2018 will be best remembered as the summer when the sun kept shining! Whilst it brought challenges around watering livestock and irrigating crops, it brought an ease of working and good fettle.
Despite the huge uncertainties around Brexit – which develops as I write, the farming community has carried on in their Business-as-Usual style. Farmers continue to invest and diversify, notwithstanding the uncertain future on subsidies and trade.
The end of 2017 saw the introduction of 3 legislative changes which developed in 2018. Firstly, the Digital Economy Act 2017 created more change than anticipated in the telecom mast world. Whilst the deeply concerning changes to valuation / consideration were not brought in through the legislation, Network Operators are taking a strong position on rentals, creating a stalemate in negotiations. I know of only a handful of deals that have been signed up since the new Code came into operation. The operators are adopting near bullying tactics and cases are being referred to the Lands Tribunal. it is hard to predict how the telecoms rental market will develop until we know how matters will be considered by the Courts.
In 2018 we have worked our way through the new Private Residential Tenancy for residential lets. This replaced the Short-Assured Tenancy and is now the main letting mechanism for houses. In practice there is little change to letting a property, but the main consequence is the removal of the no fault termination right. As Letting and Management Agents for residential properties, we needed to undertake exams and further regulation to become Registered Letting Agents this year. Then there was more red tape to the residential letting market with the EPC Banding requirements for new to market and existing lets.
The final legislative change for 2018 was the introduction of the Modern Limited Duration Tenancy replacing the Limited Duration Tenancy as a means to let agricultural land. There has been little marketed activity in the agricultural tenancy sector and few MLDT’s have hit the open market but those that were advertised, generated considerable interest. The Land Occupation Survey conducted by the Central Association of Agricultural Valuers at the start of the year obtained evidence of a contracting let market with short term grass lets and Short Limited Duration Tenancies of 3 to 4 years being the main vehicles to let land.
The farmland market continued to perform well in 2018. A recent opinion-based survey by the RICS reports a 20% increase in arable bare land values in Scotland compared with the second half of 2017. I concur that the market is strong – particularly for prime arable land. However, I do not believe the average price to have raised as much as 20% and I am of the view that the market has been quite stable for arable land for the last 3 to 4 years. Hill land with planting potential is a growing market and there is good demand for such land. The land in between these two land types – poorer arable land and mixed farming units – does not always generate as much demand and as such needs to be realistically priced.
What can we expect in 2019? I suspect the land market will continue as in 2018 with good prices for good land and the let market contracting further. Woodland planting and diversified income streams will be explored by many. Further developments are expected in the Landlord and Tenant sector – we await details on the renunciation of tenancies and rent review procedures (based on productive agricultural capacity).
In summary, there WILL be more change, so seeking professional advice will be as important as ever.
Best wishes for the festive period.
Rhona Booth is an Associate Director of Davidson & Robertson Rural, based in the Forfar office : 01307 490220. www.drrural.co.uk.