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Massive increase in agricultural rents during 2011

The rent increase in 2011 was higher than that in 2009 or 2010, with arable and livestock rents increasing the most.  In the last three years, the average increase in rent has been 21% which, for an average sized farm, has meant a rent increase of £3500 per year.

In terms of tenancy type, Farm Business Tenancy rents rose by the most – an average of 33%, with Agricultural Holdings Act rents rising by 20%.

FBT rental growth during the last 12 months was also significantly higher than in years to October 2009 and October 2010.

In terms of regional variation, North East and North West England saw an average increase of 23% with an average new rent of £76 per acre compared with £62 per acre in 2010.

In East Midlands and Yorkshire, rents rose by an average 24%, or a new average rent of £82 per acre compared to £62 per acre in 2010.

In the South West and West of England, rents rose by 24% with a new average rent of £78 per acre.

Eastern England saw the highest average increase of 32% with an average new rent of £96 per acre.

Dr Jason Beedell, Head of Research at Smiths Gore said: "Farm Business Tenancy rents are rising faster because they areinfluenced by strong results from open market lettings.

"Indeed, our data shows that there are a number of drivers that affect the buoyancy of the rental sector, and clearly openmarket rentals are one of them.  Others include the quality of the land and the soil, and the quality and quantity of buildings on equipped holdings.

"Equipped holdings continue to yield higher rents than bare land lettings.

"The majority of rental increases reflect improved profitability, but other factors include for example different prioritieson dairy units switching from dairy to rearing dairy replacements, and the installation of renewable energy technology."

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