LANDPLAN
spring / summer 2012
farmland market review farmland remains a popular way to invest pg 4
access
LANDPLAN
water
long-term water shortages are discussed in the agricultural world pg 14
rights of way legislation needs an injection of common sense, as outlined in a new CLA report
pg 10
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Introduction David Hebditch
Agriculture’s spell of much-improved returns continues, allowing many farms to post profits for the second or third year running. After a decade of losses, it’s a welcome change.
Inside this issue continued 6
Regional Roundup
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CAP Review
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Rural News Board
Contributors David Hebditch, FRICS FAAV Head of Rural Division Tel: 01823 331234 E: david.hebditch@chestertonhumberts.com Andrew Pearce, MRICS Head of Rural Agency in Lincoln Tel: 01522 516830 E: andrew.pearce@chestertonhumberts.com Harry Baines, MRICS Director at Chesterton Humberts in Stamford and Jack Mitchell in Taunton Tel: 01780 762849 E: harry.baines@chestertonhumberts.com David Pardoe, MRICS Director at Chesterton Humberts in Salisbury Tel: 01722 520117 E: david.pardoe@chestertonhumberts.com Charlotte Smithson, BSc (Hons) MRICS Associate at Chesterton Humberts in Lincoln Tel: 01522 516838 E: charlotte.smithson@chestertonhumberts.com Craig Horton Director at Chesterton Humberts in Marlborough Tel: 01672 517941 E: craig.horton@chestertonhumberts.com
Better returns, coupled with very low interest rates and improving land values, mean security is rarely an issue for lenders. It helps that banks are required to put money into SMEs and they see farming as a safe option. Money has become a relatively cheap commodity in agriculture, which is good news for those looking to expand or reinvest - provided they keep a weather eye on interest rates. Our Spring 2012 Research Brief showed land was providing nearly as good a return as gold, well above returns from residential property, gilts and equities, further adding to confidence. Costs, though, are rising fast. With diesel approaching 70p/litre, fuelling two tractors at the beginning of the day can cost more than £1,000. Fertiliser remains above £300/t, and feed costs are stubbornly high. With breakeven costs of £130 or more per tonne of wheat, producers should beware of over-committing to short-term investment. Many farmers are re-equipping, but need to avoid unnecessarily high depreciation. Overall, however, farming is in the best position it has been for 30 years, and with rising world food demand coming to the fore, there currently seems little reason for that to change. That is good news for the increasing numbers of young and very able people being attracted to the industry. They may not own land - a new generation of entrepreneurs are expanding their businesses through contract farming agreements and other short-term arrangements, delivering a really good service to their clients. But many family farms too are looking to the future - 60% of land buyers are commercial farmers who have taken the decision to expand.
There are some uncertainties. CAP reform certainly needs to be on the checklist if changes to business activities are planned creating tenancies, buying or selling land, or structural changes – and care needs to be taken to ensure the claimant is in a position to trigger new payments when they come through. At least the commission does seem to be backtracking on some of its more extreme environmental proposals. That is to be welcomed - it would be a tragedy if some of the really good schemes we already have in place were abandoned in favour of further greening of the CAP. If the current pressures on the Euro continue they are likely to reduce budgeted 2012 single farm payment receipts. However, given the UK’s own uncertain outlook there is no guarantee that the pound’s new-found strength will last. For those who prefer certainty, fixing the exchange rate at which they receive their payment may be an attractive option. For estate owners and farmers who own listed property, the recent announcement by the Chancellor of the Exchequer proposing the withdrawal of the zero rate of VAT for alterations to listed buildings will conflict with the Government’s own policy under the National Planning Policy Framework, which acknowledged the importance of finding economically viable uses for such buildings. Another matter to consider and plan for during the course of the year. Nevertheless, opportunities from farming and wider land ownership would appear to far outweigh the problems. Long may that continue.
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spring /summer 2012
Farmland Market Review The land market continues to follow recent trends, with demand continuing unabated and prices edging up in response, as Andrew Pearce,
the price differential between Grade 3 land with a decent clay content and higher grade, more easily worked soils.
head of rural agency explains.
East Midlands offers the most productive land in the UK and an abundance of Grade 3 land”
In the second half of 2011 average bare land farmland values in England and Wales reached £6,500/acre, according to RICS figures, and we are seeing further uplift. Indeed, we forecast that prices will increase by an annual average of 6% per annum over the next five years as demands from a growing population, rising soft commodity prices and the drive for alternative fuels add to supply pressure and increase investor interest. However, I do detect something of a twotier market developing. Last year, investors were concentrating on an area from Wiltshire and Hampshire up to Cambridge. This year they are targeting Lincolnshire and the East Midlands, an area that offers the most productive land in the UK and an abundance of heavier Grade 3 land that is now in favour. This is something of a shift, and is based on three years of dry weather, regardless of what April threw at us. One period of rain is not going to solve the problem. Heavy land produces more consistent yields of combinable crops, and this factor, coupled with better machinery that allows it to be worked more effectively, has helped narrow
“
Larger commercial units of 500-1,000 acres are in demand; cereals are the driver, though an element of root cropping and irrigation can increase premiums. There is no particular interest in housing stock as these buyers are, in the main, not interested in lifestyle or maintenance.
Figure 1: UK farmland purchasers by type: 2008 – 2011 source: RICS & Chesterton Humberts research
5%
3%
8% Farmers Private individuals /Family Offices Agri-Funds Private Equity Funds Institutions
22%
62%
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Bunkers Hill Farm
Interest from farmers, who still account for about 62% of purchases, continues nationwide. With little land on the open market, a lot of private deals have been transacted – these now account for about 25% of sales.
Lincolnshire, a Grade 2/3 arable unit just shy of 300 acres which was guided at £1.915m, and in the same county High Sadney Farm, North Kelsey, a Grade 3 arable and grass unit running to 368 acres and has a guide price of £1.825m.
We carried out one recently, selling the 758-acre Bunkers Hill Farm near Gainsborough, Lincolnshire, for the Braemar UK Agricultural Land Fund. The price was 30% higher than that paid three years ago – not surprising given that it is exactly the sort of unit the market is currently looking for. It is not encumbered with a big country house and is very commercial, with the land principally in one block.
Other recent notable sales by Chesterton Humberts include the Ilsington Estate in Dorset (2,700 acres) and the Hamatethy Estate, St Breward, Cornwall (542 acres). We are also selling about 400 acres of arable land near Helston in Cornwall.
We have acquired two other farms for Braemar Home Farm, near Spilsby in
Farming is doing well, so it is not surprising there is a lack of acres coming to the market. Those that are tend to be due to retirement or relocation to another part of the country. Prices are attractive, so if you are looking to
sell for the above reasons now is as good a time as any. We offer a free market appraisal so please contact any of our expert staff located in our 11 rural department offices for an in-confidence discussion.
“
Interest from farmers still account of up 62% of market purchases nationwide”
For further information please contact Andrew Pearce MRICS, Head of Rural Agency, Lincoln t: 01522 516830 andrew.pearce@chestertonhumberts.com
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LANDPLAN bulletin
spring /summer 2012
Regional Round-up Pent-up demand and limited supply is the story across the country, and values for good land and property are holding up well, according to Chesterton Humberts’ regional experts.
amenity buyers are few. Farmers will compete hard for bare land, though perhaps not as hard as when wheat was worth £200/t. Investment criteria of stable commodity prices and taxation advantages are still driving purchasers.
SOUTH WEST Caroline Lawrence
Assoc. Director – Taunton
EAST MIDLANDS Harry Baines
Director – Stamford
Prices show no signs of weakening, with arable land still fetching £7,000/ acre rising to over £8,000/acre, while smaller equestrian/amenity land is worth £10,000/acre upwards. Permanent pasture is worth about £5,000/acre in larger blocks or as part of larger mixed blocks. Values are still very dependent on competition – if adjoining or nearby farmers are interested, then expect to pay more but where competition is weak prices reflect that – lower than noted above. Availability remains tight, helping to support prices. Although there are rumours of several private deals, there is nothing of note currently on the open market. The situation is unlikely to change much – even those who bought some while ago and are sitting on potentially substantial profits are loathe to cash in due to the difficulty of reinvesting in farmland with its attractive tax benefits, such as Inheritance Tax. Reduced rainfall, which affected harvest 2011 and remains fresh in the memory after this year’s dry start, is predicted by some to become the norm. It has made heavier land more attractive and boosted prices.
The residential element can still be a problem - the mainstream market remains weak outside London – but overall buoyant agricultural commodity markets continue, encouraging farmers to bid strongly.
CENTRAL SOUTH Charles Lucas
Director – Marlborough
Little arable or pasture land is currently finding its way onto the open market in the south. Understandably there is little evidence on any downward pressure on values, as indicated by the recent sale of the Ilsington Estate at Puddletown in Dorset. Chesterton Humberts sold the farmland and woodland totalling almost 2,400 acres, including three let farms, in lots. The guide price of £12.5m for the whole was exceeded. We also anticipate keen demand for 176 acres of mainly arable and some pasture land, near Oxford. The Grade 3 arable soil is guided at around £7,500/acre, the pasture at about £5,850/acre. The market mainly consists of small parcels or individual fields, often sold via collective auction. There has, however, been a number of “off market” sales, often at premium prices. Buyer interest is coming from both investors and farmers alike - lifestyle
Historically, the south west has been a strong draw for lifestyle buyers although demand has reduced in recent years following the economic downturn. However, some confidence appears to be returning although buyers are more particular about their requirements. Hamatethy, a 542-acre ring fenced farm in Cornwall is a classic example. Situated in a private position the sale included a lovely nine-bedroom manor house, a pair of semi-detached cottages, traditional stables, pasture, grazing and some woodland plus fishing rights. It sold in excess of the £4m guide. There is also strong demand for land and commercial farms from farmers. Banks are still very supportive of agricultural propositions, helping to keep the market buoyant. There has been plenty of interest in 396 acres of arable land on the Trevarno Estate near Helston, Cornwall. The mainly Grade 3 land produces brassicas, cereals, daffodils and potatoes, mostly on share-farming agreements. It has a guide price of £2.7m, or £6,800/acre and part is now under offer. Dover’s Linhay, a Devon arable and livestock holding with just over 190 acres of mainly Grade 2 land at Cheriton Fitzpaine, Crediton, has also attracted plenty of viewings. The ring fenced property includes an immaculate four-bedroom farmhouse and a range of livestock and storage buildings and has a guide price of £1.75m.
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COTSWOLDS Christopher Jerram
Director – Chippenham
With a limited supply of freehold land available in the area valuation is a far-from-exact science, especially as demand is strong both from existing landowners, farmers in the neighbourhood and residential owners wishing to expand their boundaries. Dependent on location and land quality the typical band is anywhere between £6,500 to £10,000+/acre. Decent blocks of permanent pasture and reasonable parcels of average Grade 3 Cotswold brash would be at the lower end of the scale; better arable ground with appropriate buildings would be worth around £7,500/acre. Pony paddocks are still in demand and five figure sums per acre can be expected for manageable blocks. We have a block of 63 acres of permanent pasture including a small
amount of woodland and a lake near the National Trust village of Lacock guided at £6,250/acre; although the land has been farmed extensively it has high amenity and environmental value. Six acres of pony paddock with road frontage near Chippenham has a guide price of £60,000, and a well-equipped equestrian property at Wellow, near Bath, with 16 acres is being offered at £1.35m. However, there are still very few properties available in the area. People see land as a safe haven with significant taxation advantages, particularly IHT, and the potential for good overall returns against other forms of investment looks set to continue.
SOUTH EAST David Pardoe
Director – Salisbury
Apart from a few relatively small areas of bare land there is little on the market. Good commodity prices have staved off forced sales and more farmers who might have retired are taking advantage
of intense competition for contracting farming opportunities or FBTs. And few people are calling the top of the market yet, so investors are keen to hold on. There are plenty of potential buyers waiting in the wings. Many commercial farmers are keen to build their businesses and we have investors wanting to put their money into land, a relatively safe haven that currently offers very good returns. It really is a seller’s market - the last sale of a decent block of proper commercial arable land a few months ago realised £11,000/acre. While that would not reflect the average, it shows what can be achieved. Although very different, we also expect Petleys Farm at Downe in Kent to attract plenty of interest. It includes a barn with planning permission, a farmhouse, farmland and woodland. It has a guide price of £2.5m, reflecting its development potential and proximity to London. The farm is about 45ha (112 acres) including some woodland and has further traditional and more modern buildings. It is also available in two lots.
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CAP review Harry Baines mrics & Jack Mitchell
Several key proposals contained in the latest CAP reform are already creating plenty of uncertainty for farm businesses. Mitigating their impact now could save problems later on. What are the main pitfalls? The new basic payment will be paid only to those farmers who were in receipt of the single farm payment in 2011 – the so-called ‘Golden Ticket’. Existing farmers must protect that ticket. Restructuring an existing business - whether incorporating, forming a partnership, reverting to sole trader status or creating tenancies - before the new CAP start date could unwittingly invalidate the ticket. Building in flexibility so that decisions can be reversed as painlessly as possible is a sound idea. For example, it may be sensible to incorporate a break clause in an FBT to transfer land back just before the new scheme begins. New farmers buying land need to consider how to obtain a ticket, whether by leasebacks or buying the business that farmed the land in 2011. Another potential trap is a requirement to retain 95% of the permanent pasture entered on the 2014 form, one of
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LANDPLAN bulletin 9
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three measures farmers must undertake to secure the proposed 30% greening element of BPS payments. Permanent pasture is defined as grassland that had not been in an agricultural rotation for five years (though at the time of writing, the European Commission suggested this could be changed to eight years). Any proposal that ‘fossilises’ fields from 2014 onwards could have a serious effect on capital and rental values due to removal of cropping choice. As a result many people have been, or are considering, ploughing out grass. However, we urge caution. Ploughing an area of unimproved grass greater than 2ha that have been in place for 15 years or more could require an Environmental Impact Assessment. If in doubt, seek advice as penalties and restoration costs could be significant. Defra has also indicated that the individual farm proposal for permanent pasture may be dropped. However, if the national level drops 10% below the 2005 reference level (to about 3.4m ha), under EU rules the RPA could force farmers to reinstate.
Other elements must also be considered. Carrying out a sensitivity analysis and formulating a business plan will highlight potential risks: • Lower support levels: A 4-5% cut is
proposed, but it could be twice or even three times that depending on the EU budget.
• Active farmer: Direct payments must
account for more than 5% of a business’ total non-agricultural receipts. A highly
diversified business could fall foul of this, but beware anti-avoidance measures and taxation issues/pitfalls.
• Capping: Payments above €150,000 will be
reduced progressively, but the previous year’s salaries can be deducted. Examining how family members are remunerated makes
sense, but salary structure should be driven
by taxation and family issues - don’t let the CAP tail wag the farm dog.
• Greening measures - ensure you have
enough environmental features to qualify for top up payments and plan sufficient
crop diversity - a minimum of three crops is required, with each crop type covering a minimum of 5% of the holding and a maximum of 70%.
Farm businesses need to plan accordingly. Look at the farming structure. Is the right land in the right location? Is it occupied in the optimum way – owned, rented or cropped on licence? Time spent now should avoid any nasty surprises ahead. The European Parliament is delaying its final position on CAP reform until the EU 2014-2020 budget is announced. No decision will be taken before December, so the reformed CAP is unlikely to be implemented until January 2015. If so, current SPS entitlements will be valid for an extra year. Whether further purchasing of entitlements makes sense depends on where the market settles and when the CAP start date is confirmed. If values reflect the risk ahead of any announcement, there could be some good deals for those prepared to take a chance. For further information please contact Harry Baines MRICS, Director of Chesterton Humberts in Stamford t: 01780 762849 harry.baines@chestertonhumberts.com
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Access David Pardoe, MRICS
The mass trespass on Kinder Scout in 1932 resulted in a radical rethink of public access to the countryside that continues today. Consequently, the subject carries a huge amount of ideological baggage that stifles debate on the practicalities of our rights of way system.
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Such emotion must be sidelined if Defra is to come up with rights of way that work for everyone after its consultation on the matter. The current system is a hotchpotch of provisions arising from numerous different acts and customs, as the examples below illustrate. We have a blunt instrument that is unwieldy, costly to manage and which puts all responsibility on the landowner, and many of the current Defra proposals go some way to addressing these. Lost rights of way
A key area to address is the resurrection of lost rights of way, which stemmed from the introduction of The Countryside and Rights of Way (CROW) Act 2000. Currently, anyone can claim that unused, unrecorded ways were once rights of way. Local authorities are legally bound to investigate and can face bills of thousands of pounds, as can landowners contesting a claim.
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The right to review alleged historic routes also creates a fundamental injustice. Property buyers can carry out all the searches and believe all is well, yet could be forced to accept a new right of way across their land. They may have done everything right, but they are not protected. The solution is simple. Government should put a stop to these claims immediately to ensure scarce funds are put to far better use improving the current network where real needs have been identified.
Changes to rights of way
The method by which rights of way are managed – or unable to be managed – also needs to be overhauled. For example, a farmer may have a footpath running through the middle of a farmyard. Such places are no longer about chickens and chaps with pitchforks – these are the homes of big machines whose operators often have limited lines of sight. Diverting even these potentially hazardous
paths is extremely difficult. Landowners do not have a right to request that paths be moved – it can take as long to get a small diversion as to stop an illegal but well-used path between two villages. If ramblers object and lose the old path, it becomes a lost right of way and the case can be reopened again. A change in the law is needed to simplify the administration of rights of way. Within this, small changes in footpaths could be included in a new amendment notification, a new category that could deal with such requests efficiently, quickly and cheaply. Unless or until that happens, landowners can help themselves to a degree. It may be possible to signpost an alternative route, perhaps fenced and mown to look attractive. However, you cannot prevent people using the old route, so it mitigates the risk rather than removing it. It is also wrong that livestock owners can be held liable over incidents outside their control.
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A walker may leave a previously closed gate open, letting stock out onto a busy road, but the law holds the landowner responsible. Rights of way are completely consequence-free for the beneficiaries, but are consequence-laden for those who have the burden of them.
Structures
Livestock keepers should only be liable where negligence can be proved. Again, farmers can try to manage risks out. Ensuring gates open and close easily will help, and installing kissing gates on footpaths and self-closing gates on bridleways will improve matters – but at a cost.
The CROW Act provides public access on foot to areas of open land and contains provisions for extending the right to England’s coastal land, where wide inland margins are being proposed. This tramples on the basic tenets of property rights - the right to enjoy that property and to be compensated if those rights are eroded.
Legal width
Apart from ‘honeypot’ sites which are difficult to manage, the main problems are likely to be picnicking, games, or similar impromptu activities. Most walkers prefer to walk from point to point and are less likely to stray or stop when on a clearly defined path. Signpost accordingly, but clearly identify the path as permissive and notify the Highways Authority, stating it
There is no defined legal width for a footpath or bridleway. There are guidelines for reinstatement where a crop is sown (1.5m for a field-edged path) but these do not apply in general. This can lead to potential dangers, particularly for riders, and unnecessary disputes. Defra should issue guidance on reasonable widths.
Currently landowners cannot erect gates or stiles on a right of way where none exist. This should be changed where a requirement for the protection of property or security can be shown.
Right to roam
is not a footpath, to avoid inadvertently creating one under the 20-year law. In conclusion, no-one is advocating the wholesale closure of existing rights of way or reducing existing rights of footpath users. What is needed is a system that works for all, and allows landowners who manage rights of way to be better able to protect their rights and discharge their responsibilities. The Defra consultation is, perhaps appropriately, a step along the away.
For further information please contact David Pardoe MRICS, Director at Chesterton Humberts in Salisbury t: 01722 342 393 david.pardoe@chestertonhumberts.com
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Managing water abstraction rights Charlotte Smithson,
BSC (Hons) MRICS
We may have had the wettest April for 100 years, but it has done little to solve the long-term shortage of water in many key cropping areas.
In early May, groundwater levels across the south and east and the West Midlands remained exceptionally low, according to Environment Agency (EA) data. It’s a legacy of two extremely dry years that many commentators believe could become the norm. Does it matter? UK agriculture and horticulture uses relatively little water compared with other users, with direct use only accounting for less than 2% of total abstractions. However, in dry areas like East Anglia and the South East the figure is higher, and competition is more intense. As population builds and climate change kicks in, that will increase. Agricultural abstraction is first to come under scrutiny when drought hits, and the EA can and will enforce spray irrigation restrictions. The Agency is also restricting the issuing of new licences. The EA can also vary or revoke abstraction licences. Some farmers, often those who use less than their allowance and have not volunteered to reduce it, have already been approached. The licence holder is entitled to object to such proposals and, in the event that the licence is varied or revoked, is, in most cases, entitled to claim compensation, provided strict time limits are adhered to. However, compensation is not payable if the licence has not been used for four years
immediately preceding the service of the notice. The advice would be to start using it to try to protect its continuing existence. Loss or variation of a licence which started on or after 1st April 2006 will also not be compensated if the change is needed to protect availability of a water source of supply to which the licence relates, and variation does not reduce the amount of water available for abstraction below any specified in the licence. The licence must have been running for six years or more, so these powers have only just begun. Defra is also consulting on ways to reform the water abstraction system so it can respond to climate change pressures, especially lower summer flows. Proposals include empowering the EA to vary or revoke licences without compensation where ‘serious damage’ could occur to the environment. With all this in mind it would be prudent to consider the opportunities to improve the availability, quantity and management of water over the farm. An example of this would be to consider an on-farm reservoir, which has the chance of securing grant funding, whether alone or in co-operation with neighbours. This would make use of more secure higher winter flows to fulfil the farm’s water needs. It seems certain that given the ongoing serious lack of water the EA will be looking
to revoke and vary licences without having to pay compensation. This will have a serious effect on agriculture and horticultural businesses, and the ensuing cropping restrictions could seriously undermine land values on affected units. Farmers who are unlikely to use any or all of their permitted volumes might consider selling the rights to that water rather than risk revocation or variation. As well as securing a return it will help neighbours who need more water to secure extra allowances, and has been made simpler following a recent review of the trading rules. Trading can only take place where there is a link between surface water and groundwater between the seller’s abstraction point and the buyer’s proposed abstraction point. The quantity of water traded cannot exceed that authorised by the seller’s licence. However if the EA needs to protect the environment and the seller has not been using the total amount they may reduce the trade to the amount that was used.
For further information please contact Charlotte Smithson BSc (Hons) MRICS Associate at Chesterton Humberts in Lincoln t: 01522 516838 charlotte.smithson@chestertonhumberts.com
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Key points of Trading of Abstraction licence
Licence trades can be permanent or temporary, whole or part licence. The EA will grant a new or varied licence to the buyer and revoke or reduce quantities of the seller’s licence accordingly
Trading will often involve change in the abstraction location and possibly a change in water use. The EA will need to approve this by granting a new licence or varying an existing one
The EA will advise before an application whether proposed trading is likely to be licensed, depending on water availability
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Manorial Rights & Chancel Repair Liability Richard Saville
Impending changes to manorial rights legislation will make it easier for landowners to ensure their land is free of what can be a costly encumbrance. Manorial rights refer to rights, for example to hunt, shoot and fish, as well as mineral rights, which were usually retained by the lord on disposal of manorial land. Such rights could not be created after 1925, and in many cases the title may no longer have any land or rights attached to it. But it can be difficult for a landowner to ensure that is the case. Even if owners of the rights can be tracked down, lordship titles usually do not have title plans nor refer to any manorial rights in the register. When registering a property for the first time, the Land Registry could make an entry if it appears that the land may still be subject to manorial rights. This may be the case if the title deeds reveal that the land
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was held by the lord of the manor and the rights were preserved when the title was converted to freehold. However, under the Land Registration Act 2002 manorial rights are categorised as ‘overriding interests’, so a landowner acquires the land subject to them, even if they are not mentioned in the register. Under the same act, these rights lose their overriding status after 12 October 2013. That does not mean the manorial right automatically ceases to exist after that date. Land registered before 13 October 2013 will remain subject to it. However, unless a notice has been entered on the register, a person who acquires the land after 12 October 2013 will take it free from that. Chancel Repair Liability - beware! After 13 October 2013 new owners of land will not be bound by Chancel Repair Liability, unless it has previously been entered in the Land Register. However existing owners of land continue to be at risk. This has put the onus on the Parochial Church Councils to identify all affected land and register their interest before that date.
Unfortunately, this means an increased likelihood of a claim and liability being noted with the Land Registry as churches look to protect their interests. Landowners can usually take out indemnity insurance against such eventualities which typically costs a few hundred pounds. Chancel Repair Liability dates back to medieval times when churches received income from (glebe) land. This liability can still be imposed on the successive owner(s) today. About 5,200 parishes in England & Wales and 3.5m acres (40%) of land could be affected, but liabilities may not be recorded on deeds or at the Land Registry. Chancel Repair Liability came to the fore in the case of Wallbank v The Parochial Church Council of Aston Cantlow. The Wallbanks lost and had to pay in excess of £100,000 in repairs to the church chancel and some £250,000 in legal costs. For further advice on either of these topics please contact your nearest Chesterton Humberts rural office.
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Renewable Heat Incentive Neil Gladwin
After something of a stuttering start the RHI for non-residential systems is now finally up and running, providing opportunities for farm and estate businesses to save money by eliminating or reducing consumption of gas or oil. Amongst the range of technologies which will qualify, on farms and estates the principal opportunities surround biomass and biogas, but there are restrictions imposed on the fuels that can be used, relating to their source and sustainability. The RHI will pay up to 8.5p/kWhr for the hot water and heat generated and used by the business, with different tariff levels depending on the type and scale of the system, and will be paid for 20 years from the registration date, index-linked for
inflation. The key is having a use for the heat on site, such as to heating broiler sheds or farm and estate housing. RHI is set to transform the woodfuel sector, with a significant increase in demand for lower grade timber for wood fuel, encouraging tree planting and management of moribund woodlands, and RDPE has just launched the Round 2 of the Farming and Forestry Improvement Scheme (FFIS), which will pay landowners small capital grants for timber processing. The closing date for applications is 17 July 2012. Neil Gladwin is a member of the RICS Sustainability Working Group and has been involved in providing funding solutions for renewable heat and energy installations
Better planning? Colin Tebb
On first reading it appears that the National Planning Policy Framework (NPPF), released on 27th March 2012, will be a radical change to the planning system, with local villages and towns able to prepare their own Neighbourhood Plans with a view to supporting rural economic growth. However, it appears these plans must still be in accordance with the Local Plan drawn up by the local District, County or Unitary Council. Even so, now is the right time for landowners to consider their land assets, as many councils are asking them to suggest sites for new housing as part of the Strategic Housing Land Availability Assessment. There also seems to be a more relaxed approach in the NPPF over conversion of traditional redundant farm buildings and
barns (heritage assets) to alternative uses. Residential conversions have been contrary to policy unless office, tourism, or other non-residential use has been considered first. But the NFFP statement implies, in our view, that a residential conversion would enable an attractive redundant building to be retained, even if local planning policy normally precludes this. One of the powerful bodies in the decision-making process for local planning and for deciding the future of community facilities is going to be the Parish Council. Parish Councils will be able to produce their own local development plans, thus identifying areas for development – or otherwise.
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Agricultural Holdings Act Rent Review Craig Horton
There has recently been a strong revival in rent review activity after several decades of inactivity. These reviews are having to address an accumulation of issues that have accrued over this period of time due to, amongst other things, a changing agricultural economic climate. There is as yet no definitive guidance on how to treat these issues for a combination of reasons. The impressive wording of the Agricultural Holdings Act 1986, limited case law and contested professional approaches are reasons that make it difficult to achieve a standardised approach. Under these circumstances it has to be left to the valuers to use their knowledge, experience and professional judgement to arrive at a robust and tenable approach. Many reviews will need to address the rental value of the farmhouse as part of the review process. Consideration should be given to such things as its size, age, accommodation,
the terms of the tenancy (eg occupancy restrictions and repair) and whether it is essential to the management of the holding. With the sizeable disparity in rental values between 1986 Act reviews and rents from new lettings and rent reviews under the 1995 Act code (Farm Business tenancies) once again the debate over scarcity of supply and marriage value (broadly the economic benefit of farming two farms as one) are at the fore. Marriage value was addressed in the 1996 case of Childer and Anker and allows the economic benefit (if any) to be taken into account for the subject to the review. Such value is to be assessed and stripped out of any comparable. Scarcity was not addressed in the Childer case and it is arguably only a matter of time before a landlord pursues this point through the courts in an attempt to advance this rental position. Single Farm Payments and further payments under agri-environmental
schemes have been introduced since the inception of the rent review procedure embodied in the 1986 Act. Earlier rent reviews have accepted and dealt with this certain income potential as part of the budgetary approach. However there are complications now on the horizon with the system due to change from 2014 at the earliest and this will affect the three year forward review to be undertaken in September 2012.
7–9
June
Royal Cornwall Show
13 – 14
June
Cereals
20 – 22
July
CLA Game Fair
2
August
Honiton Show
15
August
Gillingham & Shaftesbury Show
Aug /Sept
Burghley Horse Trials
Sept
Southwold Show
30 - 2 29
For more events please visit chestertonhumbertspublications.com/2012events.html
20
LANDPLAN bulletin
spring /summer 2012
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