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UK Farmland Leases + 7 Year Fixed Rental Income
 Direct farmland investment has the potential to provide investors with the most effective exposure to the resultant boom in agricultural commodity prices, delivering a high level of income and capital growth with disproportionately low levels of risk.
One interesting new option is being offered through partners who specialize in Land Asset Management. Their UK farmland strategy provides a way for individual investors to gain direct access to UK farmland (the farmland only, not the non-land farm assets) on a freehold basis, essentially becoming the farmer’s landlord. It has been described as "The Alternative Buy to Let Opportunity" because the client receives a fixed rental income for 7 years at which point the farmer typically buys back the land and the client benefits from any capital growth (independently valued)
The minimum of around £20,000 to buy into the chosen farmer's land and rent it back to him on a seven-year tenancy basis. "It's a sort of agricultural buy-to-let arrangement but with a ready-made tenant,"
In return, the farmer agrees to pay 7% annual rent (significantly higher than the 1.5% to 2% standard rate).This provides investors with a fixed return from rental income of 49% over the 7 year period, plus their share of any capital gain in the value of the land.
Example: UK Farmland “Buy to Let” Leases (7 year investment)
Amount Invested |
Net Annual Rental Income
(7%*) |
Total Net
Rental Income
Over 7 Years
(7%)* |
Land Value
After 7 Years
Annual Net *
|
Farmer’s
Buy Back
Price
|
Success Fee
Paid to
Management
Company |
Total Return
(Inc Land)
Net of
Fees
|
£20,000 |
£1,260 |
£8,820 |
£38,974 |
£31,179 |
£923 |
£39,076 |
£40,000 |
£2,520 |
£17,640 |
£77,949 |
£62,359 |
£1,911 |
£78,088 |
£60,000 |
£3,780 |
£26,460 |
£116,923 |
£93,538 |
£2,896 |
£117,102 |
£80,000 |
£5,040 |
£35,280 |
£155,897 |
£124,718 |
£3,884 |
£156,114 |
£100,000 |
£6,300 |
£44,100 |
£194,872 |
£155,897 |
£4,917 |
£195,080 |
£200,000 |
£12,600 |
£88,200 |
£389,743 |
£311,795 |
£9, 900 |
£390,095 |
* Final land value assuming 10% annual growth. Rental Income paid quarterly (less 10% management fee). Lease establishment fee and disbursements not included in these figures.
All land is RICS valued and purchase funds are held by UK based solicitors throughout the conveyancing process until transfer of title is complete. Under the Farmland transaction model, investors purchase farmland assets, simultaneously renting the land back to the selling farmer.
The rental rate under the tenancy agreement is lower than the sub-prime interest rate, but significantly higher than the standard rental rate for UK farmland. The farmer is able to use the proceeds from the sale of the farmland to pay down debt to lenders and/or to finance cash flow.
Investors have a tenancy agreement (FBT) for a term of 7 years. This enables the farmer to continue farming the land and provides clients with rental income from rents.
Call 01204 592968 for further information on availability or click here for regular updates and opportunities
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