Summer Newsletter 2013
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Contents
4
Welcome
6
10 steps to a self-reliant countryside
8
How ecosystem services could drive revenues
Dr Jason Beedell
10
Spiritual value of the countryside
11
Seeing the wood for the trees
12
Sustainable holiday lets
13
Exhibition building
14
Brackenburgh Estate
17
Generation game
18
Big in America
20
Space age
21
What every employer needs to know‌ about Real Time Information
Catherine Desmond
2
Simon Knight, Senior Partner
Alan Spedding
Rt Rev James Jones
Andy Greathead, John Weir
Peter Hallam
Alan Tresidder
John Harris
James Dennis, Simon Derby
Philip Coles
Various
22
Could you develop your agricultural buildings?
Ian Smith, Claire Fallows
23
How to tackle the NIMBY in us all
Debbie Mackay
2013 Property Market Review
24
Farmland
25
Agricultural rents
26
Residential sales
27
Residential lettings
28
Forestry and Telecoms
29
Sporting estates
30
Rock hard
31
Selling St. Paul’s
32
Learning from the best of Europe
34
Food chains
36
Green deal or no deal
37
Financial viability is a key reason more houses are not being built
38
Secure the highest payments
39
Keeping the lights on
40
Giles Wordsworth, Dr Jason Beedell
Toby Metcalfe, Stephen Spencer
Andrew Turner
Chris Jowett
Andy Greathead, Kay Paton
David Steel
Adam Weaver, John Dutson
Harry St John
Dr Jason Beedell, Simon Blandford
Robert Childerhouse, Jon Dearsley
Dan Coston
Richard Thompson, David Parry
Dr Alan Harries, Thomas McMillan
Dr Alan Harries
News in brief
Welcome Welcome to our Summer newsletter, the theme of which is the ‘Challenge of Change’. It is hard for any business to predict the challenges ahead. The speed of economic and technological changes means that what works today may not tomorrow. Uncertainty often leads to short-term focus but a failure to strategically plan five to ten years in advance can result in businesses which may appear sound putting themselves into financial difficulty. The issue is often not whether businesses can afford to rise to the challenge but whether they can afford not to. John Harris, owner of the award winning Brackenburgh Estate, expertly demonstrates the need for a balance between the short-term focus and the longer-term strategy, as he discusses the various facets of the Estate’s business on page 14. Brackenburgh is a prime example of how an estate must adapt to be fit for future generations. We wish to thank our other contributors who also acknowledge the ‘challenge of change’ in their respective articles; Alan Spedding, editor of RuSource Briefings, explains his personal vision for a self-reliant countryside while the Right Reverend James Jones, Bishop of Liverpool and formerly Chairman of the Independent Panel of Forestry, cites the importance of the future of woods and forests on our spiritual wellbeing.
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A shifting regulatory environment is a substantial challenge for today’s rural businesses with energy, environmental and financial policies appearing to change almost on a daily basis. Dr Alan Harries, our Head of Environment & Sustainability, examines energy security and the role of conventional and renewable energy sources. Climate change is both a threat and an opportunity, and the challenge is to plan and commit resources to sustainable sources of energy. At the time of writing we are awaiting the Future of Farming Review, chaired by our Senior Consultant David Fursdon. Faced with increasing recognition of the need for food security and to produce it in a sustainable way, the review is looking at the role that could be played by new blood and entrepreneurs in achieving this aim. There are currently both opportunities but also barriers for new entrants and the review will examine them and make recommendations both to the farming industry and the government to facilitate a career path within farming. I am delighted that our Darlington office celebrates 150 years of business this year. A challenge and opportunity for the north, and the uplands in particular, is to make a financial return from providing eco-system services for society. We look at this on page 8. As rural property advisers, we aim to help all of our clients identify the future challenges facing them with innovative and sensible solutions. In today’s competitive marketplace those businesses that foresee change and implement appropriate plans are at an advantage. I hope you enjoy reading our latest edition and do please contact myself or any of the team should you wish to discuss any of the issues raised.
Simon Knight Senior Partner
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10 Steps to a self-reliant countryside Alan Spedding, editor of influential rural information service RuSource Briefings, outlines his vision for the countryside
I have spent a lifetime communicating the views of others so it’s both exciting and challenging to be asked what my vision would be for a future countryside. I am just a farm lad at heart so successful farming, for me, needs to be at the heart of a countryside which is prosperous and good to live in and look at. But self reliance and independence are at the heart of how I would like things to be. Both farmers and other country people need to have much more of a sense that it is their place and that they are free and responsible to make it how they want it with less outside interference than there is nowadays. And it’s a long-term view – so we need to get it together for our grandchildren and we need some consistent and long-term policies in place to back it up.
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1.
Climate change and the worldwide increasing demand for food will inevitably push food prices up permanently. The experts tell us that UK farmers will be less affected by the impacts of climate change than elsewhere so we have a moral duty to produce more than our share of expanded world food production.
2.
We also need ecosystem services (landscape, water, biodiversity etc) to be given financial values and those providing them (mainly farmers) to be fully paid for doing it. This is difficult, how do you value a landscape for instance? And there are bigger brains than mine stewing over whether it might be possible or not. At bottom, it seems to me, the value of an ecosystem is what people are prepared to pay to maintain it or improve it to the level they want.
3.
We need expanded R&D to enable farmers to produce more food with less impact from pests and diseases and helping them to cope with the often unforeseen impacts of climate change.
4.
Farmers should be more involved in deciding what research they need and in getting the results out in useful forms.
5.
There needs to be a re-evaluation of the place of wildlife in the countryside, with control programmes for species which can disable food production if their populations get out of hand.
6.
Perfection would be self-reliant communities driven by involved locals of all ages and backgrounds, working towards their own visions of how they want to be.
7.
Communities need effective access to planners, higher tiers of government and specialists where necessary.
8.
Communities need access to successful projects to see what makes them tick so they can learn from them.
9.
We need a better resourced local church looking out for those who need support.
10. And we need more finance for local initiatives to be found locally.
Alan Spedding alan.spedding@btopenworld.com RuSource is a free rural information service. Sign up for the weekly e-bulletin or search the library of over 1,700 articles on the rural economy, farming and research.
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How ecosystem services could drive revenues Smiths Gore contribute to the Ecosystem Markets Task Force Report
We were delighted to be asked to comment on a draft of the Ecosystem Markets Task Force Report with the CLA and NFU, and to represent the Royal Institution of Chartered Surveyors. Ecosystem services is a new term for an old concept – it means the environmental goods that land produces. Fifty years ago we would have said wildlife and landscape; 20 years ago we started talking about agri-environment schemes and multifunctionality; now it is ecosystem services. Ecosystem services will be a significant income earner for landowners in the future, especially in the uplands where land can be planted with trees and moors can be managed to hold CO2 and to hold water to reduce flood risk lower down in a catchment.
But translating these ‘goods’ into cash is not happening in the UK and we are behind many other countries. The Task Force was asked by Government to review the opportunities for UK business from expanding green goods, services, products, investment vehicles and markets which value and protect our natural environment. Unfortunately, we think the report missed the opportunity for the UK to catch up; it lists the opportunities for ecosystem services (see table below) but comes up with few recommendations on how to speed up the development of functioning economic markets. We will continue to watch and contribute to this. More anon – and hopefully some money too.
Recommendations from the Ecosystem Markets Task Force 8
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Carbon and markets for nature
Food cycle
Biodiversity offsetting: securing net gain for nature through planning and development
Bio-energy and anaerobic digestion on farms: closing the loop using farm waste to generate energy
Sustainable local wood fuel: active sustainable management supporting local economies
Nature-based certification and labelling: connecting consumers with nature
Carbon reduction through investing in nature
Common Agricultural Policy
Environmental bonds
Food waste
Water cycle
Natural capital: cross-cutting themes
Water cycle catchment management (including water and wastewater catchment management, Sustainable Urban Drainage Systems and soft flood defences)
Managing natural resource security
Water trading
Business accounting for nature: mainstreaming standards and metrics
Using nature to enhance resilience
Water supply pipe ownership Water metering Dr Jason Beedell Head of Research 01733 866562 jason.beedell @smithsgore.co.uk
Knowledge Economy: UK expertise enabling business opportunities to enhance nature
Very long term planning Privatisation of flood defences (Key recommendations are in bold)
Seeing the wood for the trees How to future-proof your forestry strategy Climate change is one of the greatest global challenges and research continues to identify its impacts on the environment, including on trees and woodland ecosystems. John Weir, the Forestry Commission England’s adviser on woodland creation and resilience, talks to Andy Greathead, Smiths Gore’s Head of Forestry, Woodland and Arboriculture about how to ensure that woods are resilient to both the current and changing climate. Andy Greathead: Projections are that the southern half of England will have hotter, drier summers with drier soils which will reduce tree growth. Should we select tree species to take this into account?
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Spiritual value of the countryside Forestry plays a priceless role in the well-being of the nation, says the Bishop of Liverpool When I chaired the Independent Panel on Forestry some people from the countryside wondered why an urban Bishop was chosen to do it. But the real division in our society is not between the urban and the rural but between urban and rural and suburbia. The city and the countryside share the same challenges of deprivation and infrastructure, be it housing, transport or the closure of schools and shops. Often in the country and in the city it is only the church that remains open for service. The Forestry Panel made many recommendations which the Government has accepted including the expansion of woodlands both in the countryside and in the city.
In the foreword to the report I wrote that: “Our forests are nature’s playground for the adventurous, museum for the curious, hospital for the stressed, cathedral for the spiritual, and a livelihood for the entrepreneur. They are a microcosm for the cycle of life in which each and every part is dependent on the other; forests and woods are the benefactor of all, purifying the air we breathe and distilling the water of life”. One of the discoveries that I made is that our woods are the biggest provider of leisure activities. People say that trees are the lungs of the earth. I think they’re the soul of the country. They inspire poetry. Gerard Manley Hopkins wrote:
“O if we but knew what we do when we delve or hew – Hack and rack the growing green!” Destroying our forests and woods would have a devastating effect on our biodiversity which in turn undermines our sense of connectedness with the rest of creation. Woods give us a sense of connection and continuity. It is such things that feed our souls.
Rt Rev James Jones The Bishop of Liverpool
John Weir: Yes, when we are planting trees today it is critical that we consider the environment that the trees will be maturing within. We expect that there will be more frequent occurrences of drought across the whole of the UK during summer. A severe drought, such as the one we experienced in 1976, can affect some species for many years. Beech in the UK suffered detrimental growth impacts for more than 10 years after this event. Some species are better adapted than others and for individual species some provenances (or seed origins) are better adapted to hotter, drier, conditions than others. Many forest scientists are now recommending using species from 3 - 5° south now. The Forestry Commission has recently revised its species choice support tool, which sets out how 60 tree species are likely to perform under the expected climate scenarios1. As well as species choice, microclimate can be influenced by management, for example avoiding large clear-fells. Re-establishment through natural regeneration is likely to be affected by drier soils so reducing extreme heat on soils, through continuous woodland cover, is a way of helping. The time for foresters to use their silvicultural knowledge is back.
AG: Warmer growing seasons and rising CO2 can stimulate timber production but reduce timber quality, particularly in upland conifer forests of the north and west. Should this affect our species choice? JW: Increased growth and intermittent water deficits could result in more drought crack in some species so we have to consider species that will become more suited for the UK, such as Douglas fir, Western red cedar, Coast redwood, Wellingtonia, European silver fir and Japanese cedar. A challenge, if new species like these are used, is industry acceptance, particularly by UK timber processors who are used to a uniform product of white wood with a strength class of at least C 16 to C 24. AG: As the risk of windthrow is likely to increase, will sites at the upper end of the exposure scale become too exposed, bringing forestry to lower, less exposed areas? JW: Wind is one of the least certain predictions within the climate change scenarios. It would be an unwise strategy to radically change current silvicultural practices on the basis of this prediction. Evidence is that complex forest structures, particularly continuous cover systems, are more wind stable. AG: How can we reduce the impact of tree diseases and pest outbreaks, which are expected to increase? JW: Pests and diseases are showing that we do not have a sufficient range of major species in our woodlands to ensure resilience. This is further compounded by the globalisation of the nursery trade. We must take our tree bio-security much more seriously. Using home grown stock seems an obvious strategy. The forest industry has played a high-risk strategy over the last 50 years in reducing the variety of species we use and using them in monoculture. Spreading the risk by using a wider range of species, ensuring the right match
to the environmental conditions and using a variety of silvicultural systems, hopefully, will provide some resilience. I personally believe we must become more relaxed about near native tree species, such as Sweet chestnut, Sycamore, Tulip tree, walnuts and, in the right locations, eucalypts. Also, the climate will become more favourable for Grey Squirrels and deer species so it will be important to monitor their populations. AG: As well as threats, climate change creates new opportunities, particularly the planting of new woodlands to sequester carbon. Carbon credit schemes currently exist – how are they likely to be extended? JW: The Woodland Carbon Code is a voluntary standard for woodland creation projects in the UK which make claims about the carbon dioxide they sequester. We hope that schemes like this will encourage major companies to plant large areas of woods to reduce their carbon footprints, and that a functioning financial market for this ecosystem service develops. This tool, known as Ecological Site Classification version 3, is free to use on the Forest Research website. 1
www.forestry.gov.uk
Andy Greathead Head of Forestry, Woodland and Arboriculture 01620 828979 andy.greathead @smithsgore.co.uk
John Weir Adviser on woodland creation and resilience, Forestry Commission England
New revenue from old buildings
Exhibition Building
Sustainable Holiday Lets 12
Before
Client:
The Duchy of Lancaster
Location:
North of Scarborough, Yorkshire
Brief:
Create a great holiday experience, with a design that respects its agricultural origins, that is sustainable and supports the local economy through job creation and increasing tourism
Main contractor:
Woodhouse Barry, York
Client:
Royal Cornwall Agricultural Association
Our staff:
Alan Tresidder, Building Surveyor
Peter’s team won two awards, for best individual dwelling and best extension, at the recent Local Authority Building Control Building Excellence Awards for North and East Yorkshire
Location:
Wadebridge, Cornwall
Our role:
Design, contract management
We have acted for the Association for almost 50 years, recently advising them on the redevelopment of their offices (top)
Project completed on time and on budget
Available to let through English Country Cottages
Brief:
Extend the existing exhibition building to facilitate the demand for further space and events
Number of units: 15 with potential for 6 more Our staff:
Peter Hallam, Chartered Surveyor
Our role:
Design, contract management
Project completed on time and on budget
Peter Hallam 01904 756309 peter.hallam @smithsgore.co.uk
Space almost doubled, 78 x 25 metre clear span portal framed steel building, doors and cladding to match the existing. Energy efficient lighting
Main contractor: Midas Construction Ltd
Alan Tresidder 01872 274646 alan.tresidder @smithsgore.co.uk
BRACKENBURGH ESTATE Interview with John Harris What have the changes been on the estate since you were awarded the Bledisloe Gold Medal in 2005? It is now seven years since we won the award and while there are no new income streams we are working to plan for the core elements of the estate – forestry, farming, rental properties and development land.
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The most significant change at Brackenburgh is that I have transferred part of the estate into a trust for my children, in order to minimize their respective inheritance tax liabilities. We are now outside the seven year threshold so we have achieved our objective. Effectively this means that the estate now falls into two parts – one that is managed for the children’s trust and one that is managed for my wife and me. It is an ongoing battle to try to keep the inheritance tax liabilities to a minimum. Our solicitors, Bond Dickinson, have been tasked with keeping a rolling brief on our tax liability which is reported formally to the trustees once a year. Succession planning Our eldest child, Imogen, is the more likely to be the successor as she is already
showing a keen interest; our second daughter, Georgina, prefers the pavement beneath her feet in London if possible. Imogen and I have had preliminary conversations about her taking over the estate but I have strongly recommended that she establishes a life outside Brackenburgh before the time comes for her to take over the mantle here. I still value the time that I spent as a land agent before coming home to the estate. When her time comes to take over, I will step down but will always be available to impart advice should she ask for it.
of sustainability. However, the sawmill was finally condemned as it became increasingly difficult to comply with health and safety requirements. We still have a joinery business here to service the repairs on our tenanted properties but the timber is now bought in. Retirement has claimed most of our forestry staff and so this part of the business has changed significantly. We now employ four contractors to carry out all of our forestry work and because we don’t directly employ any staff, I am now free to plan strategy rather than manage the day to day process of forestry.
Forestry Since 2005 there have been many changes. We used to have our own forestry staff many of whom had been with us for decades and while they were excellent in what they did, they had little regard for health and safety and were slow to embrace new technology and modern working practices. We also had a working sawmill, where we used to process all the materials for the housing on the estate – windows, doors, fencing etc, so you could say it was an early form
Each year Paul Dancer, our agent who is based at Smiths Gore’s Corbridge office, and I dedicate two days to a detailed inspection of all the woodlands. We have now put together a 20 year strategic plan for submission to the Forestry Commission; the east plan is principally based on timber production while the focus on the west plan is concentrated more on the rural infrastructure such as sporting, wildlife, biodiversity and amenity uses.
Farming We have three farms in hand; dairy, sheep and arable. Our philosophy is now to re-let vacant farms rather than take them in hand because we are keen to encourage entrants into farming and to give them an opportunity to build their own business. Last year, one of our AHA dairy tenant farmers handed back his succession tenancy despite our attempts to persuade him to stay. After thirty seven viewings and nine tenders we re-let High Oaks farm on a 20 year FBT at over £200 per acre (it had been £75 per acre under the old AHA tenancy), to a local dairy family; one of the two sons has come to establish a new dairy herd and so has expanded the family business. We were keen to offer a long tenancy to entice tenants who are prepared to make a long term commitment to the farm.
is Lazonby Fell where we are trying to preserve the lowland heath and overcome the invasive bracken and trees. To achieve this we have introduced Highland cattle and Tamworth and Old Spot pigs. It was just impractical and too costly to spray the area and hopefully the lowland heath will return and with it all the flora and fauna associated with this ancient land type. There is a five year programme to clear the wild silver birch which is being funded by Natural England.
estate’s cash flow and it keeps a team of staff in full time employment, who are responsible for the maintenance of these properties. Over the years tenants have become more exacting about the state of rental properties and the team work hard to make sure that all those properties on Assured Shorthold Tenancies are in good condition and marketable. One of the challenges we face is making sure that all the properties are EPC compliant and brought up to the required rating by 2018.
Incidentally, we were advised by our solicitors to register the estate with the Land Registry some years ago, at what I considered at the time to be an expensive operation. It now transpires that in two years time, no Forestry Commission or HLS grants will be payable if the land is not registered, so in hindsight I am pleased that we spent the money.
Development land
Rental property There is currently a 1,250 acre High Level Stewardship scheme for all the home farm land where we have restored stone walls, winter stubbles and wet lands. The main feature of the HLS scheme however
We never jumped on the band wagon when it was necessary in the 1970s to sell off estate cottages and we now retain a healthy rent roll. This is good for the
The site of our former sawmill is now the subject of a planning application for the development of 14 properties, 30% of which will be low cost units for the elderly. The site is brown field and in the middle of the village. We have just finished a two year consultation period with the parish council and the local community. I am pleased to say that we appear to have full support for this development project. Continued overleaf...
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The Globe Inn When the tenants of the village pub abruptly quit we were inundated with requests from the village to keep the pub open. It had become very run down and we spent much time and money renovating the property for the new tenants, who are a local husband, wife and son team. The refurbishment took six months and the pub reopened in October. Despite my initial scepticism, I am delighted to say it appears to be thriving and it has had a very positive impact on village life. Village nursery We were approached by the village school some time ago to enquire if there was a suitable property that could be leased as a nursery. When the right property became available, we began jumping through all the hoops to meet the regulations required to make it Ofsted compliant. The nursery is now up and running and has proved very popular; it is
open 363 days of the year from 7.30 am – 6.30 pm and has a large catchment area. Mineral registration We received a letter recently from the agent acting for a neighbouring Estate claiming that they owned the mineral rights over our proposed brown field development site. Investigations revealed a legitimate document dating back to 1935 which does indeed verify that the mineral rights are owned by a third party. We have taken a decision to make our own investigations about mineral rights over the entire estate and to make settlements over our property to secure the title for future generations. Nothing has yet been agreed and negotiations are on-going. Renewable energy We have put in a wood fuel boiler recently and as certain parts of the main house are let to tenants, we have qualified for the community heating scheme in the form of the Renewable Heat Incentive
(RHI). On paper the wood fuel saves the estate about £8,000 per annum and should have a payback period of between five and seven years. In practice there are a number of advantages and disadvantages. On the positive side there is now a use for our low grade round wood timber that has previously been left on the woodland floor; so we have improved our silviculture management now that we can use this wood to fuel the boiler. There are some disadvantages; the manpower required to fill the boiler at the beginning and the end of the day is significant – it is heavy work and not for the faint hearted or the elderly. The paper work involved in claiming the RHI from Ofgem runs to 123 pages and can best be described as a bureaucratic headache. As can be seen, we have worked hard to plan for the core elements of the estate in the seven years since we won the Royal Agricultural Society of England Award. We endeavor to improve the management of our estate so it is fit for purpose in the challenges and opportunities that lie ahead.
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Generation game A pilot scheme aims to boost rural family businesses, from farms to funeral directors Two of our Taunton-based partners, James Dennis and Simon Derby, have been trained to be advisors on a pilot scheme that aims to boost family businesses, from farms to funeral directors, in rural Devon and Somerset. “The Family Business Growth Programme, the first of its kind, will make a real difference to rural family businesses. Family businesses are the backbone of our rural economy and it is essential that they are supported so they can thrive.
The Globe Inn
Village nursery
As advisors available to the businesses, we hope to encourage them to make the most of opportunities and to grow to their full potential. We will work hard to recognise the emotional complexities of running a family business, alongside generating profit and growth.” James and Simon.
The Programme is the brainchild of Clinton Devon Estates and was instigated to support the Government’s Rural Growth Agenda. It has been part-funded by Defra’s Rural Growth Network and is supported by the Country Land and Business Association, the Tenant Farmers Association and the National Farmer’s Union. Businesses ranging from farming families to funeral directors can apply for an initial health check with one of the professional firms or organisations involved. James and Simon have undertaken specialist training at the Institute of Management Development, the global business school, in Lausanne, Switzerland, for the programme. And there is a national ambition; the programme will be carefully monitored by the Centre for Rural Policy Research at the University of Exeter and recommendations made at the end of the pilot year as to how it can be rolled out nationally. If you are interested in taking part, please contact James or Simon for a confidential discussion.
Wood fuel boiler
Forestry management at Brackenburgh
James Dennis
Simon Derby
01823 445030 james.dennis @smithsgore.co.uk
01823 445036 simon.derby @smithsgore.co.uk
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Big in America US Timberland Investment
The US offers investment opportunities not available within the UK and Europe. It has a well-established investment industry for direct and indirect investment in forestry. The scale of forestry or timberland in America is impressive to the point of mind boggling to those used to British property statistics. The US has 100 times the amount of forest than the
UK (750 million acres compared with 7.5 million). Just over half is privately owned and 44% held by federal, state and local government, throughout the main states. With a population of 314 million, an economy which is still the biggest in the world and a penchant for timber construction, there is a huge dynamic for the forestry industry. The vast scale of the US means that there is a full range of climate, soil types and tree species.
The main forestry investment areas Pacific Northwest. Quality softwood products, including exports to the Far East and China. Common species are Douglas Fir, Sitka Spruce, Hemlocks and Cypresses.
Louisiana
Timberland investment in the US It is not uncommon for large businesses to own and actively manage over 500,000 acres of timberland to supply their business needs; this is almost as much as the Forestry Commission manages in the whole of England. Kimberley Clark the paper processor is an example, using the resources as direct supply to paper and pulp mills. Investment in timberland has partly come about as a result of the reorganisation of these large businesses, which led to the sale of large areas of forestry, many into timberland investment structures. Many investments are through Timberland Investment Management Organisations or TIMOs, which are essentially property funds. They have attracted huge investments from US and overseas investors. Since 2007, when around 80% of investment was US-based, investment in the sector has doubled, and mostly due to non-US investors.
Philip Coles 01325 370511 philip.coles @smithsgore.co.uk
Philip Coles, our senior managing agent for the Church Commissioners for England, accompanied their investment team to Louisiana on an inspection visit of the timberland they acquired as part of a £200 million global allocation to this asset class.
A typical investment structure is a fund that has a life of 10-15 years, which buys and manages timberland blocks to generate an income from selling timber. I attended the AGM of a TIMO. It has a number of funds, with one ending and another being prepared for syndication. Individual investments are typically in the $1-20 million range. Its target total return is 7% plus, which is attractive
compared with many liquid investment forms and other property types. This return looks conservative given the expected dynamics of the timber market (see below) and the long-term total return on USA Timberland of 12.8% per year. (1987-2012) While some timber investors have had low returns in the last 2-4 years due to the economic downturn and timber price reductions, the industry expects returns to start rising. Domestically, US house building is increasing and timber demand and prices are rising. Internationally, new markets are opening up to the American forester. For example, European demand for wood pellets is expected to grow from 2 million tonnes in 2012 to over 11 million in 2017. The long-term global outlook is for demand to rise, in the US, Europe and Asia, and for the area of timberland to fall, due to urbanisation, fragmentation, conservation restrictions and pressure from pests. Values are distinctly un-European. Largescale mixed age timberland is typically worth $1,000-1,500 per acre (£640£1,000), so 20-33% of UK values. Only in the Pacific Northwest do you see values which appear similar to ours, at $2,5003,000 per acre (£1,600-2,000). The value of the land without the trees is rarely more than $500-600 per acre (£320-400).
North East and East. Quality hardwoods for high end uses as cladding, furniture and decorative finishes. Common species are Ash, Oak, Maple and Beech.
Southern coastal. Lower value soft wood products, including paper pulp, from high growth rates in the warm and wet climate.
Market focused regulation I was struck by the way regulation is dealt with – it seems more market focussed than in the UK. TIMOs are subject to detailed audits and are keenly regulated by the Securities and Exchange Commission, the US equivalent of the Financial Services Authority, which gives investors comfort that the fund management industry is carefully monitored. Forest certification is also important and there is a widely adopted voluntary code of practice, required in part by the timber users who demand high standards of compliance and traceability. Day-to-day management is less regulated so there are no felling licences. Bigger and faster – Loblolly Pines A visit to a 40,000 acre holding of Loblolly Pine in Louisiana was an eye opener to someone schooled in British estate management and forestry. The plan is for a 28-30 year rotation of monoculture pine to sell to pulp/particle/ paper mills, with thinnings at around 12 and 20 years. The final crop, which will be clear felled, will be 21 metre top height and have produced 16 cubic metres of timber per acre per year. The speed of growth and regularity of income means that these plantations, of what Europeans would regard as low value timber, show impressive financial returns.
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Space Age In an era of vacant properties these simple steps can help to win and retain tenants
What every employer needs to know… about Real Time Information RTI is a new system for reporting tax Many businesses are unaware of the major changes to the Pay As You Earn (PAYE) system that came into effect in April in the form of the Real Time Information (RTI) system.
Our blueprint for putting your property ahead of the competition and increasing income
Who does it apply to?
1.
Develop a brand that tenants will be attracted to
Anyone who employs staff, including casuals, in England, Scotland and Wales from April 2013 – even if you only employ one person
In a competitive market your property needs to stand out from the crowd. Make the most of stunning views, classic architecture, good road links, lack of congestion and plenty of parking when you are marketing. Many people live in the countryside as a lifestyle choice – and working there can be one too.
What do I have to do?
We recommended new signage and marketing material to The East Malling Trust in Kent to maximise the already well-known brand.
2.
Offer attractive terms – balance your needs and those of the tenant
Tenants want terms that help, not hinder, their businesses. Many of our clients offer flexible lease lengths, a range of unit sizes and flexibility to allow tenants to move as their businesses grows or contracts; provide them with as much information as possible at the outset about the property, the services and how the property can help their business grow.
An estate we manage which had some large units vacant split them into smaller, fully serviced offices to appeal to start-up technical and service businesses. They are now fully let.
3.
Be good to do business with – professional, straight and open
Think of tenants as clients. Look after them and they will look after you. Often the best advertising is word-of-mouth, from you and your tenants.
It doesn’t – deductions of both continue as before, and existing arrangements between HMRC and the CLA / NFU, whereby employers don’t need to deduct Income Tax and NIC if conditions are met, have not changed. But even where there are special arrangements, the employer still needs to make RTI submissions.
Go to local networking events and be enthusiastic about the quality of the property; hosting these events is an excellent way to get local businesses to experience your property.
Are there any exceptions?
Encourage your tenants to talk to each other and to other businesses, who could work from your property; business networking clubs, on Twitter, Facebook or Linkedin, are a good way to do this.
4.
Add value for your tenants
Each time an employee is paid, you must submit RTI data to HMRC on or before the day the employees are paid. This applies to all employees (but not self-employed workers).
• Amount paid (including to those below the £109 per week Lower Earnings Limit for National Insurance Contributions (NIC))
Details must include, for each employee:
•
Number of contracted hours
•
Deductions made, such as Income Tax and NIC
•
Starting and leaving dates
•
Full name, address, date of birth and National Insurance number
21 How does it affect PAYE and NIC?
Making it easy to work from your property can give you an advantage over places where tenants have to arrange services, reliable broadband, telephony, an answering service, post collection, IT support, office cleaning, car valeting or caterers.
•
Casual workers, such as harvest and shoot beaters
•
Businesses with less than 50 employees
Submit information by earlier of next regular return date or seven days after making payments (ie prior to making payment) unless the employer is not required to set up a PAYE scheme 1
Can submit information monthly until 5 October 2013
How can I make the process as painless as possible?
Make it hard for them to leave you. 1.
Ensure your employer records are up-to-date
3.
Let your employees know if it will affect how they are paid
2.
Try to harmonise your RTI submission with your existing payroll pattern if possible
4.
This is a complicated area and professional advice should be sought before making any payments without deductions.
Our rural commercial team manage over 2,000,000ft2 of commercial property and are working for hundreds of landlords to keep their properties profitable.
Tim Cathcart
Neil Sargent
Jason Lewis
Ben Knight
Mark Nicholson
Jamie EvansFreke
Catherine Desmond
South East 01732 879057 tim.cathcart @smithsgore.co.uk
South West 01872 274646 neil.sargent @smithsgore.co.uk
South Central 01672 529052 jason.lewis @smithsgore.co.uk
Midlands and Wales 01285 888008 ben.knight @smithsgore.co.uk
North 01904 756308 mark.nicholson @smithsgore.co.uk
Scotland 01343 823011 jamie.evans-freke @smithsgore.co.uk
Senior Manager, Landed Estates Team Saffery Champness 0161 2008383 catherine.desmond@saffery.com
This is when (i) the employer does not pay any employees more than the £109 per week lower earnings limit for NIC and (ii) none of the employees have earnings elsewhere. 1
Could you develop your agricultural buildings?
How to tackle the NIMBY in us all
‘Change of use’ rules have been relaxed to serve as a catalyst for development
The grass can be greener on the other side...
Existing permitted development rights for agriculture have been widened from 30 May to help boost the economy1. Although they are helpful, don’t forget that this applies to changes of use and not to associated operational works, such as inserting new windows, access and parking, which may still require planning permission. So development is easier but still not easy.
The title NIMBY (Not In My Back Yard) is frequently applied in a derogatory sense to those who don’t want to see development when it affects their home or their neighbourhood. Although these people can make the life of the planning consultant very challenging, who of us don’t have a backyard that we want to protect?
Agriculture to commercial use
From Conditions To
22
Change of use allowed, without need for planning permission, from: •
Agricultural buildings and land within their curtilage (but not a dwelling house)
•
Building must have been solely in agricultural use since 3 July 2012 (otherwise these widened rights will not apply for 10 years)
•
Does not apply to Listed Buildings or Scheduled Monuments
•
If changes are <150m2 floor space, notify planning authority
•
If changes are 150-500m2, obtain prior approval from the planning authority, as the impact on transport, highways, noise, contamination and flood risk may need to be assessed
•
•
Restaurants and cafes (A3)
•
Hotels (C1)
•
Shops (A1)
•
Financial and professional services (A2)
•
Business (B1)
•
Storage & distribution (B8)
•
Assembly & leisure (D2)
500m2 maximum
Subsequent change of use between these uses (not others) is allowed, without need for planning permission
My personal checklist is below. I would want to:
Offices to residential use Buildings that were in office use immediately before 30 May 2013 or when last in use can change use to residential, with prior approval from the planning authority in respect of transport, highways, contamination and flooding. Some areas have asked that the wider rules don’t apply to them (including some business areas in London, Manchester City Centre, Vale of the White Horse, Stevenage, Sevenoaks, Ashford and East Hampshire). As above, the new rules do not apply to Listed Buildings or Scheduled Monuments. Through the Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2013. The Order also changes permitted development for domestic extensions, new schools, temporary uses and changes of use of office buildings. This summary simplifies what are complicated new rules and we recommend that professional advice is taken before any action is taken. 1
Change is threatening for most people and it is at its most disconcerting when we feel we have no control over what is happening. This is the most important fact to remember when we are proposing developments that will have some impact on the communities nearby - even if we perceive that it will be a positive impact. It is important always to ask ourselves, how would I want to be treated if I was a member of the community affected by this proposal? This should then become our mantra when taking forward developments.
Ian Smith
Claire Fallows
Head of Planning 01733 559320 ian.smith@ smithsgore.co.uk
Speechly Bircham LLP 0207 427 1046 claire.fallows@ speechlys.com
•
Know what is proposed
•
Be given a chance to discuss the proposals with the people proposing them
•
Be treated with respect, concern and due attention
•
Be given regular updates
•
See my opinions taken seriously
•
See changes to the proposals as a result of my concerns or be given a good reason why not
•
Maintain positive relationships throughout
•
Know my community will become a better place as a result of the proposals
•
See the permission, if granted, implemented carefully
Whether in England or Scotland, the principles remain the same. Regular positive interaction with communities affected by anything you are doing or are planning to do is just good common sense. It is important to consider the level of potential impact a proposed development may have on a community when deciding how much community engagement to have, rather than just sticking to the letter of the regulations: •
Involving the local community can be time consuming and requires a front-loaded approach to project management of a planning application
•
Not involving the community can alienate them, create unnecessary barriers and can greatly complicate and lengthen development timescales
Open days, newsletters, websites, going to community events and social
media are all ways to keep in touch with local communities. Land-based businesses often contribute a huge amount to their local economies but this is frequently overlooked unless the business is regularly putting out information about its activites and discussing issues with its communities. Strong positive local networks between rural businesses and the communities they are based in is the most effective way to tackle the NIMBY in all of us. Scotland There is a clear process for consultation for major planning applications. It is becoming standard practice to consider community involvement in a wide range of local planning applications. England The new Neighbourhood Planning model seeks to allow people to influence development in their community, subject to projects of wider importance being decided at district, county or national level. The ‘community’ is widely defined, and includes developers, parish and town councils, landowners and local businesses.
Debbie Mack ay 0131 344 0891 debbie.mackay @smithsgore.co.uk
23
2013 Property market review Farmland
Agricultural Rents
Early evidence from the Spring is that farmland values have continued to rise, for both bare land and equipped farms.
‘secondary’ land but fewer bidders than before and they are not willing to pay inflated prices. Demand for ‘tertiary’ land has fallen and so have prices; some of it is not selling, even at prices well below regional averages. The red-hot market, when almost all land sold well, has cooled, which is probably a good thing.
But averages can be misleading and we are convinced that there is a two or possibly three-tier market.
For sellers, this makes knowing the local and national market even more important so that demand can be maximised. Part of this is careful lotting, which can be used to minimise any ‘issues’ and make parcels of land as attractive as possible to buyers. The strongest demand is for large commercial farming units with high quality, useful buildings.
There is prime, secondary and tertiary land in all regions of the UK. It is not just about the location and grade of the land, but also the quality of houses and buildings and whether the land has ‘issues’, such as access and infrastructure. ‘Prime’ land is still in demand and prices are still climbing as bidders compete for the land. There is still demand for
Rents have continued to rise, despite the challenging conditions in 2012, as the medium-term outlook for farming remains encouraging.
If you would like advice about rents and tenancies, please contact Toby Metcalfe (Scotland) or Stephen Spencer (England), both of whom think that the outlook for farming is positive and that rents will continue to rise.
There was a 30% average increase in the 717 rent settlements we agreed in the year to 31 October 2012, which is the greatest annual increase we have seen in the last five years. Rents rose for all types of farm and all types of tenancy but the greatest increases were in Farm Business Tenancy rents in England, which rose by 44% (average), as existing tenants bid more to retain land and farmers competed for new lettings.
For more analysis and to see regional rents by farm type, download our market intelligence report at www.smithsgore.co.uk/publications
Farmland values in England (£/ac) Source: Smiths Gore Research
English farmland values
New rents agreed by tenancy type in year to October 2012
£/ac
New rent (£/acre)
Old rent (£/acre)
Percentage change
Number of reviews
Area reviewed (ac)
Arable
£79
£65
23%
101
32,245
Dairy
£82
£71
17%
40
11,505
Livestock
£55
£45
30%
90
38,271
Mixed
£77
£65
19%
109
23,100
AHA average
£72
£60
23%
340
105,121
Arable
£132
£87
55%
108
14,815
Dairy
£109
£88
25%
23
5,007
Livestock
£77
£58
45%
95
15,271
£/ac 10,000
10,000
8,000 8,000 7,000 7,000 6,000 6,000
FBT
5,000 5,000
4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 0 0
07Q1
07Q2
07Q1
07Q3
07Q4
08Q1
08Q2
08Q1
08Q3
08Q4
09Q1
09Q2
09Q1
Bare land Bare land
Giles Wordsworth Head of National Farms and Estates Agency 01865 733302 giles.wordsworth @smithsgore.co.uk
09Q3
09Q4
10Q1
10Q2
10Q1
10Q3
Equipped land Equipped land
10Q4
11Q1
11Q2
11Q1
11Q3
11Q4
12Q1
12Q1
12Q2
12Q3
12Q4
13Q1
All land
Scottish Tenancies
24
AHA
9,000 9,000
Mixed
£98
£76
32%
63
11,460
FBT average
£105
£75
44%
289
46,552
Arable
£60
£52
16%
7
1,552
Dairy
£53
£50
7%
7
2,136
Livestock
£34
£24
19%
62
38,528
Mixed
£43
£37
15%
12
4,738
Scottish average
£39
£31
18%
88
46,954
Overall average
£81
£62
30%
717
198,627
New rents agreed by tenancy type in year to October 2012
25
Old rent (£/acre)
New rent (£/acre)
All land
Dr Jason Beedell Head of Research 01733 866562 jason.beedell @smithsgore.co.uk
Toby Metcalfe Scotland 0131 344 0885 toby.metcalfe @smithsgore.co.uk
Stephen Spencer England & Wales 01543 266403 stephen.spencer @smithsgore.co.uk
Residential Sales
Residential Lettings
Green shoots at last for the rural housing market.
High demand but beware rent arrears.
In its latest Residential Housing Market Survey, the Royal Institution of Chartered Surveyors (RICS) reports the most encouraging set of market figures for five years, with buyer enquiries, sales agreed and prices achieved all showing positive growth across the country. For once, the good news isn’t limited to London. Whilst the RICS survey has become one of the housing market’s key indicators, it’s important to understand that it is a survey of market activity and sentiment amongst the Institution’s residential agents, rather than completed sales data. It offers fairly instantaneous feedback direct from the front line, whereas the hard evidence of sales from the Land Registry necessarily involves a short time lag, with its latest data, painting a less upbeat picture. Across the country, the experience from our offices echoes the RICS data, with a marked rise in buyer activity, a good flow of new, high quality instructions, and a sense of realism from vendors in terms of asking prices. All this bodes well for a sound sales performance throughout the summer months, into which much of the year’s rural housing market activity is compressed. This increased activity is particularly encouraging given the poor spring weather, which certainly held the market back in the early months.
26
Whilst there has been some vocal criticism of the Help to Buy scheme announced in the Budget – that it will inflate prices - its effect so far appears to be strongly positive, with the Home Builders Federation reporting 500 new-home reservations a week in its first eight weeks of operation. The equity loan scheme is currently limited to new houses; there is likely to be a further boost when the Help to Buy mortgage guarantee scheme kicks in on 1st January 2014, extending the support to the buyers of established houses. We could finally be at a turning point in the housing market outside of London after five years of decline. The next few months will be critical.
Andrew Turner Head of Residential Agency 01904 756303 andrew.turner@smithsgore.co.uk
I am often asked what the future holds for residential let property. Although I don’t have a crystal ball, we can look at a few facts. The number of people living in private rented accommodation has increased by 18% in the last two years and by 47% in the last four. Tenants are staying in properties longer, in fact for record durations. Demand is greater than supply and rents have been rising. In general, it is a good time to be a landlord although the picture is not consistent across the country or for all property types.
Chris Jowett Head of Residential Lettings 01962 857421 chris.jowett@smithsgore.co.uk
But there are a number of challenges. The direction of travel for the sector is greater compliance and regulation. The long-running Government inquiry into the private rented sector is focussing on improving standards. It now seems certain that letting agents will have to sign up to a Consumer Redress Scheme, to protect tenants from poor agents, although the Government is currently stopping short of the compulsory regulation which the Opposition is calling for. The Scottish Tenants Deposit Scheme is now in place and there is increasing pressure from the courts for landlords to accept greater responsibility for their tenants’ welfare. Rent arrears are an increasing problem, particularly now local authorities pay housing benefit to claimants, rather than to landlords. But tight monitoring of payments and a good but firm working relationship with tenants can prevent arrears. We are in exciting and potentially rewarding times for residential landlords, but it has never been more important to ensure that landlords, and their agents, have the right processes to protect both themselves and their tenants.
27
Forestry The recent good prices for timber and forestry land continue. Timber markets
Forestry land
Hardwood timber is in demand and a lack of timber coming to the market means strong interest and prices for good quality parcels of timber.
Demand and prices for lowland woodlands remain strong but with interest varying depending on location.
Conifer timber prices fell by 5 - 10% in the year to March 2013 despite demand continuing to be strong from processors and the renewable energy market. But this fall should be considered in context of standing conifer values almost doubling in the past five years.
There has been strong demand for maturing, high performing spruce forests, with prices from £3,500 - 5,000 per stocked acre in Scotland, England and Wales. As usual, values are lower where growth rates are lower and access is more difficult in north Scotland and the islands. While rises in timber prices have slowed, we expect forest values to remain steady and high as long as there is not a significant increase in supply.
The long cold Winter and Spring boosted firewood prices. After dropping slightly in the second half of 2012, prices for firewood have recovered to the same levels as early 2012. Hardwood thinnings for firewood are around £15-20 per tonne standing and £34-37 per tonne at roadside. The strongest demand is for small diameter hardwood thinnings suitable for firewood processors, with ash getting a premium of £2-3 per tonne.
Andy Greathead Head of Forestry, Woodland and Arboriculture 01620 828979 andy.greathead @smithsgore.co.uk
The strong values for commercial forests are reflected by the 18% total return from forestry held as an investment in 2012 and the astonishing 24% return per year over the last three years. In the 20 year period since 1992, forestry investment has produced a return of 8% per year - and it has a lower risk profile than equities, gilts and commercial property.
28
29
Outdated telecoms code due for revamp
Sporting estates
The Electronic Communication Code that has governed relationships between landowners and network providers since 1984 has been reviewed by the Law Commission; its report is now being considered by the Government and we expect primary legislation by 2015.
The number of true sporting estates which come to the market is usually low and 2012 and early 2013 have been no exception. Whether it is a prime beat on a salmon river, an all-rounder Scottish sporting estate or a grouse moor, sporting excellence remains a sought after commodity.
The Code has become outdated by the changes in communications technology and by structural changes in the industry. How it changes will significantly affect the returns landowners will get.
Whatever the wider state of the property market, a quality sporting offering will always sell well, spurred by those who fear missing out on a once in a lifetime opportunity. Murton Grange in North Yorkshire was an example of this. A large arable farm which boasts one of the best high pheasant and partridge shoots in the country, it was marketed at the end of 2012 and attracted significant interest, and sold quickly, well above its £7m guide price.
Many landowners have successfully negotiated open market rents with network providers for sites. But the network providers are lobbying hard to replace them with minimal compensation under a compulsory acquisition formula. The Law Commission supports the continuation of agreeing market rents, although recognising that a fallback position of compulsory rights is needed to maintain a comprehensive network if agreement cannot be reached. There are also further recommendations relating to site sharing and assignation of leases.
K ay Paton Head of Telecommunications 01387 274394 kay.paton@smithsgore.co.uk
Whilst a couple of grouse moors have changed hands privately recently, few have sold on the open market, no doubt because their owners are enjoying the fruits of the last few bumper seasons! A productive and competitively priced grouse moor put to the market would undoubtedly attract significant interest from far and wide.
David Steel Head of Sporting 01200 411051 david.steel@smithsgore.co.uk
ROCK HARD Maximising the value of a 120-year granite quarry has proved a fascinating challenge for Adam Weaver and John Dutson Arbury Estate’s granite quarry is entering the final stage of its life, 120 years after it was first worked. The quarry was developed for good quality granite, which has largely been extracted. There is still other lower-quality material (hornfels and shale) at depth and there is the possibility of applying for permission to extract further quality granite, which might give another 15 years of quarrying life. The restoration of the site remained with the Arbury Estate and finding a suitable solution to infill and restore the six million cubic meters of void space over 30 years has been challenging as we needed to consider a range of issues, including availability of suitable fill material, landfill competency, dewatering of the quarry, traffic management and continuity of use to reduce the risk of trespass. We wanted the right operator to work with in order to obtain planning permission and the environmental permits, set up a recycling and waste processing facility within
the quarry, commence infilling and then restore the site whilst continuing to preserve the geological Site of Special Scientific Interest on the northern quarry faces. After being impressed when visiting one of their other sites, we chose WCL, a young husband and wife team who operate a few quarry/landfill and recycling sites around Birmingham. The agreement with them required them to obtain planning permission and various environmental permits, with the Estate’s income based on a minimum percentage of revenue rather than the more normal rent and royalty basis, so if WCL succeeds so does the Estate. Infilling and recycling has started and we are now smoothing out a few teething problems as areas are given up for quarrying so infilling can commence. So far so good - 120 years into the project.
Selling St. Paul’s
30
Adam Weaver Managing Agent 01676 540529 adam.weaver @smithsgore.co.uk
31
John Dutson Minerals and Waste Surveyor 01962 857408 john.dutson @smithsgore.co.uk
Harry St John was asked to sell St Paul’s Church in Highmoor Cross, an attractive Grade II listed parish church dating from the mid 1800s, for the Oxford Diocese Selling a church is a complicated process. The Church has formal procedures to follow, such as consulting with the parishioners and other bodies. Because a church is a sui generic use, any purchaser needs planning consent for a change of use and many churches are listed buildings. After four months marketing to identify interested parties and holding 18 viewings, we asked for offers in January, interviewed short-listed bidders in February, and have accepted an offer from a buyer seeking to convert it into a dwelling, which is what most of the 120 applicants were interested in.
Our Oxford office is selling two more churches in 2013/14 one west of Reading in Berkshire and one near Milton Keynes in Buckinghamshire.
Harry St John 01865 733304 harry. stjohn @smithsgore.co.uk
Learning from the best of Europe You might ask why a large part of the European budget is spent on the environment and rural development. The reason is that the environment provides us with clean water, air and soil, it helps reduce flood and fire risk, and regulates the climate, through controlling greenhouse gas emissions. As well as being vital to our well-being, these ‘eco-system services’ help the economy work better; Europe loses three percent of GDP due to the loss of biodiversity, which is a cost of €450 billion each year.
32
Each Member State sets out its priorities and how it wants to spend its allocation of the budget in its Rural Development Programme. The English, Scottish and Welsh Governments are currently designing their new Rural Development Programmes for 2014 – 2020. Although we do not know what the precise budget is yet, we do know that it is likely to be smaller for the UK compared with other Member States. And, as a significant part of it will be used to pay for existing agri-environment schemes, there will not be a lot of money for new initiatives. Therefore we need to spend it wisely; here are some examples of the best of Europe.
Finland Continuity of scheme for reducing nutrient loss has led to increased confidence and long-term planning by farmers.
Sweden Advice to build the skills of farmers and their advisers. Delivered by ‘trusted peers’, not officials.
Sweden Free, individually-tailored advice to reduce nitrogen and phosphorous emissions. 9 out of 10 farmers implement the measures proposed and most are more profitable.
Estonia Short training at the start and end of each agri-environment scheme. The training is not prescriptive – it empowers individual farmers to contribute.
33
Netherlands Farmer-led collective approach to delivering environmental services. A regional body represents all farmers.
Germany Results (not actions)-led approach to agri-environment schemes. Belgium Working with the supply chain to add value so farmers can leave 10% wheat un-harvested for wildlife at no cost.
Germany Collective ‘Landcare’ approach, between farmers, environmentalists and administrators, to delivering environmental services. The approach builds trust and reduces administration.
Slovakia Using smart IT systems to target agri-environment and other measures to where they are most needed, and simplified application forms.
Italy Flood prevention work was done using a network of farmers. The local authority was able to monitor a big area at low cost.
Download our latest CAP Reform flyer at www.smithsgore.co.uk/publications
We are delighted to attend Defra’s External Working Group on the CAP, which is contributing to the design of the 2014-2020 Rural Development Programme for the UK.
Dr Jason Beedell
Simon Blandford
Head of Research 01733 866562 jason.beedell @smithsgore.co.uk
Head of Farm Management 01962 857405 simon.blandford @smithsgore.co.uk
Food Chains Field to fork in almost one mile You often hear about food miles and about Brazilian beef, New Zealand lamb and Kenyan beans. Some of these food chains are efficient but it is satisfying to be involved in a short, green local food chain. I advised the estate on the financial benefit of switching to beef production, made the Higher Level Scheme application, found the graziers and arranged their agreement. I also enjoy going to the Chequered Skipper!
Robert Childerhouse 01638 676749 robert.childerhouse @smithsgore.co.uk
Robert Childerhouse is our agent and farm management consultant on Charlotte Lane’s Ashton Estate in Northamptonshire.
34
Advice on switching from arable production
Financial and environmental benefit of establishing 180 acres of wildflower meadows
Conservation grazing on the meadows
Local abattoir cuts food miles
Seven Wells Family Butchers Oundle
The Chequered Skipper Pub, on the Ashton Estate
I advised the estate on a better use for a block of poorly performing arable land on Chapel Farm, that would increase the financial return and support the family’s long interest in environmental matters.
The land was sown with the family’s renowned wildflower seed mix, which is grown on the estate. We successfully applied for payments from the Higher Level Scheme for the significant wildlife benefits.
We wanted graziers who could manage the land well and we could work with, and found them in local farmers Robert and Sally Knight. I arranged a licence agreement with them.
The Limousin cattle are slaughtered at a local abattoir. This is the only part of the food chain that it not within one mile of the meadows.
The beef is expertly butchered in the local family-run butchers. It is sold to the public from the shop on Oundle High Street and to local pubs and restaurants, like The Chequered Skipper.
The pub serves excellent quality food, including the beef. The local, environmentally-friendly story about how the beef reaches their plates appeals to its customers.
Adding value to cereals Jon Dearsley
Demonstrating good record keeping and commitment to sustainable farming can add value to crops. One of our clients in Hampshire grows arable crops to an environmental set of rules, which are proven to benefit wildlife and boost crop prices.
01285 888003 jon.dearsley @smithsgore.co.uk
Jon Dearsley is a farm management consultant working from our Cirencester office.
Growing arable crops to an environmental protocol for a premium
Growing biodiversity
Growing responsibly
Growing staff
Growing together
Growing profits
One way of adding value to conventional crops is growing to the Conservation Grade protocol, or set of rules, in return for a contracted premium price for the crop, from buyers such as Allied Mills, Jordans, Vitacress and European Oat Millers.
Independent scientific trials demonstrate the Conservation Grade approach leads to a significant increase in biodiversity compared with conventional farming systems. It is not meant to be impractical and it is not organic – it is a working farmland conservation model that uses pesticides and fertilisers safely and wisely.
The key requirements relate to the farm… • Meet the rigorous production standards • Commit to a farm environment plan • Be a full member of an approved assurance scheme
…and to staff development
The scheme demands, and I have worked with clients on, high quality record keeping, compliance with the protocol, ensuring staff carry out their duties responsibly and on marketing the crops.
The crops get a premium of around £20 per tonne, significantly improving profitability – so good for the beetles and the bank.
•
Take part in training
•
Pass an annual audit
•
Join the Guild of Conservation Grade Producers
We have also used the Higher Level Scheme to help meet the environmental requirements.
35
Green Deal or No Deal The Green Deal, the government’s scheme that helps buisnesses and households make energy-saving improvements to property without having to pay all the costs up front, has had a slow start with fewer than 10,000 assessments carried out in the first two months following its launch. We think this is due to lack of awareness; perception that the interest rate payable on improvements is too high; that most ‘quick and easy’ work has already been done on houses; and, that it is difficult to apply to older and complicated houses. It is too early to say how many assessments will result in actual energy efficiency work happening to houses. There are five possible ways to improve energy efficiency when renovating or repairing: The expert building surveyor’s view
1
Do the ‘quick and easy’ work first
Ten years ago, the market for land for housing was buoyant. We were optimistic about the economy and development land was often worth £1m or more per acre. Today, the picture is different for most of the UK. House values have fallen, building costs are up, affordable housing subsidies have largely gone or are vastly reduced, and ‘developer contributions’, through planning gain and Community Infrastructure Levy (England and Wales only), are high. Let’s take a look at a fairly standard residential scheme density of three bedroom houses on a bare site with no abnormal costs:
Sale value of house
Put in additional loft insulation, replacing light bulbs1 and installing water saving devices.
Upgrade heating controls
2
Financial viability is a key reason more houses are not being built
Make sure you have control of the heating system, using individual thermostatic controls on radiators, thermostats in rooms and timers on boilers.
£225,000
£2,250 per m2 at 100 m2 per house
Less Building cost
£100,000
Marketing and finance
£15,000
Developers profit
£45,000
£1,000 per m2
20% of sale price
Think about the cost effectiveness of improving windows
36
3
Developer contributions
Before doing any repairs or redecoration. Community Infrastructure Levy
£25,000
£250 per m2
Planning gain
£15,000
£15,000 per house including off-site highway works; this is a s106 or s75 (Scotland) agreement
Affordable housing
£25,000
Say 3 out of 10 houses must be affordable. NB Nil effect on land value in Scotland
Total Cost
£225,000
Thoroughly investigate solid wall insulation
4
To ensure it is practical to do and cost-effective. Wall insulation can be one of the most effective things to do but it is also one of the most difficult because of the effect of the increased thickness of the wall on fixtures, fittings and detailings on windows, doors, walls, ceilings and roofs.
Upgrade the boiler when the old one is due to be replaced or is in need of repair
5
The latest boilers can be 20-30% more efficient than 10-20 year old ones. Think about whether it is practical and cost-effective to switch to a different fuel, such as electricity or woodfuel.
Dan Coston 01733 559317 dan.coston @smithsgore.co.uk
Dan Coston has been carrying out assessments on houses to ensure they are ready for the requirement for let houses to be EPC rated E and above in 2016. He has also investigated how best to use the Green Deal to fund any energy efficiency work.
1
This is the HHA candle bulb favoured by the Historic Houses Association
37
Residual value of the land
£0
Many planning applications include a financial viability assessment to demonstrate the affordable housing quota and / or the planning gain contributions that can be financially justified. Community Infrastructure Levy, where it is charged in England, has to be borne without demur. Viability needs to be assessed for all development schemes. For example, in the past a planning consent for barn conversions would increase land values but now, with higher ‘developer contributions’, few developers able to raise finance and higher building costs to meet Building Regulations, many schemes are unviable. We often review schemes with unviable planning consent, such as for a block of apartments where there is no demand, where a change in consent to family houses, although fewer in number, might produce a financially viable consent.
Richard Thompson
David Parry
0131 344 0884 richard.thompson @smithsgore.co.uk
01732 879063 david.parry @smithsgore.co.uk
Secure the highest payments
Keeping the lights on
Act now to avoid renewables subsidy cuts
Think beyond the flick of a switch
Payment rates under the Feed-in Tariff and Renewable Heat Incentive are subject to reductions. The Government uses these subsidy reductions, known as degressions, to avoid making excessive payments as the cost of renewable installations falls and to manage its spending, as the uptake of technologies increases.
Have you tried having an electricity free day recently? It is difficult as electricity is central to our way of life. We expect the lights to come on when we flick the switch, we want it to be inexpensive (even cheap) and we want it to be clean (most of us). To achieve this, the UK needs a diverse energy generating mix, in which renewable energy will play a significant role.
Base Case Degression FiT rate p/kWh Payback 20 year IRR
UK electricity generation
Hypothetical 500kW wind turbine project
0%
5%
10%
20%
18.04p
17.14p
16.24p
14.43p
5.9 years
6.3 years
6.6 years
7.5 years
19%
18%
17%
15%
Projected UK renewable electricity generation GW installed
It is now possible to obtain ‘pre-accreditation’ for schemes that have planning consent and a grid connection which allow the project to lock into the current tariff rate before construction. Our advice is therefore to act now to guarantee the highest subsidy rates by progressing projects quickly and by applying for pre-accreditation where possible. Feed-in Tariff
Renewable Heat Incentive
(FITs)
(RHI)
Anaerobic Digestion Technology
Solar PV (electricity)
Wind
Biomass boilers Ground source heat pumps Solar thermal
Hydro
Biomethane
Next possible reduction
Sept 2013
April 2014
October 2013
Frequency of reductions
Quarterly
Annually
Quarterly
Minimum reduction
3.5%
5%
5% but only if triggered by the budget
Maximum reduction
28%
Period of pre-accreditation payment lock in
6 months for solar PV >50kW
20%
20%
1 year for wind >50kW 1 year for AD
No tariff lock in yet, but makes full accreditation much simpler
2 years for hydro
Comments
Reductions likely
Dr Alan Harries Head of Sustainability 0207 409 9490 alan.harries @smithsgore.co.uk
Reductions likely
Significant reductions unlikely as only a small proportion of the budget is currently spent
Thomas McMillan 0131 344 0886 thomas.mcmillan @smithsgore.co.uk
We are currently working on solar PV, wind, AD, hydro, biomass and energy management projects. Please contact our Sustainability, Renewables and Energy team on maximising returns on renewables.
Electricity from renewables in the UK grew to a new high of 11% in 2012 but is still dwarfed by coal (39%), gas (28%) and nuclear (19%). This mix will change significantly and quickly as the decommissioning of ageing fossil fuel and nuclear power stations means there is a risk of the lights starting to flicker by 2015. All of our coal-fired power stations will cease operation by 2025. Shale gas has grabbed headlines recently due to its effect of lowering gas prices in the US but it is unlikely to be a major source of very cheap gas in the UK due to our geology, although thousands of shale gas wells could pop up. While efficient gas power-stations will dominate over coal-fired power-stations restricted by emission legislation and more expensive nuclear energy, the contribution from renewables is set to grow strongly over the coming years. UK Targets •
Reduce greenhouse gas emissions by at least 80% by 2050, relative to 1990 levels
•
30% electricity from renewables by 2020
•
15% of total energy needs from renewables by 2020
Energy Market Reform These reforms are the Government’s key vehicle to bring about long-term changes in the energy market. They use a form of insurance policy, called the Capacity Mechanism, which provides energy companies with financial incentives to meet energy demands. Large-scale renewable projects will be supported by Contracts for Difference (CfDs), which replace the Renewables Obligation from 2017. These guarantee energy companies a market price plus a top up to an agreed level known as the ‘strike price’, which is an estimate of the long-term price needed to bring forward investment. If the market price exceeds the strike price, generators will have to pay back the difference. Proposals for the strike price for each technology have been announced but the finer details of the scheme are yet to be confirmed. We are keeping a close eye on how this will impact on option and lease agreements for large renewable energy projects.
Our Sustainable Solar Research Programme We are leading an industry-funded research programme on best practice for large-scale solar installations. Central government guidance is vague and few local authorities have best practice guidelines that they can provide to developers; some applications for solar parks have been rejected or slowed down unnecessarily due to this at just the time we need them. Our programme is looking at visual impact mitigation, community engagement, sustainable land management beneath the panels, and economics. Please email me for our factsheet on the programme.
Dr Alan Harries Head of Sustainability 0207 409 9490 alan.harries @smithsgore.co.uk
News in Brief
Offices
£100,000 for innovative thinking A series of events designed to stimulate thinking on sustainability were held at the Hay Festival in June. We provided speakers on what a countryside that produces a ‘net environmental benefit’ would look like and on the role of professional advice in sustainability projects. The events were organised by Mat Roberts, Head of Sustainability at Landmarc, our partners in managing the Ministry of Defence training estate.
Our Darlington office is 150 years old!
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We first opened our doors in Darlington in 1863, the same year that the Darlington covered market was built and Yorkshire County Cricket Club and Darlington Rugby Club were established. Having weathered two world wars, the Depression and several economic crises, the office has retained many of its original clients, our client base has expanded and the firm’s services diversified to meet the changing needs of the rural economy. To mark this anniversary the staff in the office will be fundraising for two local charities - the Upper Teesdale Agriculture Support Services (UTASS) and Brain Tumour Research & Support Across Yorkshire ( previously known as Andrea’s Gift Charity).
The Landmarc 100 scheme was launched at the Festival. It is a grass roots scheme to support innovative ideas that will benefit communities in and around the MoD’s training estate. Up to £100,000 is being invested into the scheme as well as practical support from experts in Landmarc and Smiths Gore. If you have an idea that could benefit your community, go to landmarcsolutions.com/landmarc-100/
Philip Coles, the office’s Lead Partner, says: “We are proud of our long association with the North East and pleased to give something back to the local community. “We chose these two charities as they both have good reputations for providing incredible services to the local community. ”
Grow black gold Our forestry team is working with market leaders Mycorrhizal Systems on commercial production of truffles, from the roots of oak and hazel trees. Some of our woodland owning clients are already looking forward to their first crop and please contact Marc Liebrecht if you would like further information (01543 261999 or marc.leibrecht@smithsgore.co.uk).
Obituary – Richard Broster “Our target is an amitious £20,000, split between the two charities.”
Debating with Planning Minister Nick Boles Community Lincs, which works to improve the quality of life for communities across Lincolnshire, held a debate on whether the Government’s localism agenda is working. Dr Jason Beedell, our Head of Research, joined Nick Boles on the panel, with Action for Communities in Rural England and the National Association of Local Councils. “The Minister recognised that the good new tools, such as the Localism Act, now need to be supported by advice and funding so communities can actually do things.”
Abergavenny t 01873 859200
Exeter t 01392 278466
Perth t 01738 479180
Andover t 01264 774900
Fochabers t 01343 823000
Peterborough t 01733 567231
Berwick-upon-Tweed t 01289 333030
Haddington t 01620 828960
Petworth t 01798 345980
Carlisle t 01228 527586
Lichfield t 01543 251221
Stamford t 01780 484696
Cirencester t 01285 888000
Lincoln t 01522 539555
Stow-on-the-Wold t 01451 832832
Clitheroe t 01200 411050
London t 020 7409 9490
Taunton t 01823 445030
Corbridge t 01434 632001
Maidstone t 01732 879050
Truro t 01872 274646
Darlington t 01325 462966
Marlborough t 01672 529050
Winchester t 01962 857400
Dumfries t 01387 263066
Newmarket t 01638 665848
Worcester t 01905 371261
Edinburgh t 0131 344 0888
Oxford t 01865 733300
York t 01904 756300
Alscot Angmering Park Arbury Barlavington Exbury Firle Goodwood Knowsley Leconfield Llanover Scone Windsor
Other offices Pembroke DTE office Sennybridge DTE office
Overseas offices Australia British Virgin Islands
Services
UTASS works with the local farming communities and provides a support network for local people to manage issues before they reach crisis point. BTRS provides support across Yorkshire for brain tumour patients and their families. In 2011 it opened Yorkshire’s first research laboratory where a specialist team work on long-term paediatric and adult brain tumour research projects.
Estate offices
Richard Broster, a former partner, died on 25th February aged 84. He joined our York office in the mid 1950s before moving to Lincolnshire to manage the Church Commissioners’ estates in 1957; he married Pamela shortly afterwards and they began to build their life together at Manor Cottage in Reepham. Richard was involved in managing the changes facing the firm. Minutes record our past Senior Partner as saying, “that somebody was needed to co-ordinate the new metric system throughout the firm, a difficult and important matter.” The role fell to Richard, who also became the firm’s Administrative Partner for 13 years until his retirement in 1990. Away from work, he was a private person, and he and Pamela enjoyed holidays touring France.
Architecture and Building Surveying Terry Adsett | 01798 342642 | terry.adsett@smithsgore.co.uk
Investment Gerald FitzGerald | 020 7409 9492 | gerald.fitzgerald@smithsgore.co.uk
Business Improvement Matthew Currie | 01387 274382 | matthew.currie@smithsgore.co.uk
Minerals and Waste John Dutson | 01962 857408 | john.dutson@smithsgore.co.uk
Commercial Property: City Centre James Dunlop | 020 7290 1611 | james.dunlop@smithsgore.co.uk
Planning Ian Smith | 01733 559320 | ian.smith@smithsgore.co.uk
Development Robert Weldon | 020 7290 1618 | robert.weldon@smithsgore.co.uk
Project and Construction Management Piers Owen | 01872 274646 | piers.owen@smithsgore.co.uk
Equestrian Services Simon Derby | 01823 445036 | simon.derby@smithsgore.co.uk
Property and Lettings Management Christopher Jowett | 01962 857421 | chris.jowett@smithsgore.co.uk
Estate Management Rupert Clark | 01798 345999 | rupert.clark@smithsgore.co.uk
Research Dr Jason Beedell | 01733 866562 | jason.beedell@smithsgore.co.uk
Facilities Management Dan Coston | 01733 559317 | dan.coston@smithsgore.co.uk
Residential Property Agency Andrew Turner | 01904 756303 | andrew.turner@smithsgore.co.uk
National Farms & Estates Agency Giles Wordsworth | 020 7409 9490 | giles.wordsworth@smithsgore.co.uk
Rural Commercial & Broadband Ben Knight | 01285 888008 | ben.knight@smithsgore.co.uk
Farm Management Simon Blandford | 01962 857405 | simon.blandford@smithsgore.co.uk
Sporting Services David Steel | 01200 411051 | david.steel@smithsgore.co.uk
Forestry, Woodland and Arboriculture Andy Greathead | 01620 828979 | andy.greathead@smithsgore.co.uk
Sustainability, Renewables and Energy Dr Alan Harries | 0207 409 9490 | alan.harries@smithsgore.co.uk
GIS Mapping Bob Allcock | 01543 261990 | bob.allcock@smithsgore.co.uk
Telecommunications Kay Paton | 01387 274394 | kay.paton@smithsgore.co.uk
Historic Building Conservation and Repair Jane Jones-Warner | 01798 345910 | jane.jones-warner@smithsgore.co.uk
Valuations Gerald FitzGerald | 020 7409 9492 | gerald.fitzgerald@smithsgore.co.uk
International Property Edward Childs | 001 284 494 2446 | edward.childs@smithsgore.co.uk
Edited by Dr Jason Beedell
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smithsgore.co.uk