New arrangements allow for flexibility
New arrangements allow for flexibility
NEW sale-and-leaseback arrangements have sprung up in the Eastern counties, since the advent of FBTs.
Such deals allow the owner to release capital, while carrying on farming under an agreement, the terms of which they can decide.
At March, Cambs, the 603-acre grade 1 White Fen and Floods Ferry Farm was sold earlier this year at about the guide price of £2.1m.
The farm was subject to a 20-year FBT, with five-yearly reviews linked to the Retail Price Index.
Initial rent was £130,000, with £90,000 (£150/acre) of this apportioned to the land and the remainder to the well-equipped buildings.
Giles Allen of selling agents Strutt and Parker says that for terms of over five years, there is a 1% reduction in the value of the land compared with freehold levels for every one year of the agreement.
In this case, therefore, the drop was 20%. This compares with a 50% drop traditionally seen if a unit was occupied under an old-style tenancy.
In most agreements like this one, the tenant takes on full repairing and insuring obligations. "Investors want something that is hassle-free," says Mr Allen.
Meanwhile at Boston, Lincs, the 825-acre Midville Estate was sold by Brown and Co and Savills with a guide price of £1.6m.
Grade 2 Midville was offered subject to a 25-year FBT, starting at £82,450 (£100/acre). Rent reviews, after the first five years, are at three-yearly intervals.
• Rob Hindle of JH Walter points out that the situation could arise where land subject to an FBT is worth more than vacant land. "The rent could be fixed for a long time into the future and, unlike under the old tenancies, the tenant cant walk away from a fixed-term FBT."n
Work under way at White Fen and Floods Ferry Farm, the scene of one of the first sale-and-leaseback deals under the new law.