16 November 2001

Tenanted units high interest rate lifts value

A TENANTED Essex farm with a rental value of £13,500/year has sold for an "astonishing" 75% of its open market value – reckoned to be between £800,000 and £900,000.

Farms let on full agricultural tenancies generally only fetch up to 50% of vacant possession value, but Lane Foxs Richard Brooks says 225-acre Fristling Hall, near Billericay, guided at £400,000, stirred up a great deal of competition. "I was surprised by the number of viewings and level of offers.

"The result defies any traditional investment decision at both the rate of discount and yield."

However, he believes there could be a number of reasons for this apparent anomaly. "With stock markets falling and house prices easing – especially after the events of Sept 11- perhaps it was seen as an attractive alternative investment."

Mr Brooks also suggests a number of bidders might have felt there was room to negotiate with the current tenant.

"The situation is sufficiently complicated that several bidders thought they would be able to come to a deal with the tenant." &#42