Farm rents have risen by an average of 9% in the West Midlands and Wales this year, but many landlords are still expecting unrealistic increases.
Davis Meade Property Consultants recently calculated that Agricultural Holdings Act rents in Denbighshire, Shropshire, Powys and Cheshire had increased from an average of £49.63/acre to £54.14/acre. In the year to March 2009 arable rents went up by 9.6%; beef and sheep rents increased by 8.7%; and dairy rents rose by 9.3%.
“Negotiations have been tough as some landlords were aspiring to see increases of 40-50%, with one asking for 86% because the farm had started generating non-farming revenue, and he wanted a part of the action,” said leading rent negotiator Philip Meade. “It was the largest rent increase demand I’ve seen in 18 years of negotiating rents.”
Problems arose because rent reviews were served 12 months in advance, when commodity prices across all sectors were booming. But since then, dairy and cereal prices had plummeted, leaving tenants unable to contemplate sharp increases in rent.
Despite this, some landlords were insisting on taking the hard line. “We had to go to arbitration on six cases before May – I would normally expect three or four in a whole year,” said Mr Meade.
Although landlords were being more realistic now, some were still demanding extortionate increases in rent, he added. “I already have 82 farmers under review for spring 2009 and the demands vary from 30-60%.” In a recent case the landowner demanded a 60-70% rise, and eventually agreed on 8%. “On an economic and financial basis I think it’s very difficult to justify any increase at the moment. In some cases we are actually looking for rent reductions.”