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28 August 2012|Finance,News,Property News

Autumn farm rent reviews need 'reality check'


The Tenant Farmers Association is urging all rural landlords and their agents to take a common sense approach to this autumn's farm rent reviews.

The autumn is a traditional time for settling farm rents normally for the next three years following notices served in the previous year.

"We really need landlords and their agents to take a realistic, long-term approach" said TFA Chief Executive George Dunn.

This season has seen many landlords seeing unsustainable increases in rents particularly for Farm Business Tenancies.

They are doing so on the basis of the unreal levels of rent that have been tendered by people mainly on the basis of expanding existing operations.

"We need landlords and their agents to have an urgent reality check" Dunn said.

“Recent tender rents have been fuelled by an unhealthy cocktail of over inflated land prices, scarcity, hubris and the economics of the madhouse. This year’s conditions must serve as a massive wake-up call both to those who have paid over the odds for renting land and those who have accepted those rents. A dry spring, a wet summer and a difficult harvest will cause significant problems even for tenants on reasonable rents let alone those who are paying excessive levels," said Mr Dunn.

“Happily we are seeing some landlords taking a more pragmatic approach where they are prepared to look at the realistic profit achievable from farming the holding and setting the level of rent accordingly. The market isn't all about tender rents, it also must factor in these settlements between willing parties which are informed, negotiated, freely agreed and arguably more realistic than what is taking place in the tender market," said Mr Dunn.

"The TFA is calling on all tenant farmers to resist unreasonable increases in rent sought by landlords this season. Obviously rents need to be looked at on a case-by-case basis and therefore it is essential that tenants seek advice about their individual circumstances before agreeing to anything. The TFA is on hand to provide that essential advice and information," said Mr Dunn.

“Some landlords and their agents may try to pressurise tenants to settle before the applicable rent review date. However, this is only the date whereby the parties either have to have agreed or, in the absence of an agreement, one of the parties (in this case the landlord) should have applied for the appointment of an arbitrator which merely provides for further negotiating time. Only a very few rent reviews are resolved by arbitration even where an arbitrator is appointed. Therefore, tenants should not feel forced to settle at unreasonable rent levels,” said Mr Dunn.

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