Despite DEFRA’s statistics showing an upward trend for average rents settled between 2014 and 2015, analysis of rent settlements in the year to April 2016 show some downward movement across most sectors.
TFA adviser Katy Fox said: “Rents in the dairy sector have seen the largest decreases, reflecting current difficulties in that sector.
“A number of reviews on dairy farms have yet to be settled where the reductions tenants are pressing for are clearly justified.”
Farm Business Tenancy (FBT) reviews also produced rent reductions. FBT dairy rent settlements were around £105 per acre (£259 per hectare) in 2016 compared to £138 per acre (£341 per hectare) in 2015.
Ms Fox said it was rents in the arable sector which had seen the strongest downward movement over the last three years, with decreases of 15 per cent on average for rent settlements reviewed in the year to April 2016.
She added: “There’s been strong resistance from landlords to rent reductions and the cost of going to arbitration has had a dampening effect on rent review activities originating from tenants. However where tenants are arguing their case, reductions are being achieved.”
Falling commodity prices and volatile output and input prices should be considered, she added. “Too often we’re seeing this information being ignored by landlords who instead rely on comparable rents,” she said.
“Where a rent was properly reviewed three years ago and the character of the holding along with terms of the tenancy haven’t changed, given comparable rents are static or falling, the only change has been the major drop in commodity prices which has resulted in the related earning capacity of holdings being greatly reduced.
"Tenants with these circumstances can present a strong case to argue for rent reductions.”
Figures released last month by Scotland’s chief statistician show the cost of renting Scottish agricultural land rose three per cent to an average £39 per hectare (£16 per acre) in 2014/15, compared to £38 per hectare (£15 per acre) the previous year.
The cost of renting ‘better quality land’ rose five per cent from £124 to £130 per hectare (from £50 to £53 per acre).