the rural report A unique guide to the issues that matter to landowners
Spring 2012
STRATEGIC DEFENCE The Leeds Castle Estate
FARMLAND MARKET Land prices in your area
ADDING VALUE Making the most of redundant buildings
RENEWABLE ENERGY Greening a Cotswold manor Welcome to the latest issue of The Rural Report, which focuses on the issues that matter to rural property owners and their advisors
contributors Rural businesses are set to enjoy a and its inhabitants through things such as “renaissance”, according to DEFRA minister Andrew shirley planning policy and employment legislation. Andrew is Head of Rural Property Research at Richard Benyon, who we interview on page 12 Knight Frank has the experience to deal Knight Frank. Previously he was Property and of the report. We share this positive outlook. with all of these issues on behalf of our Business Editor at Farmers Weekly magazine There are, of course, challenges, some of clients. On page 10, for instance, a member which, such as climate and commodity price James Del Mar of our Building Consultancy and Architecture volatility, are beyond our control. But there James is Knight Frank’s Head of Rural Consultancy. team shows how to make the most of For this issue he helped interview DEFRA Minister are also many opportunities – opportunities the planning system when redeveloping Richard Benyon and also explained his strategic that Knight Frank is helping its clients, who plans for the Leeds Castle Estate range from private homeowners to large redundant farm buildings. Benjamin Davies estates, to make the most of. I do hope you enjoy reading The Rural Benjamin is an expert on renewable energy On page 08, for example, we look at how Report. Please get in touch if you have any solutions for residential, rural and commercial one of our experts is providing invaluable comments or if we can help in any way. properties. He is based in Knight Frank’s guidance to the owner of a traditional Knight Frank’s experienced rural property Bristol office Cotswold manor, who is keen to benefit from teams offer advice at all levels, from long- Steve Egford renewable energy. At the other end of the term strategic estate management to one-off Steve is a qualified architect and a member scale, on page 06, we visit Leeds Castle, of Knight Frank’s Hungerford-based Building consultancy. You can find all our contacts at one of the country’s most popular visitor Consultancy and Architecture team the back of this report. attractions, to see how Knight Frank is AD TO COME We also publish the Rural Bulletin, a free, helping to shape its future. THE RURAL REPORT quarterly email update that covers commodity Written and edited by - Andrew Shirley Mr Benyon says his greatest achievement [email protected] would be for rural communities to feel that, and input price trends, as well as any Marketing - Rachel Dipper important legislative, tax or legal changes [email protected] at last, the government was on their side. Design & art direction - Quiddity Media We applaud his ambition, but there are that may affect rural property owners. If you [email protected] many other government departments apart would like to receive a copy please email Photography - Hugh Nutt from DEFRA that influence the countryside [email protected] hughnuttphotography.com Printing - Pureprint Published by Knight Frank LLP
As part of Knight Frank’s commitment to environmental sustainability, this report is printed on paper from responsible sources
Sandy Douglas Knight Frank Rural Consultancy
contents
Local knowledge 04 Market Analysis 08 Renewable Energy 12 The Big Interview The price of farmland in your area Greening a Cotswold manor Richard Benyon, DEFRA Minister with a global reach The best properties from around the world and market-leading research on the Knight Frank app for iPhone and iPad.
06 Client Case Study 10 Rural Buildings 14 Final Word and Contacts Strategic planning at Leeds Castle Five ways to add value Valuation matters
Published by Knight Frank LLP. ©Knight Frank LLP. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names. Research materials available on iPad only. For more information please visit iPad and iPhone are trademarks of Apple Inc. KnightFrank.com/iPad KnightFrank.co.uk/Rural The rural report spring 2012 | 03
1703 iPad ad for rural report.indd 1 30/04/2012 11:04 1 Market Analysis: Agricultural Land Values
Property Highlights FArmland Aberdeen scotland 1 Eilean Aigas, Inverness Demand remains strong from Scottish and Gilt-edged Acreage: 547 English farmers. market Description: Country house set on a James Denne - 01578 722 814 private river island 2 Status: Guided at £15m. Available £4,600 £2,500 in detail - £7,000 - £3,600 £600 investment 3 Knight Frank sells a wide variety of 2 Marcus Estate, Angus The price of agricultural land is rising again. Andrew Shirley, Knight Frank’s Acreage: 579 farms, estates and equine properties Description: Agricultural and sporting Head of Rural Property Research, explains why estate on the River South Esk across the UK. A selection of those Status: Guided at £4.5m. Available sold recently or currently for sale is Farmland is an asset class that commentators performance of the most sought-after land and Glenshochie, Perthshire highlighted on our map. The firm’s often like to compare to gold. In some ways land in less popular areas. Where a sale attracts 3 Acreage: 595 Edinburgh regional specialists also round up this is an accurate comparison; both can competitive bidding, over £10,000/acre can be Description: Residential estate with Glasgow superb country house and pheasant shoot the market in their areas prove popular with investors during times of achieved for arable land. Lauder economic uncertainty and are often viewed as Although the shortage of winter rain and the Status: Guided at £2.85m. Available “safe-haven” investments that act as a good declaration of drought in some parts of England Bron – Yr – Helm, Ceredigion hedge against inflation. 4 North of England are of concern to farmers, we are yet to see the Acreage: 1,850 The land that is available is There are, however, some stark differences. emergence of a water-led market. However, if we Description: Freehold sporting rights in selling well. While the price of farmland in Great Britain has have another winter of limited precipitation, it the Cambrian Mountains Status: Guided at £125,000. Available James Denne - 01578 722 814 risen strongly over the past 10 years, outclassing is likely that potential buyers could start to look £4,500 £2,500 many other asset classes, the performance of more seriously at this. Heavier land in the east Woodhall Farm, Worcestershire 5 - £6,500 - £4,000 gold has been stratospheric (figures 1 & 3). But could be a beneficiary, believes Tom. Acreage: 327 gold prices are more volatile – when the market Values were also up in Scotland (figure 2) for all Description: Mixed farm with traditional and modern barns does fall, it can drop hard and fast. Farmland also types of land, with good arable land leading the Status: Guided at £2.6m. Under offer works for its money, providing a useful income way. As in England, a shortage of good farms for yorkshire & Lancashire each year which, if you are a landlord with long- sale, combined with strong demand, is helping to Twigworth Court, Gloucestershire Key: 6 Farmers have been paying term tenants, can be relatively risk free. maintain values. Acreage: 150 So, in a number of ways, farmland offers the Description: House and arable land over £10,000/acre for good The recent Stamp Duty Land Tax (SDLT) changes Selected Knight Frank offices* arable land. best of both worlds – good capital growth and Status: Guided at £1.8m. Available relating to the purchase of residential property income. Because of this, an increasing number Tim Waring - 01423 535 373 by corporate vehicles, which were announced in Pottery Farm, Buckinghamshire Average land values of investors are looking to agricultural land as 7 Acreage: 62 £6,500+ £5,500 Harrogate March as part of the Budget, have delayed a few Pasture £/acre - £6,500 Midlands an alternative to more traditional investments. Description: Farmland sales, but are unlikely to affect overall demand. Demand remains firm with Tom Raynham, of our London Farm Sales team, Status: Guided at £520,000. Available Arable £/acre Given that there are few signs of a significant agricultural and lifestyle buyers. says enquiries from agricultural funds and private hike in the amount of quality farmland being put Seven Bridges, Gloucestershire Hill £/acre James Way - 01789 297 735 investors have risen noticeably so far this year. 8 up for sale, we expect prices to rise further over Acreage: 370 Agricultural commodity prices are also holding £6,000 £5,000 the next 12 months. Our Farmland Index predicts Description: Mixed farm with house - £8,000 - £6,250 firm. According to James Prewett, who sells and two cottages farms across the Cotswolds, through the west of an average increase of around 6%. Status: Guided at £3.85m. Available West Land looks likely to retain its gilt-edged Wales The key driver is the lack of good England and into Wales, some of the best prices Larger well-equipped farms are in status; it will be interesting to see if gold remains Belmont House, Bristol blocks over 300 acres for sale. East are being achieved in commercial farming areas 9 short supply. as secure. Acreage: 220 Will Kerton - 01905 746 883 Water will become more of a factor where farmers are keen to acquire more land. Description: Country estate. Consent for Anthony Clay - 01432 273 087 and heavier land will be most According to the Knight Frank English 10 stables £6,500 £5,750 £5,750 £3,750 sought after. Status: Guided at £3.85m. Available - £7,500 - £6,000 Farmland Index, the average price of farmland If you are a farm or estate owner who would like to - £7,000 - £6,750 Tom Raynham - 020 7861 1578 rose marginally in the first quarter of 2012 to sell your property, or if you would like to find out The Folly, Berkshire £6,500 £6,073/acre after a slight reduction in the how much it is worth, please contact our valuation 10 Acreage: 241 - £8,000 £5,000 second half of last year. This average figure, or sales teams. Their details are on page 15. Description: Thatched house with however, hides the increasing gap between the woodland estate Sutton Coldfield Status: Guided at £3.75m. Available 4 Figure 1 Figure 2 Hoddington, Hampshire English farmland performance v other assets Scottish land values by type 11 5 600 8,000 Acreage: 809 Welsh borders 7,000 Descriptio n: Grade II listed mansion Worcester Stratford 500 and estate Top values achieved in 7 6,000 competition between national Hereford 400 Status: Guided at £20m. Available 5,000 and local purchasers. 6 Cheltenham 300 4,000 Highfields, East Sussex Oxford Berkhamsted £/acre James Prewett - 01285 659 771 Beaconsfield 200 3,000 12 Acreage: 192 Cirencester 2,000 £6,500 £5,750 8 Description: Residential and parkland estate Henley Index (Q1 2002=100 ) 100 - £9,500 - £6,000 Bristol Ascot Head 1,000 Status: Guided at £5.75m. Available Hungerford 9 Bath Office 0 0 10 2002 2003 2004 2005 2006 2007 2008 20092010 2011 2012 2002 2003 2004 2005 2006 2007 2008 20092010 2011 2012 Great Swifts Manor, Kent Sevenoaks 13 Acreage: 372 Guildford English farmland Prime central London houses Prime country houses Good arable Average arable Ploughable grass Basingstoke 11 Tunbridge Description: Mansion house with farming South West Sherborne Wells and amenity land Demand has been as strong as F TSE 100 Gold Permanent pasture Hill Winchester Horsham 12 13 Status: Guided at £9m. Sold ever over the past 12 months. Figure 3 Asset performance Q1 2012 William Morrison - 01392 848 823 Mesmear Farm, Cornwall 3 months 12 months 5 years 10 years 14 Acreage: 160 £5,750 £4,750 Cotswolds South East Farmland 0.4% 1.4% 76% 188% Description: Refurbished farmhouse and - £6,750 - £6,000 Land values in the Cotswolds There have been limited Prime London houses 2.7% 11.3% 32% 102% holiday barn lets Exeter continue to show little correlation transactions due to a distinct lack UK mainstream houses -0.1% 3.3% -4% 76% Status: Guided at £2.6m. Available in two lots to productive capacity. of stock. 14 FTSE 100 3.0% -9.1% -14% 2% Atty Beor-Roberts - 01285 659 771 Will Matthews - 020 7861 1440 Gold 3.4% 19.8% 161% 472% *For a full list of all Knight Frank’s country £8,500 £5,750 £6,750 £5,750 - £10,000 - £7,000 Source: Knight Frank Residential Research and rural offices please visit KnightFrank.co.uk - £7,250 - £6,250
| 04 The rural report Spring 2012 KnightFrank.co.uk/Rural KnightFrank.co.uk/Rural The rural report spring 2012 | 05 Client Case Study: The Leeds Castle Estate
It is not hard to see why Leeds Castle, near Mrs Wallace. “I think it also changed the dynamic Maidstone in Kent, is one of the country’s of how the estate was being run; the more most popular visitor attractions. The commercially minded trustees started to have King of picture-perfect medieval fortress is one more of a say.” Some traditional activities that were popular, of the 10 “treasure houses” of England but didn’t make economic sense, such as a and every year around 600,000 visitors pheasant shoot and a small vineyard, were pass through its gates. phased out. “There was a limited understanding the castles of what each enterprise was delivering. People’s However, the castle itself is just part of a When the Chief Executive in charge of one of the UK’s most historic tourist larger estate that includes numerous residential, minds became more focused on what was core, attractions needed strategic property advice she called in Knight Frank. commercial and agricultural properties. These what was important. The review gave us the The Rural Report pays a visit to stunning Leeds Castle to find out more are all wrapped up within a charitable ownership confidence to say ‘let’s stop that’.” structure that brings with it some interesting In general, Mrs Wallace says that the strategic Words: Andrew Shirley management challenges, not least restrictions review was welcomed by the trustees. “It’s great Image: Hugh Nutt that mean much of the estate can never be sold. from their perspective because it doesn’t propose Keeping the Grade I Listed castle maintained specific outcomes they are tied to, but highlights costs an eye-watering £2.7m every year. In potential avenues that could be explored at some November 2005 Chief Executive Victoria Wallace point in the future. It also prevents us from going decided that it was time to work out how the off down blind alleys.” wider estate could make more of a contribution. “It hadn’t really been managed as an estate “Bringing in an outside that should generate an income; everybody expert who could look at the had just been focused on the day visitors to opportunities and problems the castle,” says Mrs Wallace, a former high-flying mandarin at the Foreign and with a fresh pair of eyes Commonwealth Office. seemed the best option.” Bringing in an outside expert who could look at the opportunities and problems with a James adds: “At Leeds Castle it would have fresh pair of eyes seemed the best option, so been easy to recommend rushing into a whole James Del Mar, Head of Knight Frank’s Rural host of commercial ventures, but when you are Consultancy team, was asked to undertake a dealing with such a unique property any new strategic review. initiatives have to be considered with the utmost “We could have used a local firm, but I think care. We understand that every estate is unique it was actually helpful that James wasn’t based in and that owners or trustees will have widely Kent,” says Mrs Wallace. “There was no historic varying ambitions and outcomes that they would relationship to get in the way, especially when like to achieve.” dealing with tenants, and we could draw on Although the strategic review was delivered Knight Frank’s national experience.” five years ago, its proposals and Knight Frank’s The strategic review process, which starts by wide range of services and expertise are still analysing an estate’s assets, then examines having an impact on the estate and helping to how they are currently being utilised and, finally, boost its income. proposes how they could be further developed, “It was James who suggested that we talk had an immediate impact, she recalls. “We to Knight Frank’s London Lettings team to see actually discovered that the estate was 1,200 if they could find anybody who might want to acres, which was somewhat more than we rent the castle during the Olympics,” says Mrs thought we owned.” Wallace. Following a private marketing campaign An issue that was quickly identified as holding a US-based company agreed to pay a “very Leeds Castle: Biography back the estate’s income-generating potential acceptable” six-figure sum to use part of the was that almost all of its residential property was castle as its base for the games. occupied by estate and castle workers paying “James is somebody who understands how The castle dates back to 1119 and has been home to a number of kings and queens. below-market rents. estates work,” she adds. “We still discuss new Its existing appearance was largely created in the 19th century. The last private owner “There was always the assumption that when ideas and plans; he gives me what I like to call was the Hon Olive, Lady Baillie. Ownership passed to the Leeds Castle Foundation, accommodation became vacant somebody else ‘discrete intelligence’.” a private charitable trust, upon her death in 1974. The castle’s historic role continues: from the estate would move in,” explains Mrs “Everything we do is all about building up a in 1978 the Egyptian and Israeli Foreign Ministers met there in preparation for the Wallace. Many of the properties are now let far long-term, trusted relationship,” agrees James. Camp David Accords. In 2004 the castle played host to the ground-breaking Northern more lucratively as holiday cottages or provide “The strategic review is just the first stage in Ireland peace talks led by Tony Blair. luxury bed-and-breakfast accommodation within that relationship.” www.leeds-castle.com www.treasurehouses.co.uk the castle walls. In addition, a number of sites with development potential had been mothballed To find out how Knight Frank’s unique approach and were virtually off the radar of the estate’s to management can make a real difference Perfect Partnership: Victoria Wallace, Chief Executive of the on estates of all sizes please contact James trustees. “The review provided the ‘thud factor’ Leeds Castle Foundation, with Knight Frank’s James Del Mar Del Mar: [email protected] that was needed to show them that its latent or 01488 688 507 potential wasn’t really being exploited,” says
| 06 The rural report spring 2012 KnightFrank.co.uk/Rural KnightFrank.co.uk/Rural The rural report spring 2012 | 07 Renewable Energy: Greening a Cotswold Manor
“We are planting woodland, renewable energy may soon make sense Out of sight. Many rural properties will have a barn or outbuilding where solar PV panels can be discretely located replacing hedging and stone financially even without subsidies. Some people seem to think solar PV is no longer Just what the walling and rearing traditional viable following the cuts to the FIT, but that’s livestock. We have gone organic definitely not the case as installation costs and want to create a sustainable, are falling even faster. doctor ordered natural and slightly wild place.” “I also think that the environmental standards for commercial buildings and rental Renewable energy was part of the prescription when Dr Charles Levinson properties will become stricter. In the future decided to green his traditional Cotswold manor house. The Rural Report outbuilding next to the manor house. This will the incentive to employ renewable energy may finds out more and rounds up the latest news from the sector run on wood pellets and will supply enough be more about avoiding penalties than taking heat for central heating and hot water. In advantage of subsidies,” he adds. Words: Andrew Shirley Image: Hugh Nutt addition to making a very significant dent in Dr Levinson agrees. “It definitely feels like Compact. Biomass boilers can often be accommodated the Levinson’s £5,000 yearly oil and electric- I’m adding value to my property. Not just for in existing outbuildings storage heating bill, the boiler should qualify myself, but for future generations.” When Charles Levinson bought Owdeswell deliver a 20% annual return on investment. the government’s sudden decision to cut the for the Renewable Heat Incentive (RHI), which www.doctorcall.co.uk Manor in Gloucestershire two years ago, the This takes into account the cost savings on FIT payments for electricity produced by solar is paid for every qualifying unit of heat energy 190-acre stud farm was the perfect home the family’s standard electricity bill and also PV (see panel). “The installation was produced by eligible systems. for his horse-mad family, but there was the income from the Feed-in Tariff (FIT) that commissioned with a day to spare to qualify The FIT and RHI payments are clearly part For more information on solar PV schemes something missing. pays almost 40p for every kWh of electricity for the old tariff,” says Benjamin. “If we had of the attraction at the moment for those or any other renewable electricity and “It was a bit like a factory and we have been produced. The FIT is index-linked and will be missed the deadline, the annual return would installing renewable energy schemes, but heating installations please contact: working hard to put the soul back into it,” payable for 25 years. have dropped to around 10%.” there are other longer-term benefits, says [email protected] says Dr Levinson. “We are planting woodland, Using Knight Frank to project-manage the Acting on Benjamin’s advice, Dr Levinson is Benjamin. “If the price of electricity and heat or 0117 945 2638 replacing hedging and stone walling and scheme proved a good investment following also planning to install a biomass boiler in an from traditional sources continue to rise, rearing traditional livestock. We have gone organic and want to create a sustainable, natural and slightly wild place.” Part of that sustainability includes using alternative energy sources. “Just as it is nice to eat our own lamb with vegetables out of the News update kitchen garden, it is nice that we are going to be producing our own power,” he adds. Solar PV Feed-in Tariffs reduced electricity technologies, such as wind and hydro, will not be cut until 1 October 2012. Dr Levinson is no stranger to innovation. The government subsidy for electricity Doctorcall, the medical services group he generated from renewable sources known Renewable Heat Incentive Premium founded in 1988, was the first private visiting as the Feed-in Tariff (FIT) has been cut for scheme extended doctor service in the UK and the first mass solar PV installations. The new rates (see The Department of Energy and Climate provider of flu vaccinations for office and retail table below) will apply until 1 July 2012. environments. It also introduced new methods Change has extended the Renewable Heat Incentive Premium, which was due of health screening which have since become Output Old tariff 3 Mar-1 Jul 12 to finish at the end of April 2012. standard practice. (kW) (p/kWh) (p/kWh) Installing solar photovoltaic (solar PV) Homeowners planning to install systems ≤4 (new build) 37.8 21.0 panels seemed the obvious entry to the that generate heat from renewable sources world of renewables, but, despite a glut ≤4 (retro fit) 43.3 21.0 will be able to apply for a capital grant of information, taking the first step wasn’t >4-10 37.8 16.8 to help pay for the cost of qualifying installations (see table below). straightforward to begin with, according to >10-50 32.9 15.2 Dr Levinson. >50-100 19 12.9 However, DECC also said that the Renewable “We were being bombarded with fliers Heat Incentive (RHI), which pays people for >100-150 19 12.9 from renewable energy companies who said every unit of heat generated by renewable they would install solar panels for free,” >150-250 15 12.9 sources, is not likely to be made available he explains. “But, in return for that, they >250-5,000 8.5 8.5 for domestic properties until summer 2013. would keep any subsidy payments from the Stand alone 8.5 8.5 Commercial installations already qualify for government for the electricity that we would the RHI and it was hoped that homeowners produce. I thought it would make sense to do After that the payments will be reduced would be able to join the scheme at some it ourselves and keep the payments.” further, based on how many new schemes point this year. However, with a growing business to run, were registered in March and April – the Dr Levinson decided he needed independent Renewable heat Premium higher the uptake, the greater the cut. advice to help realise his renewable ambitions. technology payment After an initial visit, Benjamin Davies of It is then proposed that FITs will fall by 5% Ground source heat pump £1,250 Knight Frank’s Renewable Energy team in October 2012 and 10% every six months Biomass boiler* £950 was able to recommend a suitable solar after that. The government says the cuts Air source heat pump* £850 PV installation as well as a supplier, are needed because of the huge number of Southern Solar. new solar PV schemes and the sharp drop Solar thermal hot water panels £300 Located on the roof of a barn away from the Knight Frank renewable energy expert Benjamin Davies in panel prices. FIT rates for other renewable * For homes without mains gas heating main house, the 10kW system, which cost (left) with Dr Charles Levinson, Biggles and Tippy £23,000 and covers 70 square metres, will
| 08 The rural report Spring 2012 KnightFrank.co.uk/Rural KnightFrank.co.uk/Rural The rural report spring 2012 | 09 Adding Value: Redundant Farm Buildings
Five ways to make holiday lets renewable energy Paddy Hoare, estate Benjamin Davies, Forewarned is redundant farm management expert renewables expert 2 4 forearmed Some of the most Barns, particularly those James Carter-Brown, Head of Building buildings pay attractive holiday cottages with sturdy, well-supported Consultancy and Architecture are converted traditional south-facing roofs, make All of the options listed on this page offer Many farm and estate buildings are no longer suitable for modern agriculture. barns and the right ideal sites for installing exciting opportunities, but realising the Knight Frank’s experts suggest five ways to maximise their potential properties can command solar photovoltaic (solar full potential of land or property will significant rents, especially PV) panels to produce inevitably require thorough and considered with the current trend for “staycations”. electricity. This can be used by the business professional analysis. residential conversion consents, or to do everything yourself. The community. Many local planning authorities Planning consent is also often easier to with any surplus exported to the National also prefer buildings to be converted into In addition to the latest round of amendments Steve Egford, architect and former involves least work, but the site will achieve than for an outright residential Grid. All the electricity generated will qualify be far less valuable without planning consent commercial premises that generate local conversion. But don’t be fooled into thinking for Feed-in Tariff (FIT) payments. Although to the Building Regulations Approved planning expert 1 and you will have limited control over what is employment. Proving that this is not a viable you can skimp on conversion and fit-out costs. FITs have recently been cut, annual returns Document L2, the introduction of the option and achieving consent for change of National Planning Policy Framework and A house is clearly far more valuable than an eventually built. The latter will give you the most Today’s holidaymakers expect home-from- of 10% are still achievable as installation use is a key part of the planning expert’s role. home comforts and amenities like wi-fi and costs are also falling fast. Barns can also changes to the VAT regime for works involving agricultural building and converted traditional control, but will also involve investing a large The conversion of traditional buildings, luxury kitchens and bathrooms. Also do your house biomass boilers, which can be used listed buildings, those wishing to develop buildings are very popular with homeowners. amount of capital and entails the most risk. especially if they are listed, requires careful market research properly; away from the main to generate heat for residential, commercial any site would be well advised to undertake In many cases they provide greater space than A half-way house is to obtain planning consideration to make best use of their layout tourist areas it will be harder to attract as and agricultural buildings. Payments for more thorough due diligence than might a cottage or small period house and come with consent for the conversion and then sell the and space. Developers will pay more where a many bookings. each unit of heat produced are already have initially been envisaged. a more attractive location. Recent conversions site. Gaining the consent is not always simple consent genuinely optimises the potential available for non-domestic properties will often also be more energy efficient and less and can take some time, which is why it pays to The preparation of outline designs, budget of a site because it means they will not Pros: Can provide good income streams under the Renewable Heat Incentive. For expensive to maintain, while retaining the charm use an expert familiar with the local planning estimates and ecology surveys will go need to renegotiate with the local planning more details please see the case study on of an old building. authority. But, because of this, it adds an awful Cons: Capital costs of conversion, some way to understanding the cost and authority themselves. page 8. Before proceeding you need to consider the lot of value to a site and will make it more requires management time and expertise programme risk associated with any proposed development. Further value can be impact on the rest of your property. Schemes attractive to a wider range of purchasers. A Pros: Sale can generate large amounts Pros: Creates new income streams, can added to any project by the early involvement involving off-lying buildings can work best developer, for example, will be cautious about of capital Paddy has just joined Knight Frank’s Estate reduce fuel bills and liaison with the local planning authority because they are less likely to impinge on the investing too much into a site where they are cons: Lose control of site, planning issues Management team and specialises in advising cons: Initial investment can be and building control department, or an commercial running of an estate or affect its not even guaranteed planning consent. the owners of Cotswolds’ farms and estates. expensive. May only utilise part of building approved inspector. amenity value. By working with an architect and planning Contact him at: [email protected] Anybody who owns barns suitable for expert, you also exert some control over how Steve is a senior member of Knight Frank’s Building or 07855 392 628 The Knight Frank team would be delighted to discuss potential project feasibility studies residential conversion has a number of options. the development will eventually look, which Consultancy and Architecture team. Contact him at: Benjamin is a member of Knight Frank’s for a diverse range of development projects. The extremes are to sell the site directly to a can be an important consideration in the [email protected] or 01488 688 509 Renewable Energy team. Contact him at: Our specialist knowledge will enable potential developer or self-builder without any planning context of an estate’s position within the local [email protected] or clients to make informed decisions early on in recreational space 01179 452 638 Angus Harley, country the procurement process and, where possible, 3 house expert mitigate project cost and programme risks before signing building contracts. Knight Frank’s Steve Egford successfully gained consent to convert these redundant buildings on an outlying part of the Badminton Estate Traditional buildings can Business premises For key Building Consultancy and Architecture into luxury residential dwellings. This increased the value of the site to often provide fantastic James Carter-Brown, building contacts please turn to page 15. well over £1m and attracted 12 potential bidders. additional space for consultancy expert residential property owners. 5 Projects can range from party barns, to garaging, to Well-located farm buildings on the outskirts of an estate may be suitable swimming and health complexes. A barn in can make exceptional for a haulage contractor or light industry, but the middle of nowhere may not be suitable for commercial premises, too much extra traffic and noise near to the anything other than a shoot lodge or retreat, from a single unit to a main residence will detract from a property’s but many country houses have buildings that small business park. amenity and re-sale value. Also consider what are close enough to offer numerous options. However, you do need to facilities tenants will require. If you are in do your sums very carefully, and be an area without high-speed broadband your Pros: Adds to enjoyment and can increase conservative when calculating future scheme’s appeal will be limited. the overall value of the property rents and void periods – overly optimistic Pros: Potentially significant long-term Cons: Capital costs can be expensive projections will quickly be found out during an economic downturn. The location is key for income streams and new uses that are very individual in nature attracting tenants and determining the sort cons: Requires specialist management, may not add value of project that makes sense for you. Barns effects on privacy/future value
Angus is head of Knight Frank’s specialist Country House Consultancy team. Contact him at: James Carter-Brown has just joined Knight Frank and heads up our Building Consultancy and [email protected] or 01488 688 511 Architecture team. Contact him at: [email protected] or 01488 688 523
| 10 The rural report spring 2012 KnightFrank.co.uk/Rural KnightFrank.co.uk/Rural The rural report spring 2012 | 11 The Big Interview: Richard Benyon
out without penalty if they have to make Many landowners argue that public rights of changes to their agreements as a result of CAP way legislation makes even sensible changes reform, and these changes are unacceptable. to footpaths extremely difficult to achieve. Do you agree it is too inflexible? And what about proposals, such as capping Westminster’s We said right from the start we wanted to see subsidy payments, that seem to penalise the a streamlining of the process for recording and most efficient farmers? making changes to rights of way and we put I have a real worry about capping. We want to that in the Natural Environment White Paper. Rural reward efficiency and we are very concerned My attitude is that, where possible, we should about food security. When it’s done on a use a voluntary approach. The organisations scale, farming can also deliver environmental we’ve had sitting around the table on Renaissance benefits in a much more effective way. unrecorded rights of way, for example, have come up with a solution that satisfies the In reality, how much influence can DEFRA have Country Land and Business Association (CLA), on the CAP reform process? the Ramblers Association and a whole range Man Caroline and Jim spend an awful lot of their of other groups with divergent interests that time on the Eurostar and aeroplanes going to have, in the past, caused antipathy. see other ministers and we all spend a lot of DEFRA minister Richard Benyon brings a wealth of farming and land time in Brussels. We have lots of friends, lots Do you think the former government’s vision management experience to parliament. He tells James Del Mar, of people who share our concerns, so we have to create a virtually uninterrupted coastal Knight Frank’s Head of Rural Consultancy, and Andrew Shirley, Head of to be optimistic we will get something out of path around England is really necessary or Rural Research, why he thinks the future is bright for rural businesses* this that is effective and recognises where fair on property owners? Is it a vision you are farming has got to go. If we don’t get what still pursuing? Image: Hugh Nutt we want it certainly won’t be through lack I’m keen to see more people walking in the of effort. countryside and walking along the coast, Both you and fellow DEFRA minister James but it seems to me we’ve inherited a very Paice are farmers. Do you think this has had complex system. I’m sure there is a quicker a positive impact on a department that has way of doing it that doesn’t have such been criticised in the past for having limited a burdensome concentration on inland empathy with farmers? spreading room, which I think is the main bugbear of landowners. I think we do bring an understanding. What we What are the biggest threats and The European Commission’s Common really want is for rural communities to feel they opportunities facing rural landowners? Agricultural Policy (CAP) reform proposals What is the most rewarding part of your role? have a ministerial team that is on their side, have been criticised heavily by farming Working with a committed group of ministers I think in the long term it’s about coping sees the virtues in what they are doing and organisations. As a farmer yourself what who bring a real passion to what we do. We with extremes of weather and the volatility wants to push that, rather than government aspect of them would you most like to are doing some really good stuff. Rolling out of commodity prices. But there are huge being seen as a hindrance. opportunities as well. If we get things right see revised? broadband is going to see a complete change there could be a real renaissance of rural We want a greener CAP, but we don’t think The current drought is already affecting in how rural businesses function. business. With the development of broadband the current CAP proposals are the best way to many farmers and landowners in parts of the and a deregulatory business framework it is a deliver meaningful environmental policies. We country. What is DEFRA doing to ensure the And the most frustrating? really exciting time to be managing a business think a huge amount of good has been done right balance is struck between conserving Sometimes you pull a lever and there is quite in a rural area. through existing agri-environment schemes water and maintaining agricultural output? a long delay before something happens. We’re by a great many farmers and landowners and Droughts happen so we have to expect them. a team in a hurry, but we have as much job What is the government doing to help that should be encouraged. Trying to green We held our first drought summit last May and security as a Chelsea football manager so we businesses cope with the threats and take the CAP in the wrong place shows a lack of we’ve had two more since, but that’s for the want to make as much difference during our advantage of the opportunities? understanding of what happens in countries short term. Coming down the track we’ve got brief time in the limelight as we can. People all want the same thing. They want like this and that the dynamic of UK agriculture Richard Benyon: an abstraction system that was designed in a government that understands enterprise is just not understood. the 1960s and is not fit for a world where we’re Finally, what else would you most like to and wealth creation, that is trying to better Biography having these extremes of climate, so we have achieve during you time at DEFRA? regulate rather than over-regulate, and they Would it not be more constructive to use a to adapt. Farmers and growers are naturally want to feel that the government is somehow voluntary approach such as the Campaign For rural communities to know that, at last, worried, but we’re doing it in a strategic and on their side. But rural businesses do have for the Farmed Environment (CFE)? Richard Benyon has been Conservative MP for the government is on their side. careful way. their own peculiarities and that is one of the Jim Paice, Caroline Spelman (fellow DEFRA Newbury since 2005. In 2010 he was appointed things we addressed in our Rural Economy ministers) and I have been really pushing Minister for the Natural Environment and Fisheries *Interview conducted on 22 March 2012 Could that include easing planning Growth Review. I’ve got quite a lot of funding, the CFE as the best way for farmers to be at the Department for Environment, Food and To read the full interview please go to restrictions on building reservoirs? £165m, to stimulate economic growth in rural able to prove that a voluntary approach works. Rural Affairs (DEFRA). He lives on the 20,000-acre KnightFrank.co.uk/Rural areas, not just in terms of broadband and We don’t want to see that overwhelmed by Englefield Estate in Berkshire that was inherited We’ve already looked at diverting Rural mobile coverage, but also improved planning, a one-size-fits-all CAP reform. We also want by his father, Sir William Benyon, in 1959 and is Development Programme (RDP) money into tourism and agri-food – these are key areas to make sure that farmers thinking about now owned by the Englefield Estate Trust. Prior making it easier for farmers to build on-farm for landowners. We have just announced going into an agri-environment scheme to entering politics Richard was in the army, after reservoirs. We’re also reviewing the guidance To find out how Knight Frank’s Rural five Rural Growth Networks that will be a real aren’t put off because of CAP reform. We have which he attended the Royal Agricultural College for the Reservoir Act, which can sometimes Consultancy team can help maximise driver for jobs. We need to help keep people pledged to make sure that farmers thinking and became a land agent. He was a founder prevent reservoirs being built because of the potential of your estate please email in work and the rural economy has got a really of entering or renewing Environmental trustee of the Help for Heroes charity. health and safety guidance that we’re not sure [email protected] or on important part to play in that. Stewardship agreements can choose to opt is always proportionate. 01488 688 507
| 12 The rural report Spring 2012 KnightFrank.co.uk/Rural KnightFrank.co.uk/Rural The rural report Spring 2012 | 13 Final Word: Agricultural Tenancies Knight Frank Contacts: The Complete Rural Property Service ready to help Knight Frank can advise on all aspects of rural property ownership. Its principal service lines and the relevant contacts are listed below. A better way needs to Further details are available on our website at KnightFrank.co.uk/Rural be found to improve Farms, Estate and Equestrian property sales the landlord and tenant relationship
Regular readers of the farming press, reasoning was that it would help simplify the particularly in Scotland where I am based, process. Clearly, that hasn’t been the case, and Estates – England Estates – Scotland Farms – England Farms – Wales, Farms – Scotland, Equestrian it’s not just those on either side of the Moonzie will have noticed an increasing number of Clive Hopkins Ran Morgan Tom Raynham west England north England Properties articles and letters highlighting the growing dispute that are suffering. A rent review I am 020 7861 1064 0131 222 9600 020 7861 1578 James Prewett James Denne Rupert Sweeting levels of dissatisfaction with the legislation involved with has been delayed for almost clive.hopkins@ ran.morgan@ tom.raynham@ 01285 659 771 01578 722 814 020 7861 1078 governing agricultural tenancies. three years pending the outcome of Moonzie. knightfrank.com knightfrank.com knightfrank.com james.prewett@ james.denne@ rupert.sweeting@ Although my client, the landlord, will potentially knightfrank.com knightfrank.com knightfrank.com To those who are neither a farm landlord benefit from the ruling, it is in nobody’s nor farm tenant it might seem bizarre that interests to have to wait so long to settle a rent. Farms & Estate buying valuations Renewable energy such a seemingly simple transaction – the The 2003 Act was also intended to make letting of property from one individual to more land available to the tenanted sector another – should generate such controversy. by the creation of Limited Duration Tenancies Agricultural tenancies and rents, however, (LDTs) and Short Limited Duration Tenancies have always been more contentious than for (SLDTs). LDTs were originally intended to last other forms of property. for a minimum of 15 years, although this has There are a number of reasons for this. It is now been reduced to 10, while SLDTs would fair to say that in some cases the relationship cover tenancies of up to five years. From what The Buying Solution England, Wales Scotland Country House On-Farm Renewables Renewable between tenant and landlord still comes with I can see, this has done little to increase new Mark Lawson Tom Barrow Michael Ireland Renewables Benjamin Davies Investments historic baggage, although hopefully this is entrants, an essential to the sustainability of 01344 206 070 01285 886 690 0131 222 9625 David Parry-Jones 01179 452 638 Oliver Routledge gradually becoming less of an issue today. the industry. mark.lawson@ tom.barrow@ michael.ireland@ 01488 688 538 benjamin.davies@ 01179 452 636 The fact that a farm unlike, say, a factory unit, thebuyingsolution.co.uk knightfrank.com knightfrank.com david.parry-jones@ knightfrank.com oliver.routledge@ A deal has to be good for both parties provides a tenant with their home as well as knightfrank.com knightfrank.com and landlords currently do not have enough their income, also confuses the issue. But Rural Consultancy and Property Management confidence under such a rigid framework to one of the biggest issues is that agricultural make more land available to the new entrants incomes are so volatile. What might seem a fair that the Act was designed to help. Rightly or rent one year, based on the income-generating wrongly, many remain concerned that granting potential of a unit, may seem far too high, or longer tenancies could have implications under too low, the next. possible future right-to-buy legislation. Against this backdrop, creating tenancy Although not perfect, the Farm Business legislation that is fair for both parties is an Tenancies (FBTs) introduced in England and incredibly difficult task. Despite the challenges, Wales in 1995 are far more flexible. It may well Building Consultancy Rural Consultancy Country House Estate Management Estate Management, Institutional I believe the system we have currently in have been that the Scottish legislators behind and Architecture James Del Mar Consultancy Percy Lawson Cotswolds Management Scotland still falls well short of what landlords the 2003 Act did not want to be seen as copying James Carter-Brown 01488 688 507 Angus Harley 01488 688 513 Paddy Hoare Christopher Smith and tenants deserve. 01488 688 523 james.del.mar@ 01488 688 511 percy.lawson@ 07855 392 628 01179 452 630 Westminster. If that was the case, our tenanted Take the “Moonzie” case for example. It has james.carter-brown@ knightfrank.com angus.harley@ knightfrank.com paddy.hoare@ christopher.smith@ system is losing out due to political expediency. taken the best part of four years to achieve knightfrank.com knightfrank.com knightfrank.com knightfrank.com In all parts of the UK there will be landlords a ruling on what rent should be paid for an and tenants who will not agree, regardless of average arable farm in Fife. After various rulings the legislation governing the tenanted sector. and appeals, the Scottish Land Court has finally But, from my experience, most want a mutually decreed that the rent payable from December beneficial relationship that will allow each 2008 should be £31,462 per annum. The to prosper. At the moment tenancy law is not original determination was £20,800. Although helping that to happen. this is undoubtedly a sizable increase, the amount pales into insignificance next to the Investment Property Investment Property Marine Property Mapping and GIS Rural Property Strategic Estate professional fees that have no doubt been Management (East) Management (S West) Michael Bapty Michael McCullough Research Planning Michael Ireland can be contacted at accumulated along the way. Alastair Paul Edward Dixon 01179 452 635 01488 688 508 Andrew Shirley Sandy Douglas [email protected] or Part of the blame has to lie with the decision, 07768 232 922 0117 945 2633 michael.bapty@ michael. 020 7861 5040 01488 688 502 0131 222 9625. He provides advice on all alastair.paul@ edward.dixon@ knightfrank.com mccullough@ andrew.shirley@ sandy.douglas@ which formed part of the Agricultural Holdings types of rural property valuations, including knightfrank.com knightfrank.com knightfrank.com knightfrank.com knightfrank.com Act (Scotland) 2003, to move rental disputes Michael Ireland, Head of Rural renewables; farm rent reviews and other matters Valuations and Consultancy at away from an arbitration-based process towards relating to the ownership of rural property. Knight Frank Scotland the Land Court. As is often the case, the © Knight Frank LLP 2012. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, | The rural report spring 2012 14 KnightFrank.co.uk/Rural KnightFrank.co.uk/Rural W1U 8AN, where you may look at a list of members’ names. The rural report Autumn 2011 | 15 Bringing investors to your farm
When it comes to investment, we understand that agricultural land is the intelligent choice in an uncertain climate. That is why private and corporate investors, both in the UK and abroad, turn to us when they want to add to their portfolio.
As part of a global network of offices and with an extensive investor database, our farms and estates sales team has considerable experience connecting City buyers to commercial farmland. We can ensure that your farm will be seen by the right people.
For advice and a free market appraisal please contact Tom Raynham on 020 7861 1578 or email [email protected] KnightFrank.co.uk/Farms
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