Derbyshire let unit for investment market

Investors looking to maximise inheritance tax relief as well as securing good income potential and capital growth will have a rare opportunity to keep things simple after next week’s launch of Lodge Hill Farm in Derbyshire.

The 379-acre mainly arable farm near Church Broughton was subject to a surrender and re-grant under the Tenancy Reform Industry Group provisions of 2006, which enabled an Agricultural Holdings Act tenancy to be exchanged for a new tenancy.

This provided the tenant with the same security but also allowed the landlord to claim 100% Agricultural Property Relief for Inheritance Tax purposes, compared with 50% for farms let before September 1995.

“Most investors have to buy vacant possession land to obtain 100% IHT relief,” said Robert Hurst, a partner with Fisher German. “They then have to find someone to farm it, whereas Lodge Hill comes with a succession tenancy which means everything is already in place.”

The former dairy farm has 312 acres of gently undulating Grade 3 medium to heavy arable land growing wheat and oilseed rape, plus permanent pasture, a five-bedroom house, three-bedroom semi-detached cottage and an extensive range of modern and traditional buildings.

The farm is priced at just under £5,300/acre. “On a bare-land vacant possession basis we would expect to get £7,000/acre for the arable and £6,000 for the pasture,” Mr Hurst said. “The sale also includes two houses and the buildings, so we think it represents very good value.”

The current rent is £25,000, representing a return of 1.25% on the £2m guide price. The tenancy is subject to a notice for rent review in September 2013. “There is also a possible opportunity to add value to the traditional range of buildings,” said Mr Hurst.

“Very few let farms are offered to the open market and this is a rare opportunity to acquire an investment which shows potential for both income and capital growth.” (Fisher German 01636 642 504)

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