Warning over farm rent increases

by Kathryn Lewis of Davis Meade Property Consultants, Oswestry

As Lady Day (March 25) – the traditional rent day for tenant farmers – approaches, landlords are being urged not to press for rent increases as falling commodity prices are pushing some tenant farmers nearly out of business. Tenant farmers who have been served a rent notice should seek professional advice immediately or they could end up paying more than they need.

Tenants will now be taking action on recent notices sent out a year ago when the situation in farming was much different. Under the 1986 Agricultural Holding Act, landlords have to give at least 12 months notice of a rent review, so reviews coming up this March will have been instigated from a formal rent notice served in March 2014.

Milk prices are at rock bottom and the price of grain has also dropped considerably since this time a year ago. We need to look at the bottom line of the farm accounts and those are not looking good. At Davis Meade, we are negotiating on behalf of tenants some of whom were asked for increases of 30 to 40 per cent.

We can understand that there might be a need for a rent increase if the rent has not been reviewed for a number of years or if it is at a historically low level but if rents have regularly been reviewed at a reasonable level then there is no reason why they should go up again this time around.

We are advising tenants to be prepared to negotiate with their landlord and have their facts and figures to hand when they begin discussions. Don’t just put the rent review notice in a drawer and forget about it or you will then have to either agree to a rent increase or go to arbitration. The best option is to negotiate through your agent.

Tenant farmers should keep accurate records of their returns and expenditure to back up their claims and they need to have a reasonable idea of their likely profits for the next three years.

Contact Kathryn Lewis at Davis Meade Property Consultants on 01691 659658 or email kathrynlewis@dmpcuk. com

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