Dont miss out on rent reductions

By Farmers Weekly staff

MANY tenants can expect rent reductions of 25-40% this Lady Day, and farmers still paying over the odds should waste no time in serving notice to their landlords.

“Almost without exception, the negotiations last autumn and this spring are for reductions, and trigger notices were served by tenants – a rare occurrence,” says Anthony Oliphant, senior consultant with the Laurence Gould Partnership.

Ministry figures predict that UK farm income in the 1999/00 year slumped to less than one-fifth of 1995/96 levels in real terms.

This means cuts of up to 15% are easy to negotiate.
Given that rents have been rising for many years, that looks attractive.

“It would be wrong, however, to accept this as sufficient without first taking professional advice.

“This level was first based on benchmark settlements across large estates, but a 15-20% reduction bears no reflection on the true fall in productive and related earning capacity of a farm,” says Mr Oliphant.

By building a sound argument (see box) based on budgets and outlook prospects, a prudent tenant would be unwilling to settle at these levels, he adds.

Agents report that some tenants are unwilling to take action, says Mr Oliphant.

But for some, rent reductions will mean the difference between surviving, or not.

They should take action now and serve a section 12 noticed for their 1986 Act tenancies, which will trigger a review this time next year.

“They have already missed the chance for some quite sizeable rent reductions,” he says.