Since 28th November I’ve been struggling with really bad lag in and around my ‘base’ on Minecraft Realm 1.2.5.

If you approach closer than approximately 20 blocks of the perimeter (base is 75 x 40 blocks) then the lag goes through the roof. Frame rate drops to around 2 FPS for the player and movement speed slows down drastically. Even button presses and selecting items in the hot bar are slower. This is the same for me, or if any other player on our realm enters the effected area.

Other players logged in to the realm but elsewhere on the map notice lag of mobs and a slow down of the realm in general. As soon as I move out of the effected area the game runs normally for me all any other players logged in.
You can move in and out of the effected area easily, and the boundary doesn’t change.

Base/Effected area specifics:
No active automatic spawners or Redstone machines. I had a gravity fed Skeleton spawner but I’ve deactivated it by increasing the fall distance to lethal.
I had a dark room for spawning Zombie Villages. I’ve now partially lit this.
There are 6 captive villagers and 3 Skeleton horses inside, no other captive mobs.
The base uses 3000+ Jack-O-Lanterns.
There’s a small mine cart railway down to level 12
1 ender chest and 26 double chests are in the top storage room, a further 28chests are in the level 12storage room.
1 nether portal

The base comprises of a 35 x 75 wide room that’s 28 blocks high. It’s surrounded on 3 sides by rows of Jack-O-Lanterns, and on one side by a lava waterfall 70 blocks wide with a 25 block fall. The farm on the roof also uses Jack-O-Lanterns. The base was built over an ocean cove so half the floor is water. Underneath is a glassed off ‘pit’ down to level 12 that’s 14x14 and lit with more Jack-O-lanterns.

The farm on the roof grows all crops and is 83 x 40in size.
I started to build a wooden tower on top, this is only 14 blocks tall and 50 x 85 wide. It has a few torches on it but nothing else.

Things tried
Another realm player has independently entered the area and gets the same lag.
Logging in from a different Xbox
Reducing graphics settings and render distance

Best guess is that the realm can’t handle handle that many Jack-O-Lanterns? The lag just randomly happened, I wasn’t placing lanterns, I was just walking around.