Rural News Winter 2017 by Bruton Knowles

IN THIS ISSUE CHOOSING A LAND PROMOTER:

AMC LENDING UPDATE:

Covering options and pitfalls of land promotion

Successful 2017 for Farm Finance

CLASS Q REFUSALS: The campaign to change planning consent rules continues

RuralNews News and views on property assets

FEATURE:

Market Review: A recent drop in land values and uncertainty around Brexit has slowed some sales but there are reasons to be upbeat too.

Winter 2017

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Which Promoter should I use?

Housing is very high on the Government’s agenda and we are seeing significant pressure to increase housing numbers, increased funding to smaller developers and affordable housing providers – all of which will place significant pressure on the authorities to allocate new sites. We already have seen Stroud District Council have an early review of their Local Plan and a consultation review looking for new sites with Cheltenham, Tewkesbury and Gloucester – there will again be an early review of their Local Plans. It is important for each local authority to maintain their five year housing supply and we will see that in a few years authorities will be under significant pressure. As a consequence many landowners are being contacted by housebuilders and land promoters who will seek to promote strategic land in return for an option to either purchase the land or for a share of the development returns. However, great care needs to be taken in the selection of a promoter as not every promoter is the same

or would fit with the ethos of some landowners. We are finding a number of issues where promoters make brief headline terms, which come to fruition when matters progress with solicitors with a miss mash of commercial terms not being agreed and risk of abortive legal costs. Besides the commercial terms ensuring issues like a minimum land price, the choice of promoter can be determined by: • Proof of funding – the cost of making a planning application and dealing with a possible planning appeal or high court challenge can easily be in the region of £250,000 and if a promoter has several schemes ongoing then satisfaction of their funding is crucial.

• Most promoters tend to employ external planning companies but planning strategy at an early stage is important to understand. • Sales Strategy – once planning is achieved it is very important that the site is sold in the open market place with a full suite of technical and assignable reports and there must be a clear transparency. Bruton Knowles has a database of over 200 housebuilders and promoters and manage around 50 agreements. Housebuilders and promoters will always pay your reasonable legal and agents fees. If you have received an offer already or you think you may have potential land, please contact Scott Winnard for a free consultation. Scott Winnard Partner 01452 880187 scott.winnard@brutonknowles.co.uk

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Planners should be easing off on Class Q refusals A recent report has revealed the 40% of Class Q prior approval applications (agriculture to residential permitted development rights) were refused during the second quarter of 2017. This refusal rate is lower than when the permitted development rights were first introduced but still frustratingly high for those landowners looking to bring buildings back into residential use, especially when you consider England is in the grip of a housing crisis. The Chancellor in his budget speech advises there was no ‘single bullet’ to resolve the housing crisis, and whilst residential barn conversions will not resolve the crisis on their own, they could play a more significant role than they are at present. Advice issued by the Government in 2015 set out that ‘unsustainable location’ of barns should not be used as a reason for refusal and has lowered the number of refusals based on location. However, the new ‘battleground’ appears to be whether the works involved in a proposed development constitute a conversion, or are the works so great they are tantamount to a new build in the countryside.

Local Planning Authorities decisions on this matter have been strengthened by what has become known as the Hibbitt Case (Hibbitt v Secretary of State for Communities and Local Government [2016] EWCH 2853) in which a single storey cow shed which was open on three sides, was dismissed at appeal because of the works involved. The decision was subsequently upheld in the High Court. While Mr Justice Green upheld the appeal decision, it is significant that he set out that this does not mean all barns should be.

The Government’s 2016 Rural Planning Review set out proposals to amend the permitted development rights to extend permit conversion of up to 750 sqm, for a maximum of five new dwellings. These measures were welcome, but without clear guidance regarding what works are considered acceptable it is likely that refusal rates will continue to be high. Paul Barton is a Town Planner with Bruton Knowles based in Gloucestershire.

The Judgement stated: “In my view she [The Planning Inspector] correctly recognised that the extent of the works was not dispositive. In many permitted developments the work might be extensive yet that does not thereby disqualify a development from automatic permission.” Despite this detail many decisions are still being refused on the basis that buildings are considered new build.

Paul Barton Town Planner 01452 880055 paul.barton@brutonknowles.co.uk

Farmers urged to check business rates when considering diversification While farm buildings and agricultural land are exempt from business rates as long as they are being used for agriculture, diversified farm businesses are often subject to business rates. Traditional forms of diversification would be the use of farmhouses or cottages for either bed and breakfast or self-catering holiday lets. The development of farmers’ markets and other retailing opportunities has also led to surplus farm buildings being used as meat preparation, pressing and bottling, cheese and ice cream manufacture and other food processing.

• Farm Parks (leisure attractions).

The Valuation Office (VOA) has formed three main categories:

• Who is to be the rateable occupier.

• Non-agricultural use (Commercial use including power generation).

• Does the land and buildings still qualify for exception.

• Events (uses such as 4x4 courses, horse trials, paintball and shooting grounds). A step away from strictly agricultural use may exclude the hereditament from the agricultural exclusion and the VOA will seek to identify:

Some farmers may find they have bridged the gap from agriculture to business without being aware, making the occupier liable to pay business rates. For further information and assistance with your business rates please contact our Ratings team.

• What is the hereditament.

Adam Rock Partner 01452 880000 adam.rock@brutonknowles.co.uk

We are here to help you – initial advice is always free We provide a comprehensive range of services so if you are not sure what your next step should be then talk to us and we would be happy to provide some initial advice for free. We can help you with: Planning potential

Scott Winnard

01452 880187

scott.winnard@brutonknowles.co.uk

Renewable options

Robert Smith

01452 880143

robert.smith@brutonknowles.co.uk

Telecom sites

David Lancaster

01452 880000

david.lancaster@brutonknowles.co.uk

Grants

Ben Compton

01452 880180

ben.compton@brutonknowles.co.uk

AMC loans

Roger Bush

01452 880185

roger.bush@brutonknowles.co.uk

Sales advice

Matthew Peters

01452 880184

matthew.peters@brutonknowles.co.uk

Diversification projects

Paul Barton

01452 880055

paul.barton@brutonknowles.co.uk

Landlord & Tenant advice

Julia Allen

01452 880113

julia.allen@brutonknowles.co.uk

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Diversification key as farmers look to bridge subsidy gap Diversification will be crucial as farmers look to re-boot their business following the expected CAP overhaul post 2022, according to rural specialists at Bruton Knowles. One possible solution to bridging the subsidy gap is through successful farm diversification but this would depend upon ‘unlocking the potential whilst managing the risk’. Ben Compton said: “As things stand around 62% of farmers in the UK have at least one form of diversification business, helping to generate some £580m. “In the face of highly volatile farm incomes successful diversification could generate a greater proportion of farmers’ incomes.” Ben Compton said there were still opportunities out there for farmers to convert buildings for alternative uses such as holiday or commercial lets. “Full planning will probably be needed to convert existing buildings to alternative uses, but planning rules have been relaxed and should be in favour of sustainable proposals.

“Some development could be permitted through Permitted Development Rights.” Listed properties, or those in the Green Belt or in an Area of Outstanding Natural Beauty are likely to be more problematic. Before setting out on any new venture, farmers should be looking at producing a current business overview and financial health check – before undertaking detailed market analysis of any chosen enterprise giving due consideration to competition and niche market areas. “Financing conversion projects has always been a problem, but with 40% Rural Development Programme for England grants currently available through the Leader or the Growth Programme, the direct costs can be reduced for certain types of project.”

He went on: “Farmers should be approaching lenders to obtain competitive offers bearing in mind their borrowing capability and sole trader, partnership or limited company status might be better for specific enterprises.” “They should look particularly closely at location and proximity to their target market – and undertake a market appraisal with set objectives, targets and timelines to ensure success.” “Current farm businesses should be stable and not too highly geared, and lastly but not least, farmers must have genuine passion and desire for any diversification project they undertake. “As always, farmers are advised to take professional advice when looking at budgets, grant funding options, borrowing requirements, planning, marketing and the business plan.” For help with diversification contact Ben Compton.

Ben Compton Associate 01452 880180 ben.compton@brutonknowles.co.uk

Ruralnews

Basic Payment Scheme Update 2017 payments should be hitting farmer’s bank accounts soon and are approximately 7% up on 2016. The payment rate for 2017 is approximately £228 per ha or £92 per acre compared with £213 per ha or £86 per acre in 2016. New Greening Rules for 2018 – changes to the options available for Ecological Focus Areas (EFA) A ban on the use of Plant Protection Products on Land Used as Ecological Focus Areas comes into force on 1st January 2018 and applies to land to be used as EFA Nitrogen-fixing crops e.g. peas and beans, EFA Fallow and EFA catch/ cover crops.

Plant Protection Product includes; seed treatments, herbicides, fungicides, insecticides, desiccants and plant growth regulators. Please note that the ban applies to Nitrogen-Fixing crops sown in the autumn of 2017. Please also note that you can still apply PPP’s if you are using a nitrogen fixing crop for crop diversification purposes only.

“Field Margins” as an EFA Option An EFA “field margin” can be next to a permanent field boundary or landscape feature on arable land. In order to qualify as an EFA “Field Margin” the margin must be: At least one metre wide from the edge of the hedge or other field boundary OR next to or within five meters of ‘arable’ land. Each margin should not be used for any crop production and it needs to be visually different to any adjoining agricultural land. It should be established by the 1st January 2018 and kept until 31st December 2018.

For all BPS enquiries contact Ben Compton on 01452 880180 or email ben.compton@brutonknowles.co.uk

Grant funding up to £170,000 now available for businesses in rural Gloucestershire Why not go along to one of the workshops to find out more? 11th January 2018 10am to 12pm The Kings Head Hotel, 24 Market Place, Cirencester GL7 2NR

diversification; tourism; culture and heritage and forestry productivity.

24th January 2018 10am to 12pm Vantage Point, Mitcheldean, Gloucestershire GL17 0DD

These grants (for capital investments) are available now from £5,000 to £100,000 (up to 40% of total eligible costs) for micro/small businesses, and from £5,000 to £50,000 to farmers/foresters, community groups and other organisations.

Applications are invited from micro and small businesses and community organisations in rural areas of Gloucestershire for funding from the RDPE Growth Programme and the two LEADER programmes. The grants are funded by the European Agricultural Fund for Rural Development (EAFRD). 1. The Growth Programme – Tourism Infrastructure £2.8 million of funding available (increased from £1.7 million) to encourage visitors to spend more time and money in the rural parts of the county. Small businesses, social enterprises, farmers, land-owners, rural community groups, charities and public bodies can apply.

These grants (for capital investments) range from £35,000 up to approx. £170,000 and are for investments that will help grow and develop tourism in rural areas.

All applications must contribute to the creation of jobs, growth in businesses or organisations and demonstrate a benefit to the wider economy in rural Gloucestershire.

2. The LEADER Programme

If you would like to know more about either of these funding streams, the application process or to discuss your project idea please contact Ben Compton on 01452 880180 or email ben.compton@brutonknowles.co.uk

The LEADER programmes are open to applicants for projects, which support national and local key investment priorities. These are; farm productivity; business support/farm

Market Review A recent drop in land values and uncertainty around Brexit has slowed some sales but there are reasons to be upbeat too. Discerning farmer buyers are placing greater emphasis on location and productivity when buying land as a result of agricultural economic uncertainty, producing big variations in land values across the region. We are seeing this two-tiered market widen further as buyers become more selective, creating big differences in land values even within local areas. Farmers continue to support the market, some have ‘rollover’ funds to reinvest and others are well financed progressive agribusinesses looking to expand and exploit development opportunities. Mixed farms and estates continue to sell well with poorer quality land in less accessible areas experiencing more downward pressure on values. As a result realistic pricing has been key to

many successful sales over the last 12 months or so. Supply continues to be at historic low levels and many farmers reaching retirement and without successors are looking to opt out and cash in. Looking ahead values will likely be dictated by political and economic uncertainty surrounding support payments and trade deals as a result of the UK’s exit from the EU. Buyers and vendors will approach the market with caution resulting in fewer properties changing hands and average values remaining stable in the short term. There is likely to be some rationalisation of support for UK farmers post 2020 with a shift to environmental benefit which is likely to affect the better quality arable land as support will be targeted towards those handicapped by geography, topography and climate. This will force many medium sized arable farms to look hard at their costs of production and long term viability, this may result in more land

coming to the market once the full impact of reduced support sinks in. However with significant tax advantages and weaker sterling there are attractive benefits in owning land for investors looking for long term, low risk opportunities. Therefore we are predicting stable land values but with uncertainty comes opportunity for both buyers and sellers to take advantage of. If you would like to arrange an up to date, independent, no obligation market valuation, free of charge please do not hesitate to get in contact with either Ben Compton or Matthew Peters. For property and land sales please contact Matthew Peters.

Matthew Peters Auctioneer 01452 880184 matthew.peters@brutonknowles.co.uk

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Landowners to count cost of new Electronic Communications Code Landowners look set to lose out when new rules governing electronic communications infrastructure and the construction and operation of mobile phone masts come into force. The Electronic Communications Code, which forms part of the Digital Economy Act 2017 and will replace the existing Telecommunications Act 1984, contains wide-ranging reforms in favour of telecoms operators. Among the changes will be the way in which landowners with mobile phone masts on their land are compensated, which will not only affect new installations but could also have a significant impact on those coming up for renewal. Operators will also be able to share sites and assign without landowner consent, with increased scope for operators to upgrade their equipment. Under the new code, licenced telecoms operators struggling to find suitable sites for new masts or encountering resistance from landowners will be able to use compulsory purchase powers to free up privately owned land. David Lancaster, senior surveyor at Bruton Knowles’ Shrewsbury office, said: “The aim of the new Electronic Communications Code is to help substantially increase coverage of 4G and mobile services across the UK by building and upgrading masts to expand the network. “Clearly, improving coverage across the UK is important, particularly in rural areas where it is historically poor. However, there is potential for these changes to create more of a burden than a benefit for landowners.”

According to The Country Landowners Association (CLA), the new system, which is designed to reduce disputes and speed up the installation of masts, could have the opposite effect. David said: “We are awaiting an announcement regarding the date for the introduction of the new code. In the meantime, landowners are encouraged to ensure existing negotiations with operators are concluded and new leases are agreed as soon as possible.”

David Lancaster Senior Surveyor 01743 770084 david.lancaster@brutonknowles.co.uk

Winter 2017

Farmers look for answers from expert panel at Farming Conference The environment, supporting innovation, improving productivity and investing in the next generation of young farmers will be crucial as the UK Government overhauls the Country’s future agriculture policy in succession to the EU’s Common Agricultural Policy post 2022, according to agricultural experts at the Three Counties Farming Conference in association with Bruton Knowles. A record number of 400 delegates attended the event to debate the future of farm subsidy. NFU President Meurig Raymond told the conference the UK must not be disadvantaged to EU competitors. He said: “While I’m not going to stand here and demand we have the same £3.2 billion funding post 2022, here’s a sobering thought: when you subtract the diversified farm income farmers have earned, 85% of what is left of the farm income is delivered through farm support.

“Uncertainty is paralysing for UK farmers, and we need a transitional free-trade deal with Europe to see us through this period.” New Zealand special agricultural trade envoy, Mike Petersen, was positive about the future. He said: “The UK should learn lessons from New Zealand, but the two are extremely different. New Zealand was ‘broke’ and subsidies were removed overnight, but when I talk to New Zealand farmers nobody wants to go back to where we were pre-1985. The opportunity for UK farmers to thrive

is significant. Countries will want to trade with the UK, but strong farm leadership is vital.” Former Secretary of State for the Environment, Food and Rural Affairs, the Rt Hon Owen Paterson indicated the reform would include a rewards-based system. “Ceasing production subsidies would bring many benefits to consumers and producers. It does not mean stopping financial support for farmers – it could even mean increasing support by adopting practices similar to those in Switzerland, rewarding farmers for the environmental and public goods they provide.” Country Land & Business Association deputy president, Tim Breitmeyer, said: “You can’t justify giving people money just because they own land, they have to do good. We need investment under a new contractual relationship, with the same level of subsidy, but we need to reward farmers for investing in the countryside and employing good environmental practices.” The Three Counties Farming Conference, in association with Bruton Knowles, was chaired by farmer and BBC Countryfile presenter, Adam Henson, who fielded questions to the panel for an hour after the speakers made their cases. The next Three Counties Farming Conference takes place on 15 November 2018.

Ruralnews

AMC lending update 2017 has been an exceptionally successful year for BK arranging Farm Finance through the Agricultural Mortgage Corporation. Of the loan applications made through BK and approved by AMC during 2017 the largest proportion (40%) has been for Farm and land purchase with finance restructuring next largest (22%). Converting farm buildings for residential or commercial letting has been high on the agenda at 13% with total finance for construction projects of all kinds (including leisure projects such as holiday lettings and Wedding Venues) totalling 38% of this, the proportion of loans for reinvestment into the farm business in buildings particularly was 17%. With more land available on the market in the spring of the year, it is not surprising that most lending centred on purchase but the restructuring of farm finance is still progressing as people look to securing their position for what may be an uncertain future. This is particularly so in the dairy sector. AMC’s unique selling points of long term uncallable loans up to 30 years make them the ‘go to’ business to arrange farm finance. Their interest rates are competitive in the market and as one customer said recently “You know where you are with AMC”. For further information about AMC loans contact Roger Bush.

Roger Bush AMC loans 01452 880185 roger.bush@brutonknowles.co.uk

Join the Gloucestershire Root, Fruit and Grain Society The Gloucestershire Root Fruit and Grain Society which is very much alive today, started after a potential punch up! Back in 1863 two farmers came to blows in Gloucester Market, each claiming to grow better crops than the other. A peacemaker suggested that specimens be brought to Gloucester where independent judges would pronounce.

Judging on the farms enables a far wider range for competitions. Livestock is included. Interest in the society grew and competitions increases, though these have changed with the times as fruit has disappeared from schedules.

The event attracted crowds of interested farmers and from it the society was born. In the early years annual shows were held at the Corn Exchange, but during the Second World War farmers could not take their produce to Gloucester so the judges went to the farms, receiving special allocations of petrol in the interests of food producing.

Each year entries come over from all over the county, and the classes are categorised into championship areas, i.e. livestock arable, forage and farm. Then the points are added up to create an overall winner for the premier award. This is the most sought after award, and the battle commences.

Membership costs just £25 per year and entries are £5 each so to find out more about joining call Sam Pennington on 01452 880101 or visit www.grfgs.com We hold events during the year including a bi-annual tillage events, farm walks and our prestigious Annual Dinner and Prize presentations evening.