ESA cash adds lustre to image of Salop unit

15 May 1998

ESA cash adds lustre to image of Salop unit

By Louise Rose

PAYMENTS received for entering into an enviromentally-sensitive area scheme contribute significantly to the farm income generated on a hill unit in Shropshire now for sale subject to a farm businesss tenancy.

"ESA payments are much more likely to continue in their present form compared with arable area aid payments, and they are currently flavour of the decade with a strong likelihood that the annual payments will increase," says vendor Richard Pettit.

For sale as a whole or in two lots, Black Mountain Farm, Newcastle on Clun, near Ludlow includes about 171 acres of grassland in two blocks designated as a less favoured area. It is guided at offers in the region of £300,000 by selling agent Tony Morris-Eyton, FPDSavills.

Now the ESA scheme which started on 20 Sept 1993 for 10 years generates an annual gross income of £11,671 which is complemented by the FBT rent.

The seven-year-tenancy commenced on 25 March 1996 and is due to terminate on 1 March 2003. The current gross rent passing is £19,020 – there is an annual management fee of 5% for the administration of the FBT – and there is no provision for a further rent review until the expiry of the tenancy.

The FBT rent at just over £100/acre is similar to current grass let rents, a tradition that has been inherent in this area for centuries, maintains Mr Pettit, who had stocked the hill with 600 ewes and 60 suckler cows.

"None of the family were interested in taking on the farming business and so it made sense to sell the dead and livestock and let the land on an FBT to a local farmer, who farms at least 1200 acres, but now Im in need of some capital".

From a capital outlay of £300,000 the income equates to a gross annual yield of 10%.

"With the fortunes of farming at such a low ebb, the annual net income of over £29,000 represents an extremely attractive and secure income for the next five years," said Mr Morris-Eyton.

Also he maintains if sold with vacant possession the capital value of the land would be quite similar because the income generated by the FBT adds significant value to the investment.

He said: "This investment opportunity could appeal to farmers looking for an annual income whilst retaining an interest in land and a variety of investors".

The Snowdenham Estate, Bramley, near Guildford is for sale as a whole or in two lots with an aggregate guide of £4.25m.

See more