Why grazing lets are so popular

The extraordinarily high prices paid for annual grass park lets has been a talking point recently. The reasons for this have been well documented, chiefly the cold spring leading to a shortage of grass and the buoyant trade for prime sheep.

This year is, perhaps, exceptional, in terms of demand driving up prices.

Indeed, local anecdotal evidence suggests many farmers who would not normally do so were actively bidding for grazing lets this year, such was their need for grass.

However, it is clear that the trend in recent years has been for more grazing lets being made available by landowners.

The sixth Scottish Land Occupation Survey, published by the Central Association of Agricultural Valuers (SCCV) in March, reports on the year to November 2017 and shows that by far the majority of new lets signed in the period are in the form of grazing lets.

They are finding favour with landowners as they offer flexibility in terms of duration and obligations, they do not confer tenancy rights and maintenance obligations and vacant possession can be obtained quickly and easily.

However, grazing lets provide no long-term prospect for the grazier and as this spring has shown, can be a prohibitively expensive option.

The second most commonly-used letting mechanism in the latest land occupation survey is the Short-Limited Duration Tenancy (SLDT), which offers advantages to the landowner in that they can be short in nature.

The average new SLDT in 2017 was three to four years and allowed vacant possession to be obtained easily at the end of the term. It affords slightly more confidence to the tenant and gives more flexibility in terms of grazing and cropping duration.

I do not wish to discuss the politics or play the blame game regarding the tenanted sector.

However, it makes me sad that the trend evident in this most recent land occupation survey echoes that of previous years – the relatively small acreage of land being brought to the open market for let each year is increasingly being let under short-term arrangements and the land is most often let as “bare land”.

In practice, what this means is that when a farm becomes available for relet, it will now either be farmed in hand, or land let on a short-term basis with the house let separately.

There is no incentive for the landowner to do otherwise and the traditional type of equipped farms of 250-350 acres are no longer being brought forward into the market.

The efforts of all concerned to reignite the tenanted sector and encourage new entrants are to be applauded. The starter farms initiative from the Scottish Government and various public agencies has provided a first step on the farming ladder for a small number of lucky candidates, but I question if enough effort is being put into answering the question “what next”?

Where will new entrants in starter units go when their first tenancy ends? Where will they, or the graziers building up stock numbers, or the contract farmers, find an appropriately sized farm – in the traditional sense of the word – to rent?

The land letting picture, painted in the CAAV land occupation survey suggests that the answers to these questions might be “with great difficulty” – and surely that is not a healthy situation for the Scottish farming industry to be in.

Ultimately, the solution to this conundrum will have to find favour with both landowners and tenants and instill confidence in the future – for both parties. Rhona Booth is a surveyor in the Forfar office of Davidson & Robertson.

Grass park lets are fetching very high prices at the moment.