17 May 2002

Small investor likes look of

tenanted units

By Andrew Shirley

FEW tenanted farms have made it to the open market recently, but, despite relatively meagre rental returns, demand has been strong for those that have come up for sale.

"With returns from the stock market unreliable and the chance of a windfall when vacant possession is realised, small-time investors and family trusts are still extremely interested in buying tenanted land," reckons William Naylor of FPDSavills.

Mr Naylor is marketing 400 acres of bare arable and pasture land at Theddingworth on the Northants/Leics border with a rent of £19,989 and says, because the tenancy will terminate with the expiry of the present incumbent who is in his 50s, it makes a sound investment.

"Although the land is occupied under a 1986 Holdings Act Tenancy there is no succession because it was agreed in the 1990s. Agreements prior to 1986 are more tricky because you are never quite sure who will come out of the woodwork."

This guaranteed reversion to vacant possession in the foreseeable future has been reflected in the guide price of £645,000, which is approximately 75% of the lands open market value. Usually tenanted land is sold at levels closer to 50% of vacant possession rates.

Slightly further south, Herts-based agent Faulkners is close to wrapping up a deal on a 268-acre predominantly IACS-registered farm near Aylesbury, Bucks.

Jenny Rowe, handling the sale of Old Rectory and Manor Farms, Puttenham, says there was lots of interest from commercial investment firms at the guide price over £600,000 with five serious offers received. "There was even an inquiry from somebody in Israel."

One of the most obvious buyers for a tenanted farm is the sitting tenant. There is the potential to sell for an immediate profit, and, according to Mr Naylor, banks are keen to lend for such a purchase.

In the Lake District, Macclesfield-based operation The Brown Rural Partnership is selling a 140-acre dairy unit on the shore of Lake Windemere. Although the rent is only £5250/annum, the firms John Unterhalter is expecting plenty of interest.

"These farms are rare commodities and are few and far between."

Bellman Ground Farm, Bowness-on-Windemere, originally formed part of the estate of Sir Edward Holt, a 19th Century Manchester brewer. Mr Unterhalter is valuing the farm at around £400,000, approximately 50% the price it could attain if sold untenanted.

"This is a longer-term investment. It is not a case of an elderly tenant about to give up." A further portfolio of tenanted properties will also be coming to the market shortly when the company manages the sale of part of the land acquired during the construction of Manchester Airports second runway. &#42