Scottish agricultural survey: December 2017

10. Tenancy data

10.1 Rents paid - ranges

Chart 10 shows the range of rents paid in different sub-regions. The number of returns in some areas are quite small but they suggest that Na h-Eileanan Siar and Shetland have the lowest rates, even after crofts are excluded from the analysis, explained by their remoteness and quality of land. Highland showed a wider spread of values. Orkney showed much higher rents than elsewhere in the North West region, more in line with those in the North East, reflecting the fact that location alone does not drive prices.

The South West contained the next lowest group of rents, although with rents in Argyll & Bute being more in line with those in the North West.

Rents in the North East and South East were then generally higher, with Fife and Lothian having the highest rents, with half of those sampled paying over £120 per hectare.

Chart 10: Range of rents paid per hectare, by sub-region, 2017/18

Bars show 90 per cent, upper quartile, median, lower quartile and 10 per cent values. The figure below the label shows approximate number of leases for which data were returned. Excludes crofts and seasonal lets. source: Table 9

Chart 11 (on the same scale as chart 10 for comparability) shows the rents paid, by the new NUTS2 ^[6] , excluding crofts and seasonal lets. Rents for West Central Scotland appear almost as low as those for the Highlands and Islands, due to low rents in Argyll and Bute. There is little difference between the other three regions, which all have medians at just over £100 per hectare.

Chart 11: Range of rents paid per hectare, by NUTS2 regions, excluding crofts and seasonal lets, 2017/18

Bars show 90 per cent, upper quartile, median, lower quartile and 10 per cent values. The figure below the label shows approximate number of leases for which data were returned. source: Table 9

Chart 12 (on the same scale as previous charts for comparability), shows the rents paid by farm-type ^[7] , also excluding crofts and seasonal lets.

Farm-type is, to a certain extent, determined by the quality of land, and so it would be understandable if some differences appeared between categories in this chart. However, there is little difference between farm types, with the exception of LFA cattle & sheep and forage farms showing predictably lower rents, and the rents for pigs & poultry and horticulture extending much higher. The larger values of rent per hectare in these latter categories generally relate to rents of a few thousand pounds for quite small areas, presumably with sheds and glasshouses.

Chart 12: Range of rents paid per hectare, by farm-type, excluding crofts and seasonal lets, 2017/18

Bars show 90 per cent, upper quartile, median, lower quartile and 10 per cent values. The figure below the label shows approximate number of leases for which data were returned. source: Table 9

Chart 13 (on the same scale as previous charts for comparability) shows the range of rents by type of tenancy, with seasonal lets split between LFA and non- LFA and whether on a recurring location, and traditional 91 Act tenancies split by LFA and non- LFA. The chart shows the low rents on crofts and the few returns from Small Landholders Act ( SLA) tenancies. This was followed by 91 Act tenancies on LFA land, and then Partnerships and LDTs. There is little difference in the other arrangements, though with less variation in non- LFA 91 Act tenancies. Non- LFA seasonal lets on a new location had the highest median value, and a considerably larger range, with a quarter of those responding over £800 per hectare.

Chart 13: Range of rents paid per hectare, by tenancy-type, 2017/18

Bars show 90 per cent, upper quartile, median, lower quartile and 10 per cent values. The figure below the label shows approximate number of returns. source: Table 9

SLA	Small Landholder Act
91 Act LFA	91 Act tenancy on LFA land
91 Act Ltd Ptn	91 Act Limited Partnership
LDT	Limited Duration Tenancy
Ssnl LFA same loc	Seasonal let on LFA land, on a recurring location
SLDT	Short Limited Duration Tenancy
Ssnl LFA diff loc	Seasonal let on LFA land, not on a recurring location
91 Act nLFA	91 Act tenancy not on LFA land
MLDT	Modern Limited Duration Tenancy
Ssnl nLFA same loc	Seasonal let, not on LFA land, on a recurring location
Ssnal nLFA diff loc	Seasonal let, not on LFA land, not on a recurring location

10.2 Rents paid - overall average per hectare

As detailed in section 10.1, in the above analyses, rent per hectare for a tenancy covering a large area of land is treated equally to one covering a small area, and results from different farm-types are not weighted to make data for each farm-type representative of their size in the industry.

However, in order to estimate the overall cost of rent for the estimate of Total Income from Farming, the data have been weighted accordingly to produce a total rent figure. This results in an estimated overall average (including crofts but excluding seasonal lets and rents paid in kind) of £39 per hectare, £25 per hectare for LFA and £136 for non- LFA, with a figure of £52million for the total amount of rent paid.

10.3 Historical trend

Chart 14 shows the trend in estimated average rent per hectare from 1998 to 2017.

In estimating the average rent per hectare, survey data have been weighted-up so that, for example, the importance given in the calculation to the rent of LFA cereal holdings is in proportion to the actual area of tenancies on LFA cereal holdings in the census. This means that the calculation would not be affected by having too few or too many of a certain type of farm in our survey responses. However, due to the comparatively high non-response rate for this question, there are still some strata where values are based on best estimates or, for previous years, rolling averages.

The chart shows that

• between 1998 and 2008 there was very little change in the overall average rent paid per hectare, and hence a reduction in real terms, once inflation is taken into account.
• since 2008 there has been an above-inflation increase in rent (41 per cent or 22 per cent after accounting for inflation), particularly on LFA land which has risen 53 per cent (32 per cent in real terms).

These result in rents currently been at a similar level to 2000, once inflation is taken into account.

In recent years there have been a reduction in the area of land rented under long-term rental arrangements, and an increase in shorter-term limited duration tenancies. These arrangements are often more expensive, and this has driven up the overall average cost of renting.

It should also be noted that most rents are not reviewed each year; for example, 1991 Act tenancies can be reviewed no more than every three years. Hence the overall average increase comprises those with no increase this year and those with increases above the average.

Chart 14: Average rent per hectare, 1998 to 2017 source: Table 8