CKD Galbraith Rent Review Report 2010
We have carried out a series of rent reviews in 2010 and can report a strong desire by landlords and tenants to agree rents.
Chris Addison-Scott, Head of our Rural Department, said: “In general, there have been fewer rent reviews in the sector this year due mainly to the fact that a significant number of reviews have been undertaken over the last two years on leases that had not been reviewed for up to 15 years.
“This year our firm carried out 15 reviews with every case being agreed between the parties.
“As has been the case in the past the vast majority of reviews have been agreed amicably and in general there have been increases which vary in size, depending on when they were last agreed.
“The striking feature of this year’s reviews is that there has been no appetite for landlords or tenants to agree reviews on the basis of the Moonzie decision issued by the Land Court in May.
“The well established and traditional method of working out the rent based on comparable evidence, whether or not SFP was taken into account, was preferred by all and ultimately resulted in a much fairer agreed rental than the Land Court’s formulaic approach.
“Where we did apply this approach, as a cross check, to arable farms, the figures could have resulted in huge increases reflecting the large increase in commodity prices in 2010 and projected for 2011, possibly doubling (in some cases) rent based on the comparable method.
“Similarly with extensive livestock farms and hill farms the resultant rents were large using ‘naked acre’ rates as the basis of calculation. The Landlords we represented in these rent reviews were keen to take a realistic and pragmatic view and did not want to push rents to such an ‘unrealistic’ level despite the law supporting that proposition.
“Another feature of this year’s rent reviews is that both Tenants and Landlords are more reluctant than ever to have the matter referred to the Land Court for a determination. With the process being confrontational, time consuming and expensive there is little to recommend it and while both Landlords and Tenants continue to approach rent reviews on the basis described above it is hoped that this process will become redundant at least in so far as rent reviews are concerned.”