33 / 36
33
Spring / Summer 2018
Aspects of Land
The report also suggests looking at
comparable rents in the area as a sense
check. “This is because it would be unfair
to have extreme discrepancies in rents
where holdings are similar,” says Hannah.
“The sense check should be based on
comparisons on rents over the last three
years to make sure it’s up-to-date.”
To help agree the fairest rent, Hannah
also recommends making use of the
amnesty on tenant’s improvements – a
three-year period introduced by the
Scottish Government last June that
allows tenants to have improvements they
have made during their tenancy formally
recognised by their landlords.
“There’s not been a huge uptake in
terms of formal agreements under the
amnesty since it began, but in terms of
helping rent reviews, making use of the
amnesty should be a priority,” Hannah says.
“It doesn’t have to be a formal process –
it can be carried out over the kitchen table
– as long as the agreement is recorded and
each party gets a copy of the agreement.
Above all, it’s about finding a way to come
to an agreement that everyone’s happy
with, and if these approaches can help
reduce conflict and create a fair rent, then
it’s worth doing them.”
■
For more advice on agreeing fair rents,
contact Hannah Guild, Aberdeen,
01224 971 135,
hguild@savills.comHOW TO AGREE
A FAIR RENT
■
Begin the process at least six
months before the rent review
is due
■
Start with a farm inspection
to document all the assets and
their condition
■
Agree a statement of facts
about the property
■
Carry out any maintenance or
renewals that are needed
■
Document any improvements
that the tenant has put in place
■
Look at comparable rents in
the area over the past three years
AGRICULTURAL
RENTS IN NUMBERS
£40
Average rent per hectare of
Scottish farmland. Although
figures vary from £137 per
hectare on better quality land
to £27 per hectare for Less
Favoured Area land
30
%
The average that Scottish
farmland rents have increased
each year since 2008 taking
inflation into account
3
years
Rent reviews should be
carried out every three years
to start making preparations now. “For
those gearing up for a rent review, the
best route to agreeing a fair rate is to
start with a farm inspection six months
in advance, followed by a negotiation
period,” she says.
“From a landlord’s perspective the
thing to be aware of is that you can only
base rent on fixed equipment and land
provided in the lease. Good maintenance
and renewal of fixed equipment is
therefore the best way of generating a
good rent,” she says.
“For tenants the main thing is knowing
exactly what improvements you have put
in place – regular correspondence between
parties and up-to-date records are key.”
It’s also important for both landlords
and tenants to be clear on the lease that
is in place, as different leases can have
different obligations, she says.
“And also, make sure that rent reviews
are carried out regularly. Because
farming’s had some hard times, some
landlords have sometimes missed rent
reviews,” she says. “When they are
eventually carried out, the increase can
then be far higher than the tenant is
prepared for. A steady increase is much
better, as it allows the tenant to account
for it in their business.”
SHUTTERSTOCK