taking the p**s ! It's up to us all to negotiate for our selves and if you feel that the bank is in fact taking liberties then perhaps a change of bank is the only answer. I wonder if your friend asked for quotes from other banks ?

We did move banks for the purpose of cheaper money.  Trouble is a year or two down the line the higher fees come creeping back.  Last year our bank manager gave us the speel about  thier margins being tight in order to justify a rise in the overdraft interest rate.  Our rate is 2.3% over base it was 1% over base when they were fishing for the business.  Our bank, the one with the black horse, was bailed out by all of us just 3 years ago.  Like I said, they can't loose.

We dont have an overdraft so dont pay any fees I have worked for myself since I left school at 15 and havent bought anything that I couldnt pay for.This may well change one day but I hope not.

I use to run my contracting and dealing business on a private acount so didnt pay any charges at all in fact I use to get some interest on it, they had a go at me once about it I told them I could take my business down the road if thats what they wanted and they never said any moor

TeslaCoils:

Given the potential for enormous banking catastrophe, and huge crop prices, I would be considering ways of making any overdraft vastly smaller, or swapping it for something that cannot be "called in". The poop hasnt even got close to the fan yet. Bank runs in Spain - its not like cash in the bank is earning anything. Bad times ahead. Bad. Bad. Bad.

Now Tesla is not known for scaremongering and I have a horrible feeling he might be spot on here. I think my £10 bet that the banks will not be seeking another bailout before next February is safe, and if they need more cash then the borrowers whose loans can be called in will be the frirst to suffer.

In the UK I began using an insurance broker I knew in 1962 (they do the shopping around) and I have continued to use the same small firm whenever I have had a need to insure anything in the UK. It was not common to be insured with the same company in consecutive years. Either use a broker or get alternative quotes yourself - your original company will find ways of reducing the premiums if they know you are looking elsewhere.

It is a hassle to change banks, bu I am on my fourth in 9 years in Portugal, the first went because of excess charges - emptied an almost inactive account with €115 in it with two half year charges; the second because of a failure to make any decision on a temporary facility for a new business venture (soap making from excess olive oil) and the third, Barclays, because they were not honest with me. I was assured there would be no charges on a current account if there was a positive balance in it. After a few months they began to slap on a €20 monthly charge - without prior notification.

old mac, they wont be calling in overdrafts, as those that can be called are making them the most profit.

base plus 4.5% is common for tenant farmers without property, with a hefty fee for arrangement. i have heard of base +8% at other banks.

They are rebuilding their balance sheets out of our hides.

glasshouse:

old mac, they wont be calling in overdrafts, as those that can be called are making them the most profit.

base plus 4.5% is common for tenant farmers without property, with a hefty fee for arrangement. i have heard of base +8% at other banks.

Most ODs can be called in - check the small print "repayable on demand". Though to be fair, if one runs with a consistant minimum OD then best to have converted it into a proper loan.

henarar:

We dont have an overdraft so dont pay any fees I have worked for myself since I left school at 15 and havent bought anything that I couldnt pay for.This may well change one day but I hope not.

Personal choice. I'd say that highly leveraged purchases of land at the right time would have paid many times more than a debt-free farming of the same area great-grandad etc passed down. Capital growth of land bought at the right time seems to have exclipsed returns from actual crop growing over several large periods since the 60s. 

Dozer:

Our overdraft was up for review last month.  We had the bank manager visit us, accompanied by the banks insurance salesman, and everything went well.  The following week the insurance man called on us again but we were not buying.  Now checked the online statement and we have been charged 1.5% arrangement fee!  When we first moved to the bank three years ago the arrangement fee was zero, then it was 1% and now 1.5%.  They cant loose.  Massive security held and able to take our money as and when they see fit. 

Back to the starting post - I wonder if you could give us a ballpark figure for your OD? Given the massive security, may it be that the OD is really not so large and could be avoided by drawing down some money against grain sales (no fee, costs about 2.5 over base)? If I were a bank, I would be cancelling lightly used / unused ODs as I suspect that the "total authorised OD" figure appears on their balance sheets and that by crossing them off they tidy themselves up. I dont expect banks are piling on the pain so much for those who run their business through the OD, as destroying small businesses wont be their number one priority, especially if they are banks owned by HM Taxpayer?

aah, buying land at the right time. When is the right time?

since daddy didnt leave me my farm, or the money to run it, the timing of a land purchase is all important.

get it wrong, and you are toast. get it right, you may survive.

a neighbouring farm was sold recently, which hadnt turned a profit for 12yrs, but had grown in value by £300,000 pa. nice work if you can get it.

but then hmrc will be getting 40% of that, plus 5% stamp duty from the buyer.

glasshouse:

aah, buying land at the right time. When is the right time?

Whenever the opportunity arises. There's such a thing as being too cautious. Some people spend their lives holding back 'just in case'.

glasshouse:

but then hmrc will be getting 40% of that

Not if they use the money to buy more property.

I remember 20 odd years ago when I was at college, a friend bought land for £2k/acre and we all thought it was expensive.  It doesn't look it now!  If you work back the figures of todays land price and todays interest rates, borrowed money for land is roughly £700 per acre per year.  Unless you are going to grow poppies this does not making sense..

Dozer:

If you work back the figures of todays land price and todays interest rates, borrowed money for land is roughly £700 per acre per year. 

True, but hasn't this always been the case ? Even at today's land prices there's a very good chance that in 20 yrs time it will sound very cheap. Nothing is guaranteed though but that's the risk you take. Nothing ventured, nothing gained and all that.

Glasshouse, as I have said before if you buy land and have paid too much you can always sell it to get out of trouble. If you pay too much rent however you're shafted !

         if you buy land and have paid too much you can always sell it to get out of trouble.

Quite so, welshnwilling.

But you may have to top up the acreage by 50% or more to get straight again at the bank.

I can recall at least two cases where this happened with land bought at the 1979 high. 

wnw, the farmer was retiring at 80 odd, so the tax would be paid.

as to selling it to get out of trouble, not so easy if the value has quartered!

numerous examples round here of farmers who bought land in 1981--4 because it was for sale and they werent making it any more. They paid £3k/acre, then the bad years of 85--87 hit, interest went to 19%,land dropped to £1k and the bank took them out, they lost the lot, not just the extra land. There is good  reason to be cautious, even more so when it is your first purchase, without inherited wealth to cushion you.

I can remember some round here buying high and saying that it would never stop going up then going bust and the land was sold for alot less

Things go up and things go down, what did happen to the £300 wheat buy the way

You are right to be cautious cos at the end of the day you have to pay for it, yes if the price stays up you can sell and get out of troubble but that is not the point. best to do your thinking first then go for it if you think its right.

i went for it in 2007, when i thought it was right, but was runner up. of course knowing what i know now, i would have bid more, but hey ho thats life!

the £300 wheat is still coming.