Rural Estate Management 

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At Armitstead Barnett we act for a wide range of private and charity sector landowners in the letting of rural property from bare land to well-equipped farms, shoots and quarries.  Owing to the current agricultural and environmental policy changes some Landlords are reviewing their portfolios and strategically positioning their letting arrangements in preparation for what lies ahead. 

In this article we will look at the key decision factors and rationale when deciding how to let property.  In each instance, it must be remembered the clients’ individual position can vary from the norm depending on their key motivations such as maximising return, environmental matters, estate longevity, etc.

  • Tenancy type – Agricultural Holdings Act (AHA) agreements were replaced with Farm Business Tenancy agreements (FBT) on 1st September 1995 and such letting arrangements have become much more flexible.  Of the two, the FBT arrangement offers the Tenant much more security and standing than the seasonal grazing licence.  Taxation matters can also play a key part in deciding the type of agreement. 
  • Term – Shorter term agreements such as 2 or 3year FBTs and annual grazing licences, give the Landlord more flexibility but offer the Tenant minimal security to invest in the property unless write down periods can be agreed.   
  • Rent – Rents are very topical at the moment with the full affect of Brexit and changing grants and subsidies yet to be seen.  Under a Farm Business Tenancy rent mechanisms can take many forms.  The standard is 3 yearly reviews to market rent but they could be linked to a set formula such as the retail price index, fixed, upward only or linked to the AHA agreements related earning capacity rent mechanism. 
  • Diversification – Becoming increasingly more prevalent as we are seeing the pro-active Tenant investigate alternate ways to generate farm income.  Whilst some Landlords are supportive, and even willing to back such projects, other Landlords are wary of the impact agreeing to these changes of use can have.  It is important to fully consider the merits and of each scheme and potential drawbacks.  Prior to letting, your agent should also serve a Section 1(4) notice to ensure the tenancy remains an agricultural letting, free of security of tenure. 
  • Legislation – Minimum Energy Efficiency Standards (MEES), electrical safety certificate responsibilities, right to rent checks, etc., place a legal obligation on the Landlord and there can be significant implications and liabilities if they aren’t properly considered.  In regard to BPS claims, grant applications and subsidies the legal position can also be imperative.

These present just a snapshot of the considerations one must consider before letting rural property.  With experienced surveyors across the firm please contact your local Armitstead Barnett office to discuss your portfolio and the options open to you.  As matters progress, we will often suggest, and work with, accountants and legal representatives to protect and enhance your position and assets.

Authored by

Mark Barrow

Cumbria

07976 280114


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