Farm rents fall on back of low commodity prices

New data from the Tenant Farmers Association (TFA) has shown that farm rents across the UK appear to be falling as a reaction to lower farmgate prices in several sectors.

The TFA’s latest figures show that rents agreed at review across all farm types were on average around 16 per cent lower (89/acre) in the year to 30 April 2016 for Farm Business Tenancies (FBTs) and 10.5 per cent lower (at 63/acre) for Agricultural Holdings Act (AHA) tenancies, compared to those in 2015.

The farmers seeing the most significant fall has been those in the livestock sector on FBTs whose rents saw the biggest fall in rates compared to those whose rents were reviewed the year before, falling from £93/acre to £43/acre on average;  a decrease of 54 per cent.

Meanwhile, AHA tenant dairy farmers whose rents were reviewed saw a 21 per cent drop in rates to £65/acre compared with those whose rents were reviewed in the previous year when rates averaged £82/acre. This will be welcomed by those in this struggling sector who have recently had their rents reviewed.

However, rents have fallen much less when comparing those reviewed in the last year to when they were last reviewed three years ago. Across all sector types, AHA rents had fallen just 3 per cent, while there had been no change FBT rents during this period.

Katy Fox, Adviser at the TFA, said: “There has been strong resistance from landlords to any rent reductions and the cost of going to arbitration has also had a dampening effect on rent review activities originating from tenants.

“However where tenants are arguing their case, reductions are being achieved and there is no reason if current market conditions prevail, that these reductions should not become more frequent and deeper,” said Ms Fox.

Posted in ARA News.