Huge competition for arable land delivers high rents

The huge level of competition for land is demonstrated by the results of a recent letting by Savills for more than 1,000 acres of mainly grade 2 land in Lincolnshire.

Sotby Farm has been let on a five-year farm business tenancy after 42 tenders were received, 36 of which offered more than £200/acre for the land.

“The main pack was between £230 and £250/acre, with the shortlisted parties and final figure being somewhere above this,” said Johnny Dudgeon, a director at Savills.

“There are many reasons that contribute to this substantial rise in prices; confidence from the large-scale farming operators, the current strength of commodity prices and the ability for farmers to spread their fixed costs over a larger acreage.

“Landlords are taking the safer bet with the current volatility in grain prices and deciding to lock someone in for a five-year term, providing them with stability and assurance, especially where farmhouses are not perceived to be an issue from a taxation viewpoint.

“Although contract farming does offer a more tax-efficient way of managing land than letting it out on a farm business tenancy, it still demands an increased level of input by the owner and increases volatility.”