Case Studies

Quality trumps quantity

Uplift in rent of 32% per annum.  But that’s not the real story.  Thorough interrogation of the applications is critical to understanding the strength of an application, the calibre of the applicant and how they will fare in an uncertain agricultural market.

At TNLM we value discretion and integrity.  All our Case Studies are published with the full authority of the Estate to which they relate and are deliberately anonymised to protect the individuals and businesses concerned. 

Introdution

The ANON Estate is a traditional, predominantly agricultural Estate in the South West.  One of the agricultural holdings on the Estate had a tenant who had allowed the farm to fall into disrepair and the relationship had broken down between the Estate and the Tenant.  An opportunity to regain possession of the farm was triggered and the process of finding a new farm tenant began.

The importance of…

  1. Finding the right tenant
  2. Establishing a solid commercial basis for the tenancy
  3. Ensuring the ethos of the tenant matches that of the Estate

…is fundamental.

Process

Terra Nova take this moment in the lineage of tenanted land extremely importantly. We interview in person every credible applicant.  We expect solid 5-year business plans which are sent away for peer review with an objective third party. We unpick the numbers and stress-test them against the ambitions of the farmer and play out scenarios at odds with their expectations to assess how they would perform under stress.

Money is not everything, but it is important to understand the viability of the proposals and the realism of the rent offerings.  Equally, under-cooked proposals may belie other fundamental problems in the offering.

The impact on the relationship and potential for longevity were pronounced

Once we had whittled down the applicants to a shortlist, we scheduled the follow up round of interviews at the home farms of the applicants.  This gives us the opportunity to see them on their own turf, assess and appraise their holding and shift the dynamic of the interview.

Though this was a considerably more involved process than the Estate had been accustomed to under the previous managing Agents, the impact on the relationship and potential for longevity were pronounced.

We work hard to make sure we understand how the tenants’ businesses can compliment the Estates’ businesses

What was particularly noted was the attention to detail in assessing the various applicants’ accounts and ambitions…and, crucially, whether they were realistic.  So often applicants submit inflated or unrealistic proposals to ‘win’ the tenancy.  At Terra Nova we understand that, if the source of the Estate’s revenue is rent generated from a tenant’s farming business, the strength of that business underpins the certainty of the Estate’s cash flow. That is why, at Terra Nova, we work hard to make sure we understand how the tenants’ businesses can compliment the Estates’ businesses and vice versa.

In this case, the uplift in rent was welcome and represented a rise of £22,000 per annum or 32%

The Estate also secured a condition in the contract to prevent maize being grown which was a cause of severe soil erosion under the previous tenant.  We then worked hard with third parties, including the West Country Rivers Trust and the fishing tenant to secure grant funded tree planting and fencing on the holding, which protects the water from run off, makes tangible gains to carbon capture and contributes to stock proofing dilapidated boundaries – a win-win-win.

Working with the applicants to understand their motivation

Of course, whether or not the new contract is maximised and bears fruit for both parties will play out over the years to come. 

We know there is plenty which sits outside our control, but we always cut to that which is within it and identify what moves the needle.  This case delivered impact by:

  1. Articulating the Estate’s demands clearly from the outset
  2. Working with the applicants to understand their motivation
  3. Investing to determine quality of applicant over quantity of rent
Terra Nova Land Management

The Terra Nova Foundation is a charitable enterprise, committed to unlocking opportunities and allowing the rural economy to deliver its full potential. We are currently developing initiatives in the following areas: mentoring, charitable donations, academic-professional preparation and rural curriculum delivery through lectures, panels and more.

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