Farm rent increases difficult to justify this autumn

The Tenant Farmers Association has said that despite the better harvest conditions this year in comparison with recent years, the dramatic falls in output prices for most farm commodities will place farm budgets under pressure and create no room for rent increases in this autumn’s farm rent reviews.

Rent reviews normally take place over a three year cycle and are triggered by notices served at least a year in advance of reviews. There have been many landlords’ notices served for reviews of rents last altered in 2011 to take place this autumn, which is a traditional time for farm rent reviews.

TFA Chief Executive George Dunn said “If we check back at the financial performance of most farms three years ago and compare that with this year, we can see that output prices are at best no better and at worst lower than the position of three years ago whilst the cost side of the equation has shown considerable increase. A properly conducted farm rent review three years ago will have set a level of rent which should not see an increase this year.”

“Of course each case must be looked at on its own merits and there will be some cases where rents have not been reviewed for some time where an increase might be justified. Equally there will be rents settled at unsustainable levels three years ago which will be ripe for reduction. However, in the main we would expect to see rents remain at a standstill in a substantial number of cases,” said Mr Dunn.

“Whilst most landlords are yet to show their hand in terms of rent proposals, a few are beginning to make suggestions as to the levels of rent they would like to achieve. The TFA has been particularly concerned at one set of proposals tabled by a national firm of agents on behalf of the Church Commissioners which contains suggestions for rent increases from between 14% up to 35%. Whilst it is difficult to focus on percentages these are farms that were properly reviewed three years ago and therefore they are not increasing from a low base. The TFA is absolutely clear, such increases are unjustified,” said Mr Dunn.

“It is also our hope that the madness that has been seen in tender rents for farm business tenancies in recent years will be abated with some sense returning to the market given the expected profitability possible from the land being offered to let. It will be no surprise that individuals who tendered well over the odds as a result of a heady mix of hubris, scarcity and the economics of the madhouse will have had their fingers burned by their experiences this year,” said Mr Dunn.

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