5 June 1998

Non-farm areas lift interest in let land units

By Louise Rose

INVESTORS in the let land market are more alert to an investment angle beyond pure agriculture than 20 years ago but are still taking a long-term view on their returns.

"Units offering strictly agricultural returns now are achieving weaker yields than those including investment opportunities beyond agriculture," says Jim Bryant, Bidwells.

He is selling more than 600 acres in the Lincolnshire Wolds, near Market Rasen, on behalf of a university. Guided at in excess of £800,000, the current rent passing is £33,000 a year, which reflects a gross return of 4.1%.

"The unit is due for a rent review in October this year, offering potential for an increase," says Mr Bryant.

He maintains that a greater range of investment yields are likely this year depending on the scope of the property.

"If the Puckeridge Estate near Luton was for sale subject to occupation I think because of the long-term development potential on the land and the freehold reversion opportunities on some of the properties demand would have been very healthy," he said.

Archie Read, AKC rural property consultants, is selling about 444 acres of grade 3 medium to heavy loam land at Aslackby, near Bourne, Lincs, subject to a full agricultural tenancy.

The farm, High Park Farm, is let on full repairing and insuring terms for an annual rent of £25,200 – last reviewed on Mar 25 1996. The £600,000 guide reflects a gross yield of 4.2%.

A pair of cottages and range of modern farm buildings with grain storage for about 2000t are included in the sale.

Most of the land is farmed on a combinable crop rotation with the grass grazed by a sheep flock. On a bareland basis Mr Read values the land at about £1300/acre, reflecting a 50% discount on the vacant possession value.

"This property is a well-rented commercial unit and investors are beginning to recognise the attractive discount afforded by traditional tenancies. Similarly to regulated residential tenancies, which grew in demand from investors once they were no longer created, the profile of traditional agricultural tenants is ageing and available successions are being taken up," he says.

"With regulated residential tenancies, the trading discount reduced from 60% to 25% as awareness grew of the significant capital gains available. I believe we could see the same thing happen to agricultural properties let on traditional tenancies."

The sale of the Friends Provident investment portfolio launched onto the market in May (Land and Farms, May 1) and spread over Yorks, Lincs, Norfolk and Wilts is believed to be moving on well.

"We anticipate bringing negotiations to a head soon, after receiving substantial interest, mainly from private individuals," says Justin Marking, FPD Savills.