Agricultural Valuations

R.G. Williams

• Publisher: Estates Gazette
• Year: 2008
• ISBN:
  9781136430411
• Edition: 4
• Topic: Derecho
• Subtopic: Derecho de la propiedad

Agricultural Valuations, now in its fourth edition is written by a practising agricultural valuer who has been working in property for over 50 years. His analysis updates recent changes to tenant right valuations, improvements, fixtures, milk quotas and dilapidations. The author uses numerous example claims and valuations which shed light on recent pipeline and electricity line wayleave claims, notices to remedy breaches, together with probate, income tax and compulsory purchase valuations. Further chapters deal with the guiding principles of how to correctly value farms, assess farm rents, carry out arbitrations, inventories and records of condition. valuation clauses on sales of farms, livestock, soils, management agreements, valuation in court proceedings and a glossary of useful information. This practical, but detailed title will be invaluable to students, agricultural valuers and land agents who are looking to be kept apprised of up to date best practices. The author was awarded the 'Kenneth Glenny' Prize by the Central Association of Agricultural Valuers when the first edition was published in 1984. Since then the book has been expanded brought up to date to reflect changes that have occurred to rural communities. The author, a member of a North Wales farming family, was Senior Partner of Coles Knapp and Kennedy, Ross-on-Wye. An experienced farmer himself, he keeps cattle and sheep, grows arable crops and also grows cider apples and hops in Herefordshire. He was involved for over 25 years in training candidates for the examination of the Central Association of Agricultural Valuers and for many years the RICS TPC in agricultural practice.

1

History

1.1 Agricultural valuations, as commonly known, can be said to have started as the assessment of tenant right payments, when a tenant quitted an agricultural holding. Such a valuation was known as a tenant right valuation. Tenant right compensation started around 1775 when there was considerable agricultural activity and progress in the country.

1.2 This compensation was paid for on a basis of custom, which developed over the whole country and often varied from county to county and in some cases from estate to estate. The work of assessing the claim was done by farmer valuers, who were well known and respected farmers in the areas in which they lived. These men eventually formed county and area tenant right valuers’ associations. Most of these were formed after the passing of the Agricultural Holdings Act 1875, when it became necessary to agree to a uniform basis, in their district, of assessing compensation for the various matters of claim.

1.3 The oldest known valuers’ association was founded in the county of Suffolk in 1847. In 1910 a number of these valuers’ associations joined together to form the Central Association of Agricultural Valuers, which, today, is the foremost agricultural and tenant right valuers’ professional organisation in the country.

1.4 The items to be paid for as tenant right, under custom, were variously: hay, straw, dung, growing crops, acts of husbandry (tillage operations), compensation for feeding stuffs consumed by animals, fallows, offgoing or awaygoing crops, pre-entry (ie entry on to the holding in advance of the date of the tenancy, eg to plant crops), boosey pasture and holdover (ie right to keep a small field for a cow or horses from quitting day of say Candlemas (2 February) until Whitsunday (15 May)).

1.5 With the passing of the Agricultural Holdings Act 1923 and particularly the Agricultural Holdings Act 1948, with their intricacies, the farmer valuers began to die away and the work was undertaken by professional agricultural valuers. However, farmer valuers did not completely disappear until about 45 years ago.

1.6 Prior to this, assessments of the value of land were made for the relief of the poor following the passing of the Poor Relief Act 1601.

1.7 The work of the professionals was further increased during the railway construction era of the 19th century when considerable areas of land were compulsorily acquired and compensation had to be assessed under the provisions of the Land Clauses Consolidation Act 1845.

1.8 The introduction of death duties by Mr David Lloyd George in his budget of 1910 further increased the work of an agricultural valuer as the landed gentry were assessed also on the value of their estates.

1.9 Nevertheless, most of the work of an agricultural valuer, as we know it today, has been extended considerably since the end of the Second World War and is very specialist in nature. Nowadays, it covers not only tenant right valuations, but also rental valuations, agricultural property valuations for many purposes including compulsory acquisition, purchase, sale, inheritance tax and capital gains tax. It also covers compensation claims for easements (gas, water and oil pipelines, electricity lines), compensation for opencast and other mineral extraction, milk quotas, SSSIs, etc.

2

Definitions

2.1 Termination of tenancies claims

Chapters 1–11 of this book deal in termination of tenancy claims and it is expected that the practitioner has a working knowledge of the Agricultural Holdings Act 1986. Unless otherwise stated, the valuation examples given in Chapters 3–11 are all on the basis prescribed by the 1986 Act and, in particular, the Agriculture (Calculation of Value for Compensation) Regulations 1978 (SI 1978 No 809), the Agriculture (Calculation of Value for Compensation) (Amendment) Regulations 1981 (SI 1981 No 822) and the latest amending Agriculture (Calculation for Compensation (Amendment) Regulations 1983 (SI 1983 No 1475).

2.2 Definitions

In computing the relevant valuations, it is well to be reminded of the following factors which are important.

2.2.1 Pre 1 March 1948 tenancies

Some of these still exist even today, 60 years later. Compensation for tenant right, ie growing crops, harvested crops, root crops, seeds sown, pasture, sod fertility, acclimatisation of hill sheep, etc, will not be paid under the provisions of Part II of schedule 8 of the 1986 Act, unless before the termination of the tenancy, the tenant serves a written notice under para 6 of schedule 12 electing that those provisions shall apply to him. If no such notice is served, compensation for tenant right will be payable under the custom of the district and the provisions of the tenancy agreement.

2.2.2 Consuming value

This is defined in SI 1978 No 809, Part II 8(3) as being the market value for consumption on the holding by agricultural livestock of hay, fodder, crops, straw, roots and other crops or produce of good quality less the manurial value, on a no crop off basis as prescribed by Tables 5(a) and (b) of SI 1983 No 1475.

Local valuers’ associations normally fix consuming values for various produce and crops twice a year. These figures reflect the deduction for the manurial values of the crops. The values fixed normally refer to the best quality crops, situated in a good position, etc.

2.2.3 Market value

There is no official definition of market value but this is considered to be what the open market would give for any commodity, without restriction on where it was consumed, eg the market value of a bay of hay is what is considered could be obtained for the same if sold by open auction. Likewise, the market value of an area of swedes is what the open market would give for the same, either for folding off or on harvesting and removal from the holding.

2.2.4 Spring tenancy (SI 1978 No 809, Part II 8/2)

This means a yearly tenancy which commenced between 1 January and 30 June, inclusive.

2.2.5 Autumn tenancy (SI 1978 No 809, Part II 8/2)

This means a yearly tenancy which commenced between 1 September and 31 December inclusive.

2.2.6 Enhancement value (SI 1978 No 809, Part II 8/1(c))

This applies to autumn sown crops where the land is held under a spring tenancy or grass and clover seeds which are sown on the land held under a spring or autumn tenancy where no crop has been taken at the termination of the tenancy.

The enhancement value is an additional amount payable which represents the enhancement of the value of that crop to an incoming tenant, but this shall not exceed the rental value at the termination of the tenancy.

2.3 Tenant right valuations

It is stressed that in all the chapters dealing with tenant right there is no contract between the outgoing tenant and incoming tenant.

The only contract the outgoing tenant has is with the landlord and a tenant right valuation is in theory carried out between the outgoing tenant and the landlord. Normally, however, one valuer acts for the outgoing tenant and another valuer acts for both the landlord and the incoming tenant (if there is one).

2.4 Claims

Under section 83(2) of the Agricultural Holdings Act 1986 landlords’ and tenants’ claims must be notified before the expiration of two months, ie after the termination of the tenancy. Under section 83(4) of the 1986 Act eight months are allowed for settlement, failing which, the matter shall be determined by arbitration under the Arbitration Act 1996. Note, however, that if the landlord is claiming for general deterioration of the holding, he must give the tenant notice of his intent to claim under section 72 of the Act no later than one month before the termination the tenancy.

3

Produce

3.1 Produce

Produce comprises harvested hay, straw, silage and roots.

3.2 Hay

Distinguish between seeds and meadow hay. Good meadow hay is fine hay from old pastures and is very suitable for calves and sheep. Seeds hay is from ryegrass, timothy and clover mixtures. Best hay should be leafy, bright, green, smell sweet, be cut young and not be fibrous. Hay suitable for horses has all of these qualities but is seeds hay and free from dust. Avoid fousty, dusty, fibrous, rain washed and overheated hay. Baling too soon and too tightly can spoil hay.

3.2.1 Valuation

3.2.1.1 Conventional bales

Weigh say six bales in a bay, preferably from different layers and get average weight in kgs. Count number of bales, multiply weight by number of bales and divide by 1000 = number of tonnes, eg 920 bales average 20.4 kg in bay:

920 × 20.4/1,000 = 18.768 tonnes

Volume method

Sometimes it is not possible to count bales. An alternative method is to obtain the cubic content of the stack in m³ and divide by an appropriate density figure:

Very compact:	6–7	m^3 per tonne
Medium:	8–9	m^3 per tonne
Unsettled:	10–11	m^3 per tonne

Practice checks

Small bales of hay often approximate at 50 bales per tonne. Medium and heavy bales often weigh from 18 to 22 kg per bale. Discount any weathered bales on the exposed side of barns and also possibly half or sometimes the whole of the bottom layer as this might be damp. Look out for voids in the stack. The bottom layer has usually more bales than the other layers since they are laid on edge. As a rule a bay 24ft (7.3m) × 15ft (4.5m) × 18ft (5.4m) will contain approximately 20 tonnes.

3.2.1.2 Big bales

Nowadays big balers are used on most farms in preference to conventional balers. Two types are generally used.

(a) Round balers

These are usually of two types each producing a cylindrical bale of about 1.5m wide × up to 1.8m diameter or 1.2m wide × up to 1.5m wide. Note the density of bale made can be controlled and sometimes as a result bales may be very dense and thus heavier. Usually on...