Survey to assess farm rent increases facing tenants

Help us to help you by filling out our rent review survey in association with the Tenant Farmers Association and the NFU.  

The tenanted sector is facing an unprecedented wave of increased rental demands, according to tenants’ representatives.

Landlords and their agents, after almost a decade with little scope to increase rents, are trying to play catch-up with some even trying to double payments on the back of improved commodity prices.

Virtually all arable tenants and many in the dairy sector will now have received a rent review notice. For traditional Agricultural Holdings Act and farm business tenancies, these notices must be served at least 12 months in advance so relatively few will have been agreed yet.

However, Michael Horton, head of estate management and consultancy at property firm Savills, said AHA rents with a review instigated by Michaelmas 2006 and settled a year later, had, on average, risen by 31% to £75/acre, according to a survey of the firm’s clients in eastern England.

Mr Horton said many of these increases had been agreed before some of the biggest cereal prices gains and he expected arable rents settled this year to rise by even more.

Louis Fell, of land agent George F White, which represents tenants across north-east England, said rents of £75/acre for good arable land were not unreasonable, but some landlords or their agents were asking for over £95/acre.

“I think they are getting carried away by headline prices of wheat at £200/t without taking into account nitrogen at £300/t and the fact that many farmers haven’t even seen the upside of cereal price increases yet.”

George Dunn of the Tenant Farmers’ Association said: “While prices in nominal terms in the arable and dairy sectors may have begun to return to the levels last seen in the mid 1990s, in real terms they are very much lower. If measured against the inflation experienced by farmers in their input costs then today’s farm gate prices are lower still.”

NFU vice president Meurig Raymond said he hoped there wasn’t going to be a repeat of 1995-1996 when increased rents were followed by a decline in commodity values, putting huge pressure on tenant farmers.

George Chichester of Strutt & Parker said tenants should always use good professional advice when negotiating rents.

“You need to use everything that is available to help your case. If you are ill-prepared it could cost you a lot of money,” said David King a tenant of Cambridgeshire County Council.

Mr King said he would be preparing a forward budget to show his landlord exactly how rising input costs will be affecting the business. “This is your counter-argument – your costs are going through the roof.”

Farmers Weekly is committed throughout 2008 to helping the tenanted sector achieve fair rent settlements, which can only be good for the entire industry. Help us to help you by filling out our rent review survey in association with the Tenant Farmers Association and the NFU. 

This section of our website will shortly contain more information on the rent review process, including the difference between Agricultural Holdings Act and farm business tenancies. And if you’ve had a good or bad experience with your landlord why not share it on our forums.

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