20 December 1996

Big rent rises unlikely in 97 as profits fall

INCREASES in farmland rents are expected to slow next year, as farm profitability diminishes.

Results from land agent Savills latest survey of 450 farms with Michaelmas year-ends put the current average rent at £63/acre for arable units and £80/acre on dairy units. These are up 22% and 33%, respectively.

"The large rent rises seen over the last two years are likely to be tempered in 1997 by the effects of the possible restructuring of EU support in all sectors to cover the cost of the beef crisis, the uncertainty over the future of milk quotas and reducing grain prices," said Philip Gready of Savills Wimborne office.

But he predicted a continued trend for 1986 Agricultural Holdings Act tenancies to close the gap on newer farm business tenancies, which are now averaging £104/acre, up 37% on last year.