TO RENT, OR NOT TO RENT? THAT IS THE QUESTION.

This entry was posted on Monday, June 12th, 2023 at 4:34 pm

I have recently been involved in advising clients on tenders for farms and bare land which has raised interesting and fresh issues that we have not faced before.

1. Absence of BPS

This historical safety net is now absent and none of the land to let includes any BPS which now stays with the outgoing occupant.

In the past, BPS has been a large factor in our accounts and more importantly a constant source of income when we go through a bad season.

2. Replacement Support Schemes

In order to maximise income and produce the best tender, we have had to appraise in some detail all the potential opportunity for Countryside Stewardship and Sustainable Farming Incentive.

The future Landlords need to be consulted as to whether they will accept such a proposal and will give their reasonable support where requested.

3. Land Quality

With the BPS payments based on area rather than production going out of the window, the focus has very much changed to productivity. Gross margins and cash flow budgets are the new tool for completing a tender. Our practice is to take a realistic view on yields which then feeds down into the commentary about affordable rent.

4. What Rent to Pay

Every farm is different but in principle when you arrive at a gross margin for the holding before rent, you then have to make the critical decision of how to split it with the landlord. Traditionally this has been on a 50/50 basis but the figure you pick will reflect your aspiration, or perhaps desperation!

Stephensons Rural is happy to advise through our team of specialists.

James Stephenson MA (Cantab) FRICS FAAV

Tel: 01904 489 731

Email: jfs@stephenson.co.uk