Many farmers and landowners could be commanding more rental income from their residential farm properties.
Here’s four tips to help farm and estate owners improve the performance of their portfolios.
1. Understand the true market values
With today’s farms being less labour intensive than they were in years gone by, an increasing number of residential properties have been let to people who are not connected to the farming business.
This shift brings the risk of the residential portfolio becoming an overlooked income stream with missed opportunities to bring rents in line with market values. Always remember non-agricultural property is rarely free of inheritance tax (IHT).
2. Review rents and terms of occupation regularly
A variety of occupational arrangements, such as those under the Rent Agriculture (1976) Act, Assured and Assured Shorthold tenancies, may be in use for different residential properties on the same farm.
It is essential that these arrangements are reviewed regularly with any agreements being updated and a system put in place to review rents and ensure they remain at the market level.
3. Improve properties gradually to increase rental income
Residential farm properties should be inspected annually to understand any repairs and maintenance issues and ensure that properties stay compliant with the law.
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A plan to gradually improve and upgrade properties over time will help to keep them desirable, reducing the time and costs associated with finding new tenants. It will also enable better long-term planning for managing the portfolio.
4. Have a joined-up property management plan
Working with an effective and trusted team of advisers will allow you to keep on top of all property management issues while you concentrate on the farming business. Strong relationships with your property, legal and financial advisers is key.