Letting agricultural land can often appear straightforward, particularly where there is a neighbouring farmer keen to take it on. However, recent experience has reinforced just how important it is for landowners to properly test the market before agreeing terms.
We recently brought around 160 acres of agricultural land to let on the open market in Cheshire, split across several parcels, and the level and range of interest was remarkable. Different farmers had different requirements, different systems and, crucially, very different views on rental value.
That experience highlighted an important point: while letting land to a neighbour may be the easiest and most convenient option, it does not necessarily demonstrate what the land is truly worth. Unless the market is tested, a landowner can never be certain that they are achieving the best possible rent or attracting the most suitable tenant.
There is more to a successful letting than simply agreeing the highest figure. The terms of the tenancy matter. A properly drafted Farm Business Tenancy provides clarity for both parties, setting out responsibilities for matters such as repairs, cropping, husbandry, boundaries and compliance.
The length of the agreement also deserves careful consideration. A three-year term can be particularly important where the incoming farmer wishes to participate in schemes such as the Sustainable Farming Incentive. Giving a tenant sufficient security to plan ahead can ultimately benefit both the farming business and the condition of the land.
Agricultural land remains a valuable and sought-after asset, and demand can often surprise even experienced landowners. Convenience has its place, but so does competition.
When it comes to letting land, sometimes you really do have to speculate to accumulate.