TAB Feb 2019

Rent Review Calculations

Holding: Woodlands Farm

Tenant: G H Walton & Son LTD

Landlords:

James Walton

Julia Walton

Tom Walton

The Heat Discretionary Settlement Trust

The Julia Walton Discretionary Settlement Trust

Strictly Private & Confidential

19 February 2019

Contents Procedure ...............................................................................................................................................2 Assumptions...........................................................................................................................................3 The Holding.............................................................................................................................................4 The Budget – Gross Margin...................................................................................................................5 The Budget – Other incomes.................................................................................................................7 The Budget - Summary ..........................................................................................................................8 Comparable Evidence............................................................................................................................9 Conclusion ........................................................................................................................................... 11 Rent Apportionment for Ownership ................................................................................................... 12 Appendix 1 – Plan ............................................................................................................................... 13

BROWN&CO | Calculations

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Strictly Private & Confidential

19 February 2019

Procedure

The Agricultural Holdings Act (1986) Rent review Formula:

The rent at which the holding might reasonably be expected to be let for by a prudent and willing landlord to a prudent and willing tenant, taking into account all relevant factors, including:

• The terms of the tenancy (including those relating to rent) • The character and situation of the holding (including the locality in which it is situated) • The Productive capacity of the holding and its related earning capacity • And the current level of rents for comparable lettings

As determined in accordance with the sub-paragraph (3)

This statutory definition needs to be taken as a whole.

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Strictly Private & Confidential

19 February 2019

Assumptions

1. Farmhouse –

i. Tom Walton lives in the farmhouse as tenant (Director of G.H. Walton & Son LTD). ii. We are assessing the holding on the basis that the tenancy is FRI.

2. Buildings let on 1954 act (units and offices in yard) – We have assumed this is with Landlord written consent.

3. Part unit 5 – Tenant improvement – We have worked on the basis that the black patch approach is used on tenant’s improvements up-until the point that the building is sublet (taking a ground rent for the sublet rent).

4. Barns converted to two dwellings – We have assumed this is with Landlord written consent.

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Strictly Private & Confidential

19 February 2019

The Holding

Holding details

Acre(s) 266.52

Arable

Permanent Pasture Total Agricultural Area Woodland and tracks Yard and house area

30.64

297.16

8.42 5.52

Total Holding

311.10

Suggest 3 Crop Rotation:

Winter Wheat (Feed) Spring Barley

88.84 88.84 88.84

Winter OSR

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Strictly Private & Confidential

19 February 2019

The Budget – Gross Margin

Winter Wheat Gross Margin

Yield

3.50 t/ac

Price/t Output

£163 /ton (exhaulage)

£571 /ac

Variable Costs Seed

£23 /ac £88 /ac £97 /ac £10 /ac £218 /ac

Fertiliser

Sprays

Sundries

Total Variable Costs

Gross Margin (per acre)

£353

Enterprise Gross Margin (Arable area - 88.84 acres)

£31,316.10

OSR Gross Margin

Yield

1.50 t/ac

Price/t Output

£311 /ton (exhaulage)

£467 /ac

Variable Costs Seed

£15 /ac £84 /ac £99 /ac £8 /ac £206 /ac

Fertiliser

Sprays

Sundries

Total Variable Costs

Gross Margin (per acre)

£261

Enterprise Gross Margin (Arable area - 88.84 acres)

£23,142.82

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Strictly Private & Confidential

19 February 2019

Spring Barley Gross Margin

Yield

2.50 t/ac

Price/t Output

£153 /ton (exhaulage)

£383 /ac

Variable Costs Seed

£25 /ac £49 /ac £55 /ac £6 /ac £135 /ac

Fertiliser

Sprays

Sundries

Total Variable Costs

Gross Margin (per acre)

£248

Enterprise Gross Margin (Arable area - 88.84 acres)

£21,987.90

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19 February 2019

The Budget – Other incomes

Total (pa)

Ground Rent (%)

Property Solstice Lapwing

Tenure Income Months

Notes

AST AST

£1,800 £1,100

12 £21,600 12 £13,200

8.0% 8.0%

£1,728 Extensive investment and risk so lower ground rent £1,056 Extensive investment and risk so lower ground rent

1954 Act 1954 Act 1954 Act 1954 Act 1954 Act 1955 Act

Unit 1

Unit 2

£24,000

12.5%

£3,000 Extensive investment but less risk than Resi

Unit 3

Unit 4

Unit 5 - 1/2 Unit

Landlord building

£11,500

17.5%

£2,013 Less investment to benefit from rent

Unit 5 - 1/2 Unit

Tenant building

£11,500

12.5%

£1,438 Less than above as the building that is let is a tenants building

Farmhouse

£6,000 £500/month - half AST for house in average condition - FRI lease

Total

£15,234

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Strictly Private & Confidential

19 February 2019

The Budget - Summary

Arable Crops Gross Margins

Gross Margin/ac Total

Acres

Winter Wheat Spring Barley

88.84 £352.50 £31,316.10 88.84 £247.50 £21,987.90 88.84 £260.50 £23,142.82

OSR

Arable Margins

266.52 £286.83 £76,446.82

Enterprise Gross

£76,446.82

Acres

Rent/ac Total

Permanent Pasture

30.64

£40 £1,225.60

Head

£/head/wkTotal

Cattle Sheds

200 £2.00 £10,400.00

(assume 26 weeks housed)

Acres

£/ac

Total

Basic Payment Scheme

297.16 £45.00 £13,372.20

(£45 being half BPS income)

£24,997.80

Acres

Other Land - Woodland and tracks

8.42

£0.00

Total Farm Gross Margin

£101,444.62

Less Fixed Costs:

£/acre

Property and Insurance Costs

£19.26 £5,723.30 £20.28 £6,026.40 £115.00 £34,173.40 £42.38 £12,593.64 £3.24 £962.80

Labour

Machinery

General Overheads

Bank Charge

Total Fixed Costs

200.16

£59,479.55

Pre-rent surplus

£41,965.07

Farm area

305.58 acres £137.33 per acre

50/50

£68.66

Rent from Farmland

Total rent

£20,982.54

Agricultural Net Profit

£20,982.54

Subletting income (ground rent)

£15,234

Total rent

£36,216.54

Acres

Farmland (from above) Yard and house area

305.58 5.52 311.10

Total area

311.10 £116.41 Per acre

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Strictly Private & Confidential

19 February 2019

Comparable Evidence

1. Holding near Botley, Oxford - Annual rent of £96,000 -

Farmhouse, 7 cottages, buildings and 887 acres - Valuing out the properties, we break down at £77.79/ac.

2. Holding near Daglingworth, Cirencester - Annual rent of £12,975 - Cottage, range of useable but tired buildings, 128 acres of arable and 45 acres of pasture. 173 acres in total - Valuing out the house and, we break down at £60/ac for bare land 3. Holding near Spetchley, Worcestershire - Annual rent of £20,910 - Farmhouse, fully equipped holding, mixed arable and pasture, 205 acres in total - Valuing out the house we break down at £77/ac for bare land

4. Holding in Oxfordshire (1) -

Farmhouse with basic buildings (mostly traditional), traditional mixed farm - Valuing out the farmhouse, we break down at £84/ac for bare land

5. Holding in Oxfordshire (2) -

Farmhouse with basic buildings (mostly traditional), but mainly pastureland - Rent of £82/ac - Valuing out the farmhouse, we break down at £72/ac for bare land

6. Holding in Oxfordshire (3) - Bare arable land - Rent of £71/ac

7. Holding at Eynsham -

120.26 acres of arable land with a range of farm buildings - Annual rent of £8,180 - Rent of £68/ac

8. Holding at Lower Heyford -

140 acres of bare arable land

- -

Annual rent of £11,037

Rent of £79/ac

9. Holding at Stirch Farm, Byfield, Daventry - 235.76 acres of arable land, 135.18 acres of pasture land, 4 bedroom cottage, farmhouse, modern agricultural buildings put up by the Landlord - Annual rent of £34,448 (£90/ac) agreed in September 2016 - Arable land valued out at £70/ac and pasture land valued out at £60/ac 10. Holding at Hill Farm, Maxstoke - 1,785.60 acres of arable and grass leys, 3.31 acres of pasture land and farmhouse - Annual rent of £18,700 agreed September 2015

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Strictly Private & Confidential

19 February 2019

- Rent of £75/ac for arable land and £60/ac for farmhouse

11. Holding at Manor Farm, Bourton-on-the-Hill - 123.93 acres of arable land, 50.60 acres of poor pasture land, 42.53 acres of good pasture land and a farmhouse - Annual rent of £17,600 agreed in September 2016 - Rent of £74/ac for arable land, £45/ac for poor pasture land and £55/ac for good pasture land.

Summary

Based on the above comparables, we value the subject holding at £70/ac. This is greater than the budget amount, but we have to take account of the above comparables. We value lower than the above comparables as the property is on an FRI basis.

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19 February 2019

Conclusion

Budget Value Comparable Evidence

£ 68.66

Per acre from Budget

per acre from Comparables

£ 70.00

Rent from Farmland

Total rent

£ 21,391

Agricultural Net Profit

£ 21,391

Subletting income (ground rent)

£ 15,234

Total rent

£36,624.60

Acres

Farmland (from above) Yard and house area

305.58

5.52 311.1

Total area

311.10 £117.73 Per acre

Taking into account the above calculations we recommend a rent for this holding at £36,624.60 or £117.73/acre

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Strictly Private & Confidential

19 February 2019

Rent Apportionment for Ownership

Property Owner (s) Ownership

House yard and Converted buildings

Total

James Walton

Julia Walton

50%

50%

100%

Rent

£

10,695.30

£

10,695.30

£

21,390.60

Property Owner (s) Ownership

Barn converted to 2 Houses (AST's)

Total

TomWalton

The Julia Walton Discretionary Settlement trust

50%

50%

100%

Rent

£

1,392.00

£

1,392.00

£

2,784.00

Property Owner (s) Ownership

Farmland and Buildings

Total

James Walton

Julia Walton

The Hart Discretionary Settlement Trust

25%

25%

50%

100%

Rent

£

3,112.50

£

3,112.50

£

6,225.00

£

12,450.00

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Appendix 1 – Plan

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