Understanding the rent formula
When reviewing a rent with a tenancy governed by the Agricultural Holdings Act 1986 consideration must be given to the rental procedure as set out in Section 12 and Schedule 2.
The rent properly payable is calculated by giving regard to the terms of the tenancy, the character and situation of the holding, the productive capacity of the holding and its related earning capacity and the current level of rents for comparable lettings.
It should be noted that, unlike within historic acts, the wording “open market value” is no longer used within the current formula. The formula is very specific as to what must be taken into account but is equally unclear in relation to, for example, the weight that should be applied to each specific factor.
The purpose of the formula was to enable a competent tenant to be protected and ensure he or she could pay a reasonable rent based upon the agricultural economic climate at the time of the review.
Kathryn Williams, Davis Meade Property Consultants, Oswestry
