As is common in the agricultural rented sector most farms are let by tender and to ensure you are in with a good chance of being invited for interview it is vital to consider your proposal at an early stage, often well before the viewing day. It is also important to consider what you can ‘bring to the table’ that will make your tender stand out from the crowd. Perhaps you have a particular skill that would enable the business to easily diversify, or an existing business that can support the subject farm, achieving a higher margin and therefore a more sustainable rent proposal than competing tenderers.
It is also important to consider who owns and/or manages the holding, in particular what motivates them. Are they purely looking for the highest rent, or are other factors more important to them. For example a particularly environmentally conscious landlord may consider a tender proposing a system of intensive conventional agriculture less favourable than another proposing to enter the new Countryside Stewardship scheme and an organic conversion. These factors need careful consideration as a great deal of time can be wasted preparing a tender that is unsuitable for the landlord’s long term plans. This issue can also be vital when tendering on local authority farms, which often have specific criteria their tenants need to satisfy in order to be suitable. Local councils should have a policy document detailing their agricultural lettings criteria, which often provides for ‘starter farms’ where potential tenants should be new entrants and where the initial term is limited with the intention that after say seven years, the tenant is encouraged to move to a larger council progression farm or indeed to the private sector. This then allows for another new entrant to utilise the starter farm.
Potential tenants should also be careful with the professional advice they receive as agents can be expensive if producing a full tender submission. It is prudent to ensure your agent provides advice at least in the more complex areas, for example on the tenancy agreement, rent or existing obligations under environmental schemes, as this will utilise their time most advantageously without incurring unnecessary expense. In many cases the tenant will often be best placed to prepare budgets and cash flows, as they will know what they will be able to ‘get out of the ground’ with the system they are proposing and the equipment available to them. Free support is also available from private limited companies and government funded schemes for preparing cash flows and budgets and your bank may also be able to recommend some of these if necessary.
Your potential landlord will also want to know about your qualifications, experience and previous farming history, whether you have family or an existing business that can provide support for your new business venture. Demonstrating your ability to achieve your business plan is vital and detailing your previous accomplishments can go some way to providing the prospective landlord with the confidence that you are the most suitable tenant. Give examples, have you previously established a farm shop and if so where. The landlord may even know it, if nearby, and having this experience of your previous success can work wonders. It might also be prudent, if you have a tidy farm, to encourage your prospective landlord to have a look around.
It is vital that you consider the particulars of the letting brochure in detail. If these state that the landlord is not in favour of diversification there is little point proposing a caravan site and a farm shop.
Financial information should be correct, detailed and well set out. This will enable those considering the tender to easily read your proposal, as at the end of a long day looking through tenders the last thing they will want is to struggle to decipher the financial data. Your financial security should be clearly laid out, as the landlord will want to ensure their rent will be paid and that you are able to deal with any dilapidations, tenant’s improvements and tenant right matters. If you are proposing investment in the holding give estimates of costs and where the funding will come from.
The rent is often the most vital factor and should be given serious consideration. Do your budgets provide sufficient profit for the proposed rent, leaving enough for yours and the business needs. This is becoming more difficult with land prices as high as they are and competition for land, particularly neighbouring land, as strong as it is. You should consider whether you are tendering against a neighbouring farm. If so they may be able to spread their costs, producing a larger margin than others. Do not let this put you off, but in order to be in with a chance these factors need early consideration and your agent’s input.
