Rent hikes will be unwelcome for struggling farmers
The prolonged cold wet start to the year impacted across all farming sectors and with the dry summer weather dashing hopes of a bumper harvest, margins are likely to be squeezed this year for most farmers in England and Wales.
This could make things particularly difficult for the tenant farming sector and we land agents at Davis Meade Property Consultants are urging landlords to resist asking for rent increases this autumn.
Michaelmas day (September 29) is the traditional day for issuing rent notices but with farmers facing challenging times and Brexit negotiations putting a damper on confidence, a rent notice dropping through the letter box won’t be welcome this year.
Many farmers have been struggling to cope with the extreme weather so an increase in rent will have a much greater impact than usual, particularly as we are facing an unknown domestic agricultural policy outside the EU.
If as a tenant you receive a rent review notice, the key is not to panic. There have been many cases over the last three years where rents have stayed the same following a rent review notice being served, as landlords have accepted it is not the time to increase rents but have served the notice to protect their position.
And there have even been instances where tenants have been able to turn the rent review into a rent reduction.
Parties will have at least a year to agree a rent after a rent review notice is served and it is dependent on the type of tenancy and the terms of that tenancy on how that rent is to be calculated.
However, each review is case specific and so the main message at all times to tenant farmers is to seek advice from their agent or a tenancy specialist before accepting a rent increase.
There is also concern that Farm Business Tenancies are getting shorter. Figures from the Central Association of Agricultural Valuers report that the average length of all FBTs has decreased from 4.5 years in 2016 to less than four years in 2017.
Excluding lettings of less than a year, the average tenancy length has fallen from six years to below five years. Worryingly, fully equipped holdings, which would be expected to be let for longer terms, have seen a reduction from over 14 years on average to below 10 years. Some 85 per cent of farm tenancies let in 2017 had terms of five years or under.
Farmers need to be able to plan ahead and short term tenancies don’t offer the security for tenants to invest long term for a sustainable future.
Kathryn Williams, land agent at Davis Meade Property Consultants
