RENTS

Agriculture

After Brexit in March 2019, the Government intends to continue a BPS like scheme for 2019 and 2020, but then in 2021 a seven-year transition period will start. During this time, direct payments will be phased out, with the last payments being made in 2027. In 2021, direct payments for all farmers will be reduced, but payments to larger farmers will be reduced by greater proportions.

These proposals, with the unknowns over our future trade relationships and the detail of the NELMS, are likely to affect land availability and rents. For both landlords and tenants the best course of action is to review their business interests and work towards ensuring they are resilient under any trade or support scenario.

Residential

In order to remain competitive, landlords will need to remain flexible and creative in their offering.

Our residential research team note that tenants are increasingly driven by finding the best-in-class property at the best price, and continue to be flexible in their choice of location to achieve this. To retain demand, there is an increasing trend for longer length tenancies. We’ve seen the average tenancy length across the prime market increase from 15.1 months in 2013/14 to 16.9 months over the past 18 months.

On a legislative issue the proportion of properties let on Short Assured Tenancies (SATs) in Scotland is likely to decline over coming years following the introduction of the Private Residential Tenancy in December 2017. Our survey currently shows that the current proportion of SATs is two thirds of all estate houses.

ASSET VALUES

Farmland

Our latest research shows that the downward pressure over the past four years on average farmland values may be easing. This trend holds true for both arable and grassland markets, but there continues to be a wide range of values achieved either side of the average. During the past 12 months the average value of ‘all types’ of farmland in Great Britain fell by -1.3% to £6,700 per acre. Average prime arable land across Great Britain fell -1.7% to £8,800 per acre.

We believe it is the amenity farms and those with a variety of income streams which will continue to be in demand. In contrast commercial units in need of investment, without the scope to diversify, are more likely to come under pressure unless there are neighbours looking to expand.

Residential

Our residential research team notes that the markets beyond London’s commuter belt are less affected by the stamp duty changes and not as reliant on equity coming out of the capital. The wealth generated in the local economy and, in some cases, demand from second-home buyers, are stronger drivers of price growth. The relative value offered in most prime regional markets compared with the capital is likely to underpin future price growth and total growth over the next five years could amount to around 15%.

Glossary and footnotes

This publication

This benchmarking survey was published in November 2018. The data quoted and used in the charts and tables is the average of each variable in the benchmarking survey and is the latest available at the time of going to press.

Sources are included for all the charts and tables. We have used a standard set of notes and abbreviations throughout this publication.

Review

We regularly review our survey data, which means the data published each year may not exactly match that published in the previous year’s survey.

Estate structure

The average estate structure for those estates participating in the survey is:

_ENGLAND

• 4,700 acres

• 58 residential properties with an average density of 15 houses per 1,000 acres

• 14,800 sq ft of commercial workspace with an average density of 3,250 sq ft per 1,000 acres

_SCOTLAND

• 3,260 acres

• 38 residential properties with an average density of 11 houses per 1,000 acres

• 12,600 sq ft of commercial workspace with an average density of 1,860 sq ft per 1,000 acres

Estate ownership

Institutionally owned estates represent around 20% of the estates in the survey with the remainder in private ownership. The owner is resident on three-quarters of the privately owned estates.

Ownership objectives

Long-term retention of the core estate is the key objective for the owners of these rural estates, followed closely by income generation and then by return on capital and environmental stewardship.

Abbreviations

AHA Agricultural Holdings Act

AST Assured Shorthold Tenancy

FBT Farm Business Tenancy

LDT Limited Duration Tenancy

SAT Short Assured Tenancy

SLDT Short Limited Duration Tenancy