Farm rents set to rise

    The opportunity for landowners to undertake rent reviews on both Agricultural Holdings Act (FAT) tenancies and (LDTs) Limited Duration tenancies on arable holdings looks to be sound for the next 12 months. 

    This is against a background of rising global food prices, which reached a record in December, and stronger commodity markets, with feed wheat spot prices now close to £200/tonne and November 2012 future prices around £145/tonne.

    The Savills Estate Benchmarking Survey, which covers over 200 Estates and over one million acres, shows arable FAT rents in the region of 46/acre and LDTs at close to £50/acre for 2010, and these are likely to increase for the rents being reviewed in 2011.

    The dairy sector will have more limited opportunities, but with rising residential rents, the element for farmhouses and cottages will sometimes justify increased rents on equipped dairy and livestock holdings.

    Whilst there has been increased volatility in recent years and this is expected to continue, the recent price spike in some commodities (feed wheat was as low as £100/tonne in June 2010) looks to be more sustainable this time compared to 2008.

    Contract farming returns are set to increase, despite increased variable costs and fuel prices, from the £98/acre benchmark figure for 2010.  Landowners are advised to ensure properly drawn up agreements protect their interests from a financial and taxation viewpoint.

    In light of all of these factors, now is an opportune time to look at what rent review notices should be served to allow rent reviews to occur in 12 months time.

    Savills has an unrivalled database of rental comparables and with over 180 rural professionals the Land Agents and Agribusiness teams are able to deal with any farm rent review whatever its sector.

     
     
     
     

    Key contacts

    Jonathan Dymock

    Jonathan Dymock

    Director
    Rural Aberdeen

    Savills Aberdeen

    +44 (0) 1224 971111

    +44 (0) 1224 971111

     

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