GSC Grays Magazine Spring/Summer 2022

ISSUE NO. 4 MAY 2022

L AN D VALU ES I N 2 022

TH E D U TC H NIT RO G E N CA S E The ruling impacting agricultural development across the UK

Will environmental buyers underpin the land market?

FO OD P RO D U C TI O N OR E N VI RO N M E N TA L R ECOVE RY Will concerns over food security stall environmental initiatives?

WELCOME

THE PERFECT STORM Even if you had a crystal ball you would be hard pushed to have foretold the unique set of circumstances the land management sector finds itself in.

Landowners face tough choices with limited information amidst

decide whether now is the time to stick or twist.

Those with potential development sites would be well advised to consider Calum Gillhespy’s article on the

global crises, evolving policy

significant price uplift that can be achieved by proper

and new unregulated markets.

agent. Further content includes opportunities under

The conflict in Ukraine has put food security firmly back on the agenda, with commodity and energy prices soaring and input availability uncertain. New

scrutiny of developer costings by an experienced the Agricultural Transition Plan, Local Nature Recovery Strategy and Solar Energy projects. There is also a focus on lettings and reflections on tenancy reform.

trade deals risk undermining domestic markets by

I should also mention that we will be opening a new

allowing products from countries uncommitted to

office in Boroughbridge this May.

the UK’s environmental and welfare standards. While

our continued growth plan to service strong client

labour shortages, particularly in slaughterhouses, have

demand from the surrounding area. Our new office

brought the pig sector to its knees.

will be home to a team of farm and land management

Despite these external factors, there has never been greater opportunity for those prepared to critically appraise their businesses. To make informed choices

This is part of

consultants and will be our fourth, and most southerly Estate Agency branch. We look forward to welcoming both new and existing clients there soon.

like; whether to commit to government environmental schemes or to focus on increasing productivity while reducing inputs, to take a gamble on volatile commodity markets or diversify and seek out development options.

In most cases it will be a combination of

factors, guided by individual circumstances.

In this our fourth edition of the magazine we have set out to give insight on some of the options that may be considered. For upland farmers and landowners, John Wallis’ article on peatland restoration will help owners

GSC GRAYS

GUY COGGRAVE MANAGING DIRECTOR

01748 897606 gsc@gscgrays.co.uk

CONT EN TS 2

SOL A R E N E RGY

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LA N D VA LU E N EG OT I AT I ON S

Supporting the delivery of pioneering projects in renewable energy.

Is investment in time and a good land agent the right strategy when negotiating sales to developers?

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T H E D U TC H N I T ROG R E N C A SE The emissions case law creating problems for landowners near designated sites.

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LO C A L N AT U R E RECOV E RY ST R AT EG I E S What are they and what are their land management implications?

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FOOD SEC U R I T Y O R E N V I RON M E N TA L RECOV E RY Do we have a choice?

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PE AT L A N D RE STOR AT I ON Stick or twist?

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PU BL I C ACC E SS TO PR I VAT E L A N D There are several practical considerations for landowners thinking of allowing pedestrian access to their land.

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LE T FA R M SEC TOR What now for the let farm sector?

ISSUE NO. 4

MAY 2022

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TI M E TO EX I T?

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FAR M BUSI NESS ACCOUNTS

Will the retirement fund be attractive to those looking to restructure their business and/or exit the industry?

Why would you ask a Farm Business Consultant to review your tax accounts and financial performance, as well as your accountant?

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FAR M S & LAN D 2022

28 30

P ROP ERTY ROUNDUP

Will environmental buyers underpin the land market?

SELECTI VE LI CENSI NG What is it and how will it impact the residential lettings sector in County Durham?

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LEVELLI NG UP WHAT N EX T FOR R ESI D EN TI AL LAN D LOR D S?

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REDUCING OUR CARBON FOOTPRINT CHAIRMAN’S CLOSING REMARKS WELCOME TO THE TEAM

AG R I C U LT U R A L T R A N S I T I ON PL A N What are the opportunities to consider?

G S C G R AY S M AY 2022

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SO LAR E NERGY Supporting the delivery of pioneering projects in renewable energy.

Delivering the UK Government’s 30-year target to achieve net zero emissions by 2050

GREEN HYDROGEN PRODUCTION IN TEESSIDE GSC Grays are excited to be supporting EDF Renewables UK and Hynamics in their ambitious plans

is an immensely complicated

to develop a renewable energy powered hydrogen

ambition that requires every

facility

industry, business and individual

development, located on the former SSI steelworks

across the country to make

site, is a pioneering project that will supply local industries such as British Steel, PD Ports and the local

in

Teesside.

The

Tees

Green

Hydrogen

transport network with a zero-emission fuel source,

changes to their behaviour.

reducing pollution levels while boosting the local

GSC Grays are proud to be involved in two solar farm

economy.

developments supporting pioneering projects that will

Hydrogen is a versatile fuel which can be used in

deliver industrial decarbonisation in the North East

place of oil or gas. When hydrogen is burnt the atoms

and make an important contribution to achieving the

combine with oxygen to form water and as such has

net zero strategy.

no carbon footprint, except for the carbon released

Until

recently,

most

major

renewable

energy

developments like wind or solar farms have been

during the production of the fuel. At Teesside they will be using renewable energy to create green hydrogen.

constructed with the sole ambition of decarbonising

Our involvement in the project began with identifying

the UK’s energy grid. However, electricity production

a solar development opportunity for a client near

represents

carbon

Redcar. Discussions evolved from plans to build

emissions and as such, an increasing focus is now on

a standalone solar farm supplying the power grid,

decarbonising manufacturing, transport and heavy

into supporting EDF and their partners to achieve

industries which can be particularly resource hungry.

their green hydrogen ambitions in the region.

just

a

fraction

of the

UK’s

The

combination of power generated from the existing offshore wind farm, with power from the solar farm on our client’s land, will enable the hydrogen electrolyser facility, which uses electricity to separate hydrogen atoms from water, to operate using renewable energy.

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While the solar farm is still in the very early stages of development, it demonstrates the possibilities for a relatively moderate renewable energy scheme to become an integral part of a much bigger project to directly support decarbonisation efforts and a significant reduction in industrial pollution.

SOLAR FARM, BEDLINGTON, NORTHUMBERLAND Similarly, we saw the submission of a planning application in March for a solar farm development on our client’s land in Bedlington, Northumberland.

FO R LAND OWNE RS, RE NE WAB LE AND LOW C ARB O N E NE RGY SC HE ME S P RE SE NT AN E NO RMO US O P P O RT UNIT Y, NOT JUST TO G E NE RAT E IMP ROVE D RE VE NUE FRO M LAND, B UT TO CO NT RIB UT E TOWARD S A SUSTAINAB LE FUT URE

Although an accepted grid connection is already in place with the DNO discussions are also underway with the hope of utilising the power at a new battery

Our Energy Team are ready to help our clients capitalise

cell production Gigafactory in Blyth that will supply

on the opportunities available.

enough batteries for 300,000 electric vehicles a year. By utilising solar power at the factory, it would be helping to further decarbonise both the UK’s manufacturing and transport industries.

OPPORTUNITIES ABOUND FOR LANDOWNERS These two pioneering projects demonstrate how innovative thinking and new technologies can combine to ensure new energy developments go beyond simply

CHRIS THYER

supplying power to the grid and illustrate the type

RURAL DIRECTOR

and scale of the changes that are needed if we are to achieve the UK’s Net Zero goal by 2050. We hope

07917 611531 ct@gscgrays.co.uk

these will be the first of many schemes like them.

G S C G R AY S M AY 2022

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L AN D VALU E N EG OT IATI ONS Is investment in time and a good land agent the right strategy when negotiating sales to developers?

The landowner’s return from development opportunities is coming under increasing pressure. Post pandemic levels of activity in the housing market and the low supply of potential development sites have led to significant competition for sites.

However, escalating costs have seen housebuilders defending their profit margins, eroding the return for the landowner if left unchecked. So, can time and an experienced land agent mitigate this negative pressure for landowners?

Many people will consider securing planning consent as “job done” in terms of achieving best price when it comes to development land sales. Whilst this is indeed a significant milestone, the reality is that there remains much to do to maximise the uplift in value which that consent should produce. often overlooked and under-valued.

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This work is

Price negotiations for development land are often governed by an agreement of market value and the negotiation of abnormal development costs.

It

has

always

been

the

case

that

significant

improvements in land value can be achieved by thoroughly scrutinising costs. In a market with cost price inflation, material and labour shortages, and the general inflationary pressures caused by the war in Ukraine, this becomes even more important.

SEEMINGLY MODEST COST REDUCTIONS CAN HAVE A PROFOUND AFFECT ON LAND VALUE Development figures are often expressed in terms of £/sq. ft or £/plot. As such, changes to them can appear modest, but this risks understating the cumulative impact when rolled out across a development.

By

altering some key variables by as little as £5/sq. ft or 2.5% to a margin, the landowner’s receipt can be

A S ITE C A N O N LY BE S OLD ONCE A N D T H E P RI C E PA I D N E E D S TO F U L LY R EF LEC T I T ’ S P OT E N T I AL In land value negotiations it is important to critically

changed significantly. On a 150 house development (c12.5 acres) £5/sq ft can equate to an £845,000 swing in value.

Getting these right is therefore

essential if you want to get the full price for your site.

IS TIME A USEFUL TOOL FOR A LANDOWNER?

review all aspects of the development appraisal. As

While mounting a properly resourced review of

such, negotiations will often involve hundreds of

the price presented by a developer might appear

variables which need to be analysed and agreed – a

unnecessarily time consuming, it can be critical if

process which can last many months.

the specialist knowledge of a good land agent is to

A good land agent will adopt an evidence-based approach, using the most up to date, market tested costs and values informed by a practical understanding of delivery on site, to achieve the best possible price.

The ability to do this starts with the contract negotiated with the developer which should obligate full disclosure from the initial heads of terms stage.

It can be challenging and time-consuming for a landowner to replicate the detailed understanding of the site which is needed to prevail in an evidence-

be used to best effect. Developers often play on the fact that a landowner expects a receipt shortly after planning consent is granted. A landowner’s frustration at the delay can mean that they pressure an early resolution without all aspects of a negotiation being fully concluded. Whilst landowners can undoubtedly be under pressure to bank a receipt, nearly all housebuilders will be under corporate pressure to start building. As such time can be a useful tool for landowners if they give their agent the freedom to use it as necessary.

based negotiation.

CALUM GILLHESPY DIRECTOR

01833 694931 crg@gscgrays.co.uk

G S C G R AY S M AY 2022

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T H E DUTC H N IT RO GREN C AS E The emissions case law creating problems for landowners near designated sites.

A ruling in 2018 by the European Court of Justice known as the ‘Dutch Nitrogen Case’ is causing severe delays and added

Richard Pearson operates a mixed farming enterprise at Adderstone Mains Farm consisting of a standard arable rotation with sheep and pig enterprises. The

costs for agricultural planning

farm is located within a 10km radius of 16 designated

applications across the UK.

systems. In 2018, Richard successfully obtained

Many Councils are entering new territory scrutinising applications in light of the ruling and the impact on applicants is being acutely felt. GSC Grays has successfully managed an agricultural development application in Northumberland, the first of its kind in the county, and is now well placed to advise others undertaking the same process.

WHAT IS IT ALL ABOUT? The Dutch Nitrogen Case is related to the prevention of nitrate pollution and specifically its’ effects on nature.

It now requires greater scrutiny of new development proposals that are likely to increase nutrient loads on protected sites in a move to improve the protection of important habitats.

sites, principally the Northumberland coastal dune planning consent for his first pig unit. Following its construction - which was enabled through LEADER grant funding - and having experienced a relatively smooth process through planning for the initial pig shed, Richard expected a similar experience 12 months on, having decided to expand his business through the construction of a second pig shed. However, this was not the case.

THE IMPACT OF THE DUTCH NITROGEN CASE The Dutch Nitrogen Case resulted in significant delays. The proximity of the farm to the protected sites triggered the additional scrutiny required under the guidance issued by Natural England. Whilst a statutory consultee, Natural England would only engage with the

As agriculture is recognised as a significant contributor

application through their Discretionary Advice Service

to the UK’s ammonia gas emissions and therefore air

(DAS), which Richard had to pay for. The specialist

borne nitrogen, agricultural development applications

services of external consultants including Ecologists,

are being severely impacted. This was the case for

Agricultural Consultants and Air Quality Experts

our client in Northumberland and their application to

were also necessary to demonstrate no additional

expand the pig rearing unit of their established and

environmental harm would be caused by the pig shed.

successful business.

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ADDERSTONE MAINS FARM – PLANNING APPLICATION

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THE FOLLOWING WERE NEEDED AS PART OF THE PLANNING PROCESS: • Ecology –

in

addition

to

the

has eventually been consented, there are farms closer to the dunes causing more harm than I ever will. Those usual

site

assessments, the ecologists had to consider impact on the receptor sites. This was done using

uses are legally permitted but the pain which I have gone through will not solve the problem and a much fairer approach needs to be found by those in power.”

the Simple Calculation of Atmospheric Impact Limits (SCAIL). This is a precautionary scoping assessment which modelled the deposition of

FOREWARNED IS FOREARMED!

ammonia and led to a need for more refined work

The measures imposed because of the Dutch Nitrogen

given the very sensitive condition of the dunes to

Case are a key step in the effort to tackle nitrogen

further deposition.

pollution. Whether the scrutiny imposed on new

• 2nd SCAIL Assessment – this was completed by an agricultural specialist who refined the inputs to better reflect the actual operation of the proposed unit. The assessment established that the emissions were below the threshold normally acceptable to Natural England and the Environment Agency. However, as the dunes are already critically loaded, the precautionary nature of the assessment still showed an unacceptable impact.

developments will be widely applied to existing, more harmful developments remains to be seen. However, it is clear that the process experienced by Richard looks set to remain for new development applications for the foreseeable future. Having successfully managed the application process for Richard, GSC Grays have been able to show that applications which fall within the scope of the Dutch Nitrogen Case can be progressed with hard work, a commitment from the client to the project and an approach which takes the stakeholders in the project along with you.

• Air Quality Assessment – a specialist consultant was then engaged to model the impact of the emissions in a more refined manner than the SCAIL

assessment

allows.

This

enabled

us

to model feed regime, pig cycle and physical interventions, such as a covered muck store and

“IT HAS B E E N AN INC RE D IB LY FRUST RAT ING AND PAINFUL P RO C E SS”

mechanical ventilation. The model demonstrated a negligible impact on the receptor sites. The deposition rates then had to be interpreted by the ecologists to express the impact on the receptor habitats.

Planning consent was eventually achieved in July 2021, some 16 months after submission, and was conditional upon, (amongst other things), the agreement of an Emissions Monitoring Protocol with Natural England and the Council. The development of this protocol has also broken new territory and will be used as a template going forward by the Council.

The process has been expensive, time consuming and hugely disruptive for Richard, who said: “It has been an incredibly frustrating and painful process. This is a new issue for the Council and Natural England, so whilst I am pleased that the shed

ALICE BONAS SENIOR SURVEYOR

01833 694930 alb@gscgrays.co.uk

G S C G R AY S M AY 2022

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LO CAL N ATU R E RECOVERY S TR ATEG I E S What are they and what are their land management implications?

Local Nature Recovery Strategies

National partnerships are to be mirrored locally and the Nature Recovery Network Delivery Partnership

are part of a package of

has been set up to support partnership working.

measures being introduced by

Natural England are also leading on the development

the Environment Act with the aim

recovery work, both nationally and locally.

of reversing nature’s decline.

Actions identified in the Local Nature Recovery

The goal of Local Nature Recovery Strategies is to create a single national Nature Recovery Network.

This network would grow from and enhance existing wildlife rich areas, and be buffered by sustainably managed

land,

for

instance

land

currently

of spatial tools to help target, plan, and map nature

in

stewardship schemes. The primary aim of the Nature Recovery Network is to provide a fully integrated approach to nature recovery partnerships, policies, and investments, at scale.

It is anticipated that there will be approximately 50

Strategies are to be transparent and locally led. There is emphasis on the work being practical and not theoretical i.e., land must be identified where action on the ground is possible and outcomes achievable.

Development of each Local Nature Recovery Strategy should be an open and constructive process. They will be non-binding but responsible authorities will have to report on the Local Nature Recovery Strategies every 5 years, and the Environment Act will require all public bodies to have regard to Local Nature Recovery Strategies.

Local Nature Recovery Strategies to cover the whole of England with no gaps or overlaps. The area covered by each Local Nature Recovery Strategy will be set by the Defra Secretary of State who will also appoint

Local Nature Recovery Strategies are being viewed

a “responsible authority” to lead on preparing each

as a multipurpose spatial tool critical to identifying

strategy, likely to be the Local Authorities.

projects and as an aid to channel investment into local

Natural England will be responsible for convening partnerships to work on Local Nature Recovery Strategies including the government, landowners and managers, business and local communities and conservation organisations.

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IMPACT ON LANDOWNERS

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priorities for nature recovery. They should speed up planning decisions, identify net-gain opportunities and where to prioritise them, and provide a clearer path for avoidance, mitigation, and compensation.

TIMING

THEY COULD HAVE IMPLICATIONS FOR SEVERAL DIFFERENT AREAS OF LAND MANAGEMENT:

The next few years are going to be complex and

• Planning and development - Opportunities for Biodiversity Net Gain will be identified in Local Nature Recovery Strategies.

potentially messy. The progress of future funding schemes

and

opportunities

for

landowners

and

managers to engage with Biodiversity Net Gain or ELM are not going to wait for the development of

• Environmental Land Management Schemes (ELM)

Local Nature Recovery Strategies to be established

- Local Nature Recovery Strategies are expected

and agreed. There will be some parallel development,

to play a critical role in identifying the location

but land managers will need to be flexible in their

and prioritising the activities that will be eligible

outlook for future opportunities. However, Local

for funding under future schemes.

Nature Recovery Strategies will provide some level of

• Land use and future management – Decisions on where future national and local schemes

stability as the plans will be drawn up for long term delivery over the next 20 plus years.

are targeted will take account of Local Nature Recovery Strategies.

• Implications for clients with land on or adjoining designated

sites

–

Local

Nature

Recovery

Strategies will look to strengthen the ecological integrity of existing nature rich sites e.g. Sites of Special Scientific Interest which may in some cases involve extending these areas.

It is therefore vital that individual landowners and our wider agricultural industry engage with, and have the chance to formally contribute to, the development of the Local Nature Recovery Strategies. GSC Grays will be ready to support our clients with advice and representation as the strategies develop.

ELIZABETH CLEMENTS PRINCIPAL ECOLOGIST AND SENIOR PROJECT MANAGER

07931 359383 eco@gscgrays.co.uk

G S C G R AY S M AY 2022

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FOO D SEC U R I TY OR E NVIRON ME NTAL RECOVERY Do we have a choice?

The war in Ukraine has created a renewed focus on

While I am sure there is some truth to this, for many people looking back on Spring 2020, visions of empty supermarket shelves will last longer in the memory

the UK’s food security and

than the cacophony of birdsong. The importance

our increasing reliance on

millions of people, and local food systems blossomed.

international food supply chains which some commentators attribute to the prioritisation of environmental initiatives over domestic food production.

Can the UK really afford to prioritise one over the other?

For many people the bright spring days of March

of domestic food production was brought home to

Fast forward to 2022 and the war in Ukraine has once again reminded us to pay close attention to the food security of our nation. As a result, some commentators, journalists and politicians have been questioning whether, by pursuing ambitious environmental targets and initiatives, we are putting ourselves on a path to reduced domestic production, increasing our reliance on international food supply chains. Their concerns are echoed by many of the farmers, landowners, lawyers and bank managers who I have met to discuss environmental projects over the past few months.

this year will have prompted some reflection on the last two years since we first experienced a national ‘lockdown’. Since then, there has been an explosion of environmental initiatives.

The past year has seen ambitious new policies laid out in the Environment Act, developments in the green finance sector, opportunities to explore rapidly emerging markets for ecosystem services and more ‘net zero’ pledges than I can count.

The roll out of the Environmental Land Management system is also gathering pace, though it has received mixed reviews. The pandemic is often credited with helping to drive this trend – highlighting as it did both the enormous benefits we can derive from being in nature and the degree to which our ‘normal’ lives push nature into the side-lines.

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RECONCILING AGRICULTURAL AND ENVIRONMENTAL PRIORITIES There are no easy answers. But it is all too easy to set food security against environmental recovery, farmers against ‘green warriors’, trees against sheep and hunker down on our chosen side of the fence.

In reality, these two major challenges are firmly intertwined, and we must address them both in tandem.

Agricultural production relies on natural systems; weather, pollinators, soil microbiology, water quality and supply, even the mix of gases in the atmosphere, are all critical to our ability to produce food.

Biodiversity loss and climate change are a significant risk to farming and food security, as well as to public

INDUSTRY LED PROGRESS

health and many of the other rural enterprises that our

Here again, the most exciting solutions for how to

communities rely on, from fishing to forestry.

deliver environmental benefits while also supporting

Many of you will also have experienced significant environmental change in your lifetimes, whether that is through changes in the seasons or a decline in the number of songbirds in the hedges. We are much more connected to these changes than a lot of people in today’s urbanised society – so why is environmentalism often regarded as something of an offcomer?

productivity and profitability, are often farmer-led.

There are some exciting innovations being trialled by farmers across the country - some embracing cutting-edge technology, and others looking back to traditional ways for inspiration. There are also an increasing number of farmers who are doing a brilliant job of championing the nutritional value of British grown meat and other produce, drawing attention to the fact that food security is about more than just

THE CHALLENGE AHEAD Of course, it is not always easy to reconcile agricultural and environmental priorities. It is therefore no surprise that a lot of the proposals currently being discussed focus on ‘land sparing’ – identifying areas with lower agricultural value and high potential for delivering environmental benefits, where farmers could be rewarded for setting land aside for nature. This will be part of the solution and we are already starting to see an interesting competition building for the use of marginal ground – whether for tree planting,

hectares and yields.

If our industry takes ownership of environmental problems and finding solutions with as much pride, passion, and skill as we approach the challenge of feeding the nation, then we will all benefit. Owning the issue is critical if we are to work out how to use and manage land in the future in a way that is truly sustainable – for our businesses, communities and for nature. We cannot afford to choose between food security or environmental recovery – we have to achieve both.

biodiversity net gain provision, or flood mitigation.

Careful, strategic decision making about future land use will be critical and policy makers working on the new ELM system must take steps to ensure that the outcomes of future schemes are properly modelled, and that food production is appropriately valued.

From our experience of landscape scale planning through the ELM Test and Trials programme, it is clear

B IO D IVE RSIT Y LO SS AND C LIMAT E C HANG E ARE A SIG NIFIC ANT RISK TO FARMING AND FO O D SEC URIT Y

that a high-level vision must be combined with input from the ground up - about the agricultural as well as the ecological value of the land, and the priorities and aspirations of the people managing it.

Even then, targeting environmental initiatives on marginal areas will not be enough, not least because these are often the areas where nature is still relatively well supported. We also need to identify ways to reduce the environmental impacts of our most productive farmland and improve the resilience of our farm businesses to climate change.

HOLLY STORY RURAL ASSOSIATE DIRECTOR

01748 897603 has@gscgrays.co.uk

G S C G R AY S M AY 2022

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P E AT LAN D RE S TORAT I ON Stick or twist?

Is there such a thing as too early when it comes to interventions

There is certainly some truth in that statement.

Previous schemes have paid handsomely for options such as arable reversion to grassland whilst farmers

aimed at improving biodiversity

who have already reverted to grass have missed out.

and sequestering carbon

More recently, the strict conditions of the Carbon

through peatland restoration?

Code and focus on additionality has led to some

When it comes to the worldwide efforts against global warming, the correct answer is of course, no. As the

landowners being financially penalised due to planting woodland ‘too soon’ to obtain carbon credits which can be sold for carbon offsetting purposes.

Chinese proverb states: “The best time to plant a tree

This has brought into focus the timing of all

is 20 years ago. The second-best time is today”. Any

interventions aimed at improving biodiversity and

action which helps reduces CO² emissions and has a

sequestering carbon.

positive impact on the prevention of climate change must be done as early as possible. However, from a revenue perspective, this might not always prove to be the case for landowners.

WILL THIS AFFECT PEATLAND RESTORATION WORKS? It has been well documented that when functioning

HISTORICALLY, ADDITIONALITY IS KEY TO REVENUE GENERATION Experience has shown the private sector in particular prefers to pay for interventions which create an additional benefit and does not favour paying for the delivery of existing benefits. The public sector also

correctly, peatland has the potential to sequester vast amounts of carbon from the atmosphere, provide clean drinking water, minimise flooding and enhance and restore biodiversity.

The moorland community already has a fantastic track record of delivering landscape scale restoration across vast areas of the uplands.

has a relatively poor record of rewarding landowners

A recent survey by the Moorland Association showed

for continued good management and instead has

that grouse moor owners have been responsible for

historically favoured paying higher sums for the

restoring 3,157 hectares of bare peat in the last 10

restoration of degraded habitats.

years. In addition, 2,945 kilometres of moorland grips,

A farmer once said to me “Natural England are only interested in paying to restore the wrecked farms, the

put in to make the land more productive for farming, have been blocked in a bid to rewet the upland peat.

ones who’ve done the right thing for 50 years don’t

The Moorland Association estimates 61,126 tonnes of

get a look in”.

carbon dioxide – which is emitted into the atmosphere from dried out, bare and damaged peat – are being

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saved every year because of the work done to restore the landscape.

THE RESTORATION GRANT Restoration Grants provide up to 75% of total project

Historically, moor owners have been more than

costs of restoration works identified through the

willing to undertake these works without any financial

Discovery Grant. All Restoration Grant applicants

incentive. Indeed, the vast majority of this work has

must match at least 15% of the project funding from

either been funded by the landowner themselves or

non-exchequer sources. The second round will open

through successive stewardship schemes such as HLS

for applications in April 2022.

or more lately Higher Tier CSS. While these schemes provide capital funding to undertake the physical work, from the carbon sequestered or the wider eco-system

PEATLAND RESTORATION – STICK OR TWIST?

services created.

We actively encourage our clients to consider the

they do not necessarily provide longer term revenue

The recent move within government towards valuing ecosystem services through Natural Capital combined with the Carbon Net-Zero agenda, has led to many landowners re-assessing the value of peatlands.

MAXIMISING REVENUE OPPORTUNITIES THROUGH PEATLAND RESTORATION With only 13% of our peatland in a near natural

grants available to them. Once armed with the detailed analysis of the asset and the opportunities for improvement/restoration, only then can a proactive strategy be created to utilise both private and public sources of capital and revenue income to optimise returns from peatland restoration works.

Time will tell how crucial additionality will be, and whether those at the forefront of biodiversity and carbon sequestration through peatland restoration will be as financially penalised as those at the forefront of

state the England Peat Action Plan sets out DEFRA’s

afforestation efforts.

plans to restore, sustainably manage and protect our

However, the time is right to grasp the nettle and take

peatlands. The Nature for Climate Peatland Grant Scheme (NCPGS) is investing £50 million to restore

the opportunities as they arise.

at least 35,000ha of upland and lowland peatlands by 2025.

As such moor owners now have a huge opportunity to get involved in the landscape scale peatland restoration works and create new revenues from both

SIT T ING O N T HE FE NC E IS NO LO NG E R A VIAB LE O P T IO N

the private and public sectors through the delivery of eco-system services and carbon sequestration.

There are also grants available to help landowners prepare for this and optimise opportunities available.

THE DISCOVERY GRANT First launched in 2021, the Discovery Grant is principally to support landowners to assess and record the condition of their peat and draw up plans for physical restoration. This grant is expected to reopen for applicants in 2022.

JOHN WALLIS RURAL DIRECTOR

01347 820498 jkw@gscgrays.co.uk

G S C G R AY S M AY 2022

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P U BL IC ACC E S S TO PRIVAT E LAND There are several practical considerations for landowners thinking of allowing pedestrian access to their land.

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THE IMPACT TO THE CAPITAL VALUE OF THE LAND

CREATING STATUTORY PUBLIC RIGHTS OF WAY

Capital values will often be diminished by introducing public access. Privacy is often a key driver in purchase decisions,

therefore

any perceived

reduction

in

A statutory right of way allows members of the public to take access but restricts that access to specific routes.

privacy could well be mirrored by a reduction in value.

Landowners can apply for temporary closures of

That said, reasons such as diversification into a public

these rights of way. However, the applications have

facing or trading business can make the introduction

an accompanying fee and the length of time that the

of public access financially desirable.

closure can be for will be determined by the County Council or Unitary Authority.

RISK MANAGEMENT

CREATING PERMISSIVE RIGHTS OF WAY

The Health and Safety Executive reported that

Much like statutory public rights of way, permissive

between 2020 and 2021, 11 people were killed by

rights of way restrict access to specific routes. Though

livestock while 2 were killed by falling trees and

as they are permissive, they can be closed or varied at

branches. Careful thought should therefore be given

the landowner’s discretion without having to pay a fee

to the level of management required to ensure public

or apply to the County Council or Unitary Authority.

access is introduced efficiently, effectively, and safely, including:

• The assessment of all public access routes / areas for matters such as tree safety.

• The management of members of the public with dogs on land with livestock – particularly so when youngstock are present.

• The quantity, types, and wording of signage and way markers required.

A WORD TO THE WISE! Once land is dedicated as public open access, or statutory public rights of way are created, the legal maxim of ‘once a right of way, always a right of way’ comes into force.

Therefore,

careful

consideration

must

be

given

to which of the above approaches to take, as such changes cannot be reversed or easily altered.

PUBLIC ACCESS OPTIONS Having given due consideration to the practical implications of introducing public access, and the desire to do so remains, there are several ways that this

‘ O NC E A RIG HT O F WAY, ALWAYS A RIGHT O F WAY’

can be achieved, depending on the desired outcome for the landowner. Some of the most common ways include:

DEDICATING LAND AS PUBLIC OPEN ACCESS Once a parcel of land is dedicated as public open access, there are no restrictions over where members of the public can access.

JONNY MORRIS RURAL DIRECTOR

0191 303 9543 jwm@gscgrays.co.uk

G S C G R AY S M AY 2022

15

LE T FAR M S EC TO R What now for the let farm sector?

16

GSC GRAYS

Hindsight is a wonderful thing.

END OF TENANCY MATTERS

From our current vantage point, it

The average age of the UK farmer is seen to be an

seems obvious that compounding

impediment to change on an industry-scale, though

Agricultural Hodings Act lifetime

the least in many cases. Nevertheless, part of current

this view is rather unfair at an individual level to say

security with rights of succession

policy is to encourage retirement from the sector.

would eventually stifle the

Will Smith’s article discusses the BPS Lump Sum Exit

tenanted sector by dramatically

planned retirements are likely to be concentrated into

reducing the supply of let farms.

Scheme. From the point of view of the tenanted sector, a shorter period than might otherwise have been the case, but the scheme as it stands isn’t the intervention

Similarly, when Farm Business Tenancies gain the

required to induce retirement from those who are

same relief from Inheritance Tax, whether granted

not already considering it. As a result, the success

for a length of two years or twenty, there is no tax

or otherwise of the scheme in making space for new

incentive to counter the various persuasive reasons

entrants looks likely to be limited.

for keeping tenancy length short.

Next are changes to AHA succession legislation, of which only the briefest overview can be given here.

The commercial unit test has been abolished.

JU DG IN G T H RO U G H THAT R AT H E R H A RS H LEN S , P E RH AP S PAS T OPP ORT U N I T I E S W ER E M I S S E D WH I C H COUL D H AV E L E F T U S IN A F U N DA M E N TA L LY DIF F ER E N T POS I TI O N TO DAY

This

test theoretically did help new entrants, in that it sought to exclude those who had long-term access to viable units other than the rented holding - but it didn’t necessarily work in practice. Instead, there is a revised suitability test and a new business competence test. This is supposed to make the process easier to navigate for all parties, to reduce the use of artificial business structures to secure eligibility and to generally encourage tenants to actively pursue the succession on retirement route. Here, the most interesting part is that the tribunal must now also consider whether the applicant would be among those shortlisted by a

How the current round of reforms will be judged with the benefit of hindsight is a very interesting

prudent and willing landlord in a hypothetical tender exercise for the farm. Quite how this will play out will

question. Emerging agricultural policies are aiming to embed environmentally-sustainable farming practices and halt the decline in farmland biodiversity. Whilst food production is covered by the aim of increasing agricultural efficiency, food security as a headline aim is notably absent.

Increased efficiency is to be achieved through technological advancement and an exploration of new income streams.

It is against these aims that

the future should judge the success of this round of tenancy reform, but how do prospects appear now?

G S C G R AY S M AY 2022

17

bear watching; some fascinating caselaw may start to appear and there may be unintended consequences.

CONTINUING TENANCIES The Agriculture Act 2020 includes various measures impacting on continuing tenancies, again designed to

HAV ING CO N S I D E RE D THE CA RROTS , WH AT OF THE S T I C K ?

make the let sector fit for purpose against the new policy objectives.

Some of these measures are long over-due and ought to be welcomed on both sides. In particular, the ability of AHA parties to agree to ring-fence out a particular

Prevailing policy wisdom seems to be that external economic pressures will force a recognition of the need for change and action will follow, but experience suggests that this is optimistic.

Those who are

financially trapped may be all too aware of the need for change but be unable to act, and elsewhere the sheer enormity of the problem may result in denial.

The concern, as BPS reduces and new schemes demand a different approach, is that the response may simply be ostrich-like, with a reduction in expenditure in the hope things will change soon. This won’t achieve any

improvement from the rent payable should encourage landlord investment. Instead of the tenant having to find funds for a new building as an improvement, a landlord can now be confident that any agreed returns will not be eroded by a falling overall rent at the next review. The tenant gains the use of a building without locking up available capital or the ability to borrow.

The changes with the most wide-ranging implications are those which provide a mechanism for tenants to gain relief from restrictive terms, and these may prove controversial.

of the policy objectives and has the potential to drive

The first set of changes relate to compliance with

down standards, particularly of animal husbandry., and

statutory duties.

to yield tragic consequences in extreme cases.

to ensure that a tenant can continue to farm their

The statutory mechanism exists for AHA landlords to intervene when standards of farming deteriorate beyond the point of acceptability but is notoriously difficult to enact until it’s too late and is expensive for both parties. Intervention from external agencies – in both business and social welfare contexts – can also be late and without much depth.

At bottom, these changes seek

holding in compliance with prevailing legislation – up to a point. AHA tenants had an existing right to refer the need for new fixed equipment to arbitration (NVZ-related infrastructure on livestock units being the classic example), but the new powers go wider.

The battleground will likely be those situations where the landlord believes that the holding is such that it should simply be farmed differently going forward,

Clearly, gaining possession of an AHA holding is of

whereas the tenant either does not want to, or

substantial benefit and no one can deny that landlords’

cannot, make a change. The obvious areas of concern

motives will not be entirely altruistic.

It is equally

are environmental obligations such as storage and

undeniable that a good landlord acting with a genuine

handling of slurry and manure, but how far ‘statutory

interest in their tenant’s welfare could be in a position

duties’ goes might be one to watch.

to intervene at an early stage.

extend to Health & Safety duties - changing field

Whilst it is not surprising that the Agriculture Act 2020 does not contain any provisions in this regard, given it is a political and moral minefield, it is incumbent on landlords and their advisors to be alert to the sensitivities of such a situation and act accordingly.

Could that

boundaries for the protection of users of a popular right of way? Or de-carbonisation – sterilisation of an area with development potential as being the only possible location of new infrastructure for renewable power supplies?

Whether hindsight will show this to be a missed

The next set of changes relate to access to ‘financial

opportunity only time will tell.

assistance’, with the easiest example being agrienvironment schemes. On the surface, the common

18

GSC GRAYS

clauses in more recent AHAs and FBTs requiring landlord’s

consent

to

enter

what

is

presently

Countryside Stewardship will be a clear problem when the Sustainable Farming Incentive becomes the standard.

Allowing a tenant to seek a direction for such a consent if agreement cannot be reached would appear an eminently reasonable amendment. Long-gone are the very prescriptive clauses of the oldest agreements as to rotations and cropping. Many of the common stewardship management options would have been hard to prevent anyway: uncropped margins and hedgerow management options are now so normal as

SUCCESS OR FAILURE?

to nearly be standard practice. Reduced or minimal

So, what does this all mean in practice? Some potential

tillage systems are more widely used every year. It’s

successions which seemed unlikely may now be back

hard to see how a landlord could genuinely construct

on the cards.

a reasonable objection to such practices.

Investment in infrastructure can be ringfenced, but

In other areas, the picture is more complex.

Others may have become less likely.

the need for new and replacement infrastructure may be increasing.

There will be a need to look hard at

difficult decisions and to have difficult conversations.

TA K E T RE E P L A N T I N G .

PL A N TI N G O F U NPRO D U C T I V E ARE AS IS R A P I D LY BECO M I N G A COR NE RS TO N E O F T H E A F FOR E S TAT I O N D RI V E , B UT I S I T AG RI C U LT U RE IN TER M S O F T H E U S UAL R EQUI RE M E N T FO R AG R I CU LT U RA L U S E OF THE H O L D I N G ?

A good working relationship and collaborative working is needed to an extent previously never seen, with a published code of good practice now in existence to underline the point. Having said all of that, perhaps the most important message is that there must be a willingness to engage: to engage with the subject, to engage with other parties and to engage in a positive way.

Those looking back with a critical eye may see a stark divide between those who embraced the need to engage, and those who did not. As for whether the lens of hindsight will yield the view that this current round of policy reform was a missed opportunity for bolder changes? I fear so.

Or permissive access: If a scheme otherwise entirely suitable as a whole-farm strategy includes provision of permissive access, how is that judged against the landlord’s worries that it will encourage trespass onto a valuable habitat adjacent to the holding? There will be a line to be drawn between financial assistance and commercial opportunity and between provision of eco-system services and sub-letting, but where?

FRAN BARRIGAN RURAL DIRECTOR

0191 3039540 fcsb@gscgrays.co.uk

G S C G R AY S M AY 2022

19

AGRICULT U R AL T RAN SIT ION PLAN What are the opportunities to consider?

WHAT ARE THE KEY OPPORTUNITIES FOR FARM BUSINESSES RIGHT NOW?

As part of the Agricultural Transition Plan (ATP), GSC Grays Farm Business

As we progress through the early stages of the

department is delivering free

Agricultural Transition Plan there are 4 key areas of

consultancy to farm businesses

opportunity for farm businesses to consider.

in the North of England.

For those

businesses

not

currently undertaking

these requirements, benefits from SFI payments will Throughout

the

scheme

our

consultants

have

be marginal once additional costs of adapting farm

been gauging farmer sentiments towards the ATP

operations are incurred. However, taking into account

and assessing the key opportunities available for

factors such as high fertiliser prices, the benefits from

consideration.

incorporating organic manures and mixed species

Our experience shows that while the majority of farmers we have worked with are open minded to opportunities presented within the ATP, they are yet to discover what these opportunities actually are. We

the whole farming business of incorporating these operations, rather solely looking at the SFI payment to support them.

can now see a clear outline of the early rollout of

Based on the experience in applying to the pilot

the Sustainable Farming Incentive (SFI), however the

scheme, we believe the application process will be

picture of the full scheme remains unclear. Whilst this

simpler than BPS.

makes business planning difficult in the near future, our discussions with farmers have been centred around

making

business viable without

payments going forward.

20

crops/leys, farmers should consider the benefits to

GSC GRAYS

support

Applications will open in June with no submission deadline, therefore farming businesses can apply at a time of year that suits them.

A P PL IC A N TS S H O U L D B EA R I N M I N D T H AT QUA RT E RLY PAY M E N TS W I LL S TART 3 M O N T H S A F TER T H E AG RE E M E N T HA S B EG U N , T H E RE FO RE DEL AYI N G T H E A P PL IC AT I O N TO T H E EN D OF T H E Y E A R W I L L NOT R E S U LT I N A L A RG E EN D O F Y E AR PAY M E N T

direct retail of farm produce such as farm shops, food production facilities, or even grain cleaning and drying technology. Applicants must bear in mind that the previous grant values have been based on 40% of project costs, with a minimum grant of £35,000.

Therefore, the minimum total project cost will be £87,500, ruling out smaller diversification projects.

In addition, the Slurry Investment Scheme has now been incorporated into the Farming Transformation Fund. The Slurry Investment Scheme will fund items that are likely to become legal requirement in the near future. Farms that will need to invest in slurry facilities in due course would be well advised to make use of the grant funding when it becomes available.

Businesses should also ensure they are keeping accurate records, demonstrating their compliance with the scheme requirements.

COLLABORATION A phased rollout of both the Local Nature Recovery Scheme and the Landscape Recovery Scheme will begin in 2023, to be scaled up in 2024. Both schemes will have similarities to Countryside Stewardship Schemes, however, they will allow the functionality of collaboration between neighbouring farmers as well the incorporation of private finance.

Projects which deliver greater environmental benefits i.e. through collaboration between neighbours, will be better incentivised by Defra. In addition, larger projects will have a greater chance of attracting private finance. Therefore, collaboration between neighbours

WHAT NOW FOR FARM BUSINESSES? Businesses must be aware that there is no single scheme which will directly replace the level of support provided by the Basic Payment Scheme. However, there are schemes available which will supplement farming income for those businesses open to farming in an agri-environmental manner.

Farmers would be wise to utilise this period, whilst BPS payments remain (albeit reduced), to exploit the productivity grants available to them, adapting their businesses to be viable without support payments, be

this

through

diversification,

collaboration,

consolidation or expansion. Our team can help farmers to evaluate their business as a whole and develop a business plan that will achieve this.

could be the difference in being paid on the basis of cost and income forgone and creating a profitable agri-environmental farm diversification opportunity.

FARMING TRANSFORMATION FUND There are two additional themes of the Farming Transformation Fund to be released: Adding Value and the Slurry Investment Scheme. Exact details of the Added Value scheme are yet to be released however we can assume they will focus on encouraging the

JAMIE CHARLTON FARM BUSINESS CONSULTANT

01748 897617 jhc@gscgrays.co.uk

G S C G R AY S M AY 2022

21

T I M E TO EX I T? Will the retirement fund be attractive to those looking to restructure their business and/or exit the industry?

THE FACTS - WHAT DO WE KNOW SO FAR?

Payments will begin from November 2022, or once

The Lump Sum Exit Scheme provides BPS claimants

Applicants can continue to claim BPS up to this point,

with the opportunity to take a capital payment.

however any BPS payments received will be deducted

Initial calculations suggest the lump sum payment

from the lump sum.

will be marginally smaller than the sum of the annual payments received by claiming the reducing Basic Payment Scheme in 2022 and 2023 plus de-linked

the scheme rules have been met. The deadline for transferring land and entitlements is 31 st May 2024.

It is expected that the sum will be treated as capital and therefore subject to Capital Gains Tax.

payments until 2027.

To secure this payment, claimants will have to

WILL IT WORK FOR YOU?

surrender the entitlements that were available to

For those individuals who know they are going to

them on 17 th May 2021. The claimant can retain up to 5 hectares of agricultural land, woodland and the farmhouse/farm buildings. The remaining land must be sold, gifted, planted with trees, or let for a minimum of 5 years. Claimants who farm tenanted land must surrender their lease or enable tenancy succession, where eligible.

The lump sum payment is to be the equivalent of 2.35 times the average BPS payment for 2019, 2020 & 2021, capped at £99,875 (an average BPS claim of £42,500).

22

GSC GRAYS

be retiring/leaving the industry the Lump Sum Exit Scheme is another string on the bow and should be considered. Those who have already retired, but made a BPS claim in 2021 and still hold entitlements can utilise the scheme.

The scheme will be of most benefit for those claimants with no obvious successors, provided of course, that tenants wishing to retire are not required to hand entitlements back to the landlord on termination of the tenancy.

Claimants that take advantage of the scheme are required to surrender their entitlements and therefore entitlements are a diminishing product on the open market to reconnect to land for future use.

Although entitlements and direct payments are being phased out, they have still driven rents over the last couple of years. We wait to see how farm tenders are affected when entitlements are no longer available from as early as post May 2022.

FINAL THOUGHTS Ultimately, in practice, there is not enough incentive to encourage anyone who is not already considering retirement to leave the industry.

However, for all

farming families, the announcement of the scheme should

prompt

succession

discussions

between

generations, advisors, and landlords. Should you wish to discuss any of the matters raised in this article, please do not hesitate to contact one of our team.

For some the payment could generate a sum of money for the elder generation to invest in bricks and mortar away from the farm. A successor could seek to buy replacement entitlements in their own name.

Entitlements are still a sound investment if purchased for the 2022 scheme year, however their availability remains a risk.

In terms of timing, it may not work, particularly for tenants whose tenancy can only be terminated after the Exit Scheme deadline in September 2022.

T HE LUMP SUM PAY ME NT IS TO B E T HE EQ UIVALE NT O F 2. 35 T IME S T HE AVE RAG E B P S PAY ME NT FO R 2019, 2020 & 2021 , C AP P E D AT £99,875 (AN AVE RAG E B P S C LAIM O F £42,500 )

Succession discussions can also be a lengthy process and therefore early discussions with advisors and landlords are key.

WHAT DOES THIS MEAN FOR LANDLORDS? For landlords or those that wish to retire and become a landlord, there must be careful consideration for taking land in hand or letting land as ‘naked acres’.

WILL SMITH SENIOR FARM BUSINESS CONSULTANT

0191 303 9545 whs@gscgrays.co.uk

G S C G R AY S M AY 2022

23

FA RM BUSI NE S S ACCO UNTS Why would you ask a Farm Business Consultant to review your tax accounts and financial performance, as well as your accountant?

All farm businesses are required to produce a set of financial accounts in each financial year, detailing business income and expenses in the profit & loss

24

It is a legal requirement to provide these and as such they should be prepared by a professionally qualified accountant. So, if that’s the case, what is there to gain from employing a Farm Business Consultant to review your farm’s financial performance?

account, and its assets and

A CRITICAL REVIEW FOR HOLISTIC UNDERSTANDING

liabilities via the preparation

It is important to take a critical view of financial

of a balance sheet.

performance. This is especially true in rapidly moving

GSC GRAYS

economic

conditions

and

periods

of substantial

the business to operate effectively, and likely changes

change, such as now, with the impact of the war in

in the capital position of the business over time as

Ukraine, reductions in support payments for the BPS,

well.

and extraordinary market volatility in output prices and input costs.

While

many

accountants

provide

a

good

level

of detailed analysis within tax accounts, thereby providing a valuable management tool to assess the

BUDGET PROJECTIONS ARE ESSENTIAL FOR STRATEGIC DECISION MAKING

financial performance of the business, they rarely put

Whilst the analysis of tax accounts is important

the financial figures into context within the practical

to managing a farm business, we believe they are

management of a farming business. A good Farm

limited as a tool for strategic decision making when

Business Consultant will do just that, appraise the

considered in isolation. We firmly believe that budget

financial performance in relation to budgets prepared

projections should be prepared annually in advance,

and assess the strength of the business from a balance

using up to date industry data and forecasts to assess

sheet perspective (assets and liabilities). In addition,

expected

the consultant can significantly add value by giving

can then be monitored to give clear management

a critical review of the figures, benchmarking both

information on progress and to identify if a review of

output and input costs against comparable information

policy is required. The Farm Business Consultant will

and industry guides.

provide a more proactive and strategic approach to

financial

performance. These

forecasts

farm businesses than can be achieved by employing a tax accountant alone.

LOOKING FORWARDS, NOT BACKWARDS Tax accounts are also often prepared up to 9 months after the year-end for any business. The information is

therefore

somewhat

historic

when

produced

which can limit the usefulness of its interpretation and relevance as a tool for financial forecasting. The problem with looking backwards, utilising tax accounts

T HE FARM B USINE SS CO NSULTANT WILL P ROVID E A MO RE P ROAC T IVE AND ST RAT EGIC AP P ROAC H

only, is that future prospects of the business depend on what happens tomorrow, not last year!

We believe it is fundamental to assess future financial performance via the preparation of an annual budget, building the projection up from the very basic considerations including yield per hectare, price per tonne and variable cost inputs for seed, fertiliser, sprays, feed and vet and med, fuel, etc. Business forecasts should take account of expected changes in income and expenses and give a clear guide as to price sensitivity implications.

A good Farm Business Consultant will help owners and managers of farm businesses to look forwards,

GREG RICKETTS

to understand the likely levels of profit achievable

RURAL DIRECTOR

over the next 12-24 months, the amount of finance required on overdraft to provide working capital for

01748 897628 gpr@gscgrays.co.uk

G S C G R AY S M AY 2022

25

FARMS & LAND 2022 Will environmental buyers underpin the land market?

The farmland market in 2021

Grassland and more marginal upland units also attracted strong interest with particular interest

for northern England was

coming from the forestry sector where opportunities

characterised by an increase in

for new planting land are scarce. This impacted on values, in some cases dramatically, with in excess of

supply of equipped wholefor farms Market projections 2022 – Will environmental £4,000 per acrebuyers being recorded for white hill.

As so

underpin the land market?

often is the case, this is an exceptional figure, but it is

The farms and land market in 2021

clear that the direction of travel for values of this type

across the sector, all of which

attracted strong interest and have

of land is on the increase.

The farmland market in 2021 for northern England was characterised by an increase in supply of equipped whole farms across the sector, all of which attracted strong interest and have almost all successfully sold, and mostly at or above asking price.

almost all successfully sold, and

mostly at orWeabove asking PREDICTIONS FOR 2022 also saw some good-sized price. blocks of bare arable land ranging from 50 acres to over 250

acres with strong competition from local farmers. Price achieved ranged from £10,000 to £11,500 for prime arable and between £8,000 and £10,000 for goodbelow arable grassland.

The graph shows Athe average prices for our We also saw some good-sized blocks of bare arable highly productive block of predominantly grade 2 arable land in Kirby Wiske, North Yorkshire achieved £11,488 per acre in October 2021, some 28.5% aboveover guide the price.last year and a projection for the region

land ranging from 50 acres to over 250 acres with

year ahead.

Predictions Grassland and more marginal uplandachieved units also attracted strong interest with particularare that arable and grassland strong competition from local farmers.

Prices interest coming from the forestry sector where opportunities for new planting land are prices will increase slightly, by between 1% and 3%, ranged from £10,000 to £11,500 for prime arable

scarce. This impacted on values, in some cases dramatically, with in excess of £4,000 per acre being recorded for white hill. As always this is an exceptional it is clear Expectations that the as theyfigure did but in 2021. may have been for direction of travel for values of this type of land is on the increase.

and between £8,000 and £10,000 for average arable.

greater rises but inflationary pressure on the economy

A highly productive block of predominantly grade 2

Predictions for 2022

as a whole is pushing up interest rates, increasing the

arable land in Kirby Wiske, North Yorkshire achieved

costover of the new thereby making servicing loans graph below showssome the average prices for our region lastborrowing, year and a projection £11,488 per acreThe in October 2021, 28.5% above for the year ahead. Predictions are that arable and grassland prices will increase slightly, by harder even if values covering secured loans remain guide price. between 1% and 3%, as they did in 2021. Expectations may have been for greater rises but inflationary pressure on the economy as a whole is pushing firm. up interest rates, increasing the cost of new borrowing, thereby making servicing loans harder even if values covering secured loans remain firm.

AVERAGE £ PER ACRE IN THE NORTH £12,000.00 £10,000.00 £8,000.00 £6,000.00 £4,000.00 £2,000.00 £-

Prime Arable

Arable/Grass 2019

Source: GSC Grays indicative figures

26

GSC GRAYS

2020

Permanent Pasture 2021

Rough Grazing

2022 Outlook

Hill/Moorland

THE RISE OF THE ENVIRONMENTAL BUYER

Although it is very early in this new marketing cycle

Farmers have traditionally made up around 40-60% of

to receive details of suitable land buying opportunities

the buyers of farms and land that come to the market

is growing fast.

and there are few completed deals for us to analyse, the number and range of interested parties registered

in any one year. The rest are loosely categorised as non-farming buyers, but mainly consist of lifestyle purchasers, foresters, those managing inheritance tax questions, equestrian and some international investors.

Perhaps the most pertinent issue will be that of scale.

Opportunities for private ventures of individual farms and land parcels will be most accessible, but corporate buyers with serious ambitions to improve their ESG credentials may find it hard to buy at sufficient scale

This group have now been joined by those with

to be meaningful, particularly in England where there

an environmental and sustainability agenda who

are so many more national parks with potentially

are looking at land, not for the production of food,

conflicting interests.

but

predominately

for

environmental

objectives

including tree planting, biodiversity net gain, carbon sequestration or flood mitigation.

Deals are being agreed now for huge tracts of forest land in Scotland, which are selling to investment funds and large corporates, but even then these areas may only form a small part of their overall ESG portfolios.

THE FO C U S FO R T H E S E NEW B U Y E RS WI L L NATUR AL LY BE O N M O RE MA RG I N A L AN D U P L A ND A R EA S W H E RE T H E Y WILL B E COM P E T I N G WI T H FA R M E RS AN D FO RE S T ERS A N D EX P EC TAT I O N S A RE THAT L AN D P RI C E S WI LL R I S E A S A CO N S EQ U E N C E

There is little doubt that land values will be influenced by the demand for nature based solutions, emerging markets for ecosystem services and a desire to invest in your own slice of ‘natural capital’. Competition between investors, environmental bodies and forestry companies for the most suitable ground will intensify.

It will be interesting to see how this unfolds.

Our prediction for the coming year is that the value of land focussing on food production will remain at current levels, but that a strong, two-tier market will emerge in the more marginal and upland areas, where some of our greatest natural assets can be found or ecosystem gains can be achieved.

JOHN COLEMAN DIRECTOR

01748 897627 jarc@gscgrays.co.uk

G S C G R AY S M AY 2022

27

F SA OR LE

F SA OR LE

PRO P E RT Y RO U N D U P

WE THE RBY

M ID D L E TON -IN -T E E SDAL E

An attrac tive bloc k of we l l m an age d com m erci a l woodl an d with s ig n ifi ca nt am e n ity, s portin g an d ti mber f rom m ixe d age pl ant i ng.

Abou t 147.62 h a (364. 77 ac re s).

A compa ct a nd a ccessi b le dri ven grouse moor i n t he North Penni nes provi ding 5 days shooti ng per ye ar.

5- yea r avera ge of 158 b race .

About 300 a cres.

GUIDE PRICE: £1,500,000

GUIDE PRICE: £750,000

28

GSC GRAYS

U

O

O

U

N D FF E ER R

HORDEN ALLOTMENT

N D FF E ER R

WEST WOODS PLANTATION

GOOSE BANK

ROSE COTTAGE

LE YBURN

L E Y BUR N

Vic torian fam ily h om e , com pl ete l y an d sym path etic all y re n ovated with a ran ge of ou tbui ldi ngs an d ove rl ook in g th e vi lla ge g re e n in th e York s h ire Da les Nation al Park .

Pretty, double fronted cotta ge, enj oyi ng a sou t her ly a spect i n Ri chmondshi re vi lla ge. Sympatheti ca lly updated a nd i mma culately presented.

GUIDE PRICE: £595,000

GUIDE PRICE: £300,000

We have had a hugely successful start to 2022 selling rural properties of all shapes and sizes.

Follow us on social media to keep up to date with the latest properties brought to market: GSC Grays Estate Agency

F SA OR LE

F SA OR LE

gscgrays_estateagency

AISL ABY

Su bs tantial cou ntry home with adjace nt s table s a nd paddoc k s , s et in about 4 ac re s , with ou ts tan ding vi ews ove r th e l oc al cou ntr ysi de.

Modern four- bedroom fa mi ly home of exceptio nal speci fi cati on wi th glori o u s vi ews over the Ri ver Tees and open countrysi de.

GUIDE PRICE: £825,000

GUIDE PRICE: £1,000,000

U

O

O

U

N D FF E ER R

BLACK BULL WYND

NORTHALLE RTON

N D FF E ER R

GRINDSTONE CROOK

THE GRANARY

THE LENDINGS

KNARE SBOROUGH

BAR N AR D C AST L E

Conve rte d f ive -be dro om farm h ou s e l oc ate d i n the h e art of th e Al l e rton Pa rk Es tate e n joyin g far rea chi ng cou ntrys ide views and pe acef u l pos ition .

Attra cti ve stone- bui lt fam i ly home, sympathet i ca lly updated a nd i mma culately presented wi th cha ra cter features throughout. Set i n substa nti a l grounds of j u st under one a cre.

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GUIDE PRICE: £725,000

G S C G R AY S M AY 2022

29

SE LECTIV E L ICENSIN G What is it and how will it impact the residential lettings sector in County Durham?

Proposals to introduce a selective licensing scheme in areas of County Durham came into force on 1st April this year. So, what is selective licensing and what impact will it have on the residential

extending to prosecution or a civil fine of £30,000, it is crucial for landlords to find out whether they are in an area covered by a scheme.

IMPACT ON THE RESIDENTIAL LETTINGS MARKET From Durham County Council’s perspective, the impact of selective licensing is fundamentally positive.

lettings sector in the county?

The scheme will ensure any privately rented property

Selective licensing was introduced in 2006 under the

interests of landlords, tenants, and communities in the

Housing Act 2004. It gives local councils powers to

designated areas. It will therefore make a significant

regulate landlords and managing agents of private

contribution to the wider local authority strategy

rented property in areas experiencing low housing

of regenerating the county’s towns and villages and

demand and/or suffering from high levels of crime,

making them places where people want to live.

antisocial behaviour or deprivation. The aim of the scheme is to improve housing standards in these areas, improve the health and wellbeing of tenants and reduce socially unacceptable behaviour.

is in good condition and well-managed, protecting the

Similarly,

from

a

tenant’s

perspective,

selective

licensing should ensure access to quality housing which is vital for improving the health and wellbeing of the people who live in the community.

WHO NEEDS A LICENCE?

The greatest pain from the introduction of selective

In areas where selective licensing applies, it is

multiple rental properties. The primary issue, perhaps

mandatory for landlords to apply for a licence if they want to rent out a property. There are exemptions to this, including for registered social landlords and any property which is an HMO, or where a Temporary Exemption Notice or Management Order is in force.

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However, with potential penalties for non-compliance

GSC GRAYS

licensing will be felt by landlords, especially those with unsurprisingly, is financial.

FINANCIAL IMPACT ON LANDLORDS

REDUCTION IN HOUSING STOCK?

The licence fee set by Durham County Council is £500

While it may be the intention for selective licensing

per property to cover the cost of administering the

to increase access to good quality housing, the costs

scheme and is payable in 2 parts, the first on application

involved may have unintended consequences in

and the second when the licence is granted. While

reducing the number of landlords entering the buy

there are some discounts available which could reduce

to let market in the designated areas or see existing

the fee to £350, it is nevertheless steep. And it isn’t a

landlords sell up. Both would reduce the number of

one-off. A licence lasts for five years after which the

rental properties available and negatively impact on

landlord must apply for a new licence.

the achievement of the Council’s housing strategy.

Given one of the primary aims is to raise housing

Exactly how the extension of the selective licensing

standards in designated areas, it stands to reason

scheme will impact the residential market remains to

that it will invariably require some landlords to incur

be seen. However, for now this is an integral part of

additional costs relating to remedial works to bring

the housing strategy in County Durham and as such

their property up to required standards before the

landlords would be well advised to check if their

licence will be issued.

properties fall within a designated area, and do so quickly, with some discounts available to those who

IS IT POSSIBLE FOR LANDLORDS TO RECOUP THE COSTS THROUGH INCREASED RENTS? Landlords may look to raise rents, a relatively quick option for those whose tenants are on a periodic tenancy, though potentially a much longer term solution for fixed term contracted tenants.

There are also strict rules regarding rental increases which are dictated by the Retail Price Index – this

apply within 6 months of the application process opening.

T HE LIC E NC E FE E SE T

BY D URHAM CO UNT Y CO UNC IL IS £500 P E R P RO P E RT Y. . . AND IT ISN’T A O NE -O FF

usually lies somewhere between 3-7%. For low rental properties, which will typically be found in Selective Licensing areas, the licence fee will take some time to recoup.

This strategy also comes with inherent risk regarding tenant affordability which needs to be duly considered.

A rental increase may render your property too expensive for sitting tenants and may prove more difficult to attract tenants should it stand empty. An empty property may quickly prove more costly than the cost of the licence and as such rental increases should be weighed up carefully.

CAROLINE RIDLEY MARRIOTT HEAD OF RESIDENTIAL MANAGEMENT

01748 829210 crm@gscgrays.co.uk

G S C G R AY S M AY 2022

31

L E V E L LING U P - W HAT N E XT FOR R E S I DE NTI AL L AN DLORDS ?

WHAT ACTION SHOULD LANDLORDS BE TAKING?

Significant new rental market reforms have been announced as part of the Government’s

The white paper intends to further shift rights from landlords to tenants and responsibility from tenants

Levelling Up plan.

to landlords. It is important that landlords have an

In February 2022, Michael Gove, Secretary of State for Levelling Up, Housing and Communities unveiled the UK Government’s Flagship Levelling Up White Paper, this represents a long term plan to transform the UK

in depth understanding of their property portfolio to firstly ensure that they are up to date and meet current legislative requirements, and secondly, to understand what is potentially looming on the horizon.

and sets out bold national missions to be achieved by

For some, the proposed changes may be the catalyst to

2030. The announcement included long awaited detail

consider diversification of their portfolio into holiday

on rental reforms, with a further white paper on the

lettings, capitalising on the staycation trend following

Renter’s Reform Bill expected in the autumn.

covid. For others experiencing difficulties with sitting tenants, issuing a Section 21 notice while they remain a legal option for eviction might be a consideration.

WHAT DOES THIS MEAN FOR LANDLORDS?

For further advice, please do not hesitate to contact a member of the lettings team. We will be monitoring

The Levelling Up paper looks set to further increase

the legislative detail as it emerges and will advise

the legislative burden on landlords to meet the

clients accordingly.

Government’s

key

objective

of

boosting

living

standards in the private rented sector, with the ambition of achieving a 50% reduction in the number of non-decent rented homes.

THE PROPOSALS INCLUDE: • A new decent homes standard, to improve property conditions for all homes in the private rented sector with a minimum standard to be introduced.

• A national register for all landlords to set out plans to crack down on rogue landlords.

• Removal of Section 21 notices – no fault evictions.

Tenants will not be able to be evicted unless they have been provided with good reason.

LUCINDA RIDDELL DIRECTOR

01347 820505 ljr@gscgrays.co.uk

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GSC GRAYS

REDUCING OUR CARBON FOOTPRINT We revealed in the last issue of

TRAVEL

the magazine the commitment

• Provision of electric car charging points

that we have made to becoming

• Better management of schedules to reduce travel

an environmentally and socially responsible business, integrating Environmental, Social and Governance (ESG) into our company strategy.

• Car sharing • Bicycles for short journeys (voluntary basis)

OFFICE • Reduce paper usage • Recycling – food waste, paper and plastic, old IT equipment

• Review Success will require company wide commitment and

suppliers credentials

and

their

environmental

as such our journey began with the launch of our ESG strategy at the GSC Grays Staff Conference in December last year, detailing our ambitions and

NEXT STEPS

bringing staff on board with our plans.

Our challenge now is to take action to implement the

Our initial area of focus was agreed to be the

a long-term plan for the reduction of our carbon

transition to Net Zero status. We have since begun

footprint. It is important to remember that this is

work on measuring the carbon footprint generated at

just one part of our overall ESG strategy and the way

our offices and by our employees in carrying out their

that we operate. There is much work to do to make

daily work. Working with an external consultancy,

a meaningful impact on our environmental footprint,

we have measured our sources of carbon dioxide,

societal contribution and internal governance – but

identifying where improvements need to be made and

the commitment and determination to do so is clear.

changes identified across the organisation and build

providing the baseline figures against which we will be able to measure the impact of any action taken.

To support this work and to encourage staff inclusion, we have also issued a staff survey to gather thoughts and ideas on opportunities for improvement. This survey was extremely productive and generated numerous ideas for consideration, including:

ENERGY • Investing in providers of greener energy suppliers for our electricity

• Investing in technology to improve efficiency and reduce wastage of gas and electricity to heat and light our offices

JERRY MCGILL OPERATIONS DIRECTOR

01748 897618 jmg@gscgrays.co.uk

G S C G R AY S M AY 2022

33

CLOSING REMARKS

2020 - 2030 A DECADE OF UNCERTAINTY AND MIXED MESSAGES, BUT WITH THAT COMES OPPORTUNITY

On 31st December 2019 we knew that Brexit was going to happen

the first two cases of COVID-19 were found in the UK, and we have just had the second anniversary of

on 31st January 2020, but there

the first lockdown, which started on 26th March 2020.

was no clarity as to the impact it

Brexit has proved to have had an impact on British

would have on those who owned

agriculture to date, but COVID has muddied the

and occupied land. At the same

waters, giving economic turmoil and unprecedented debt for future generations.

time, news was coming in that a

There was a general feeling that we were seeing the

virus known as COVID-19 was

first signs of our industry getting back onto the rails

beginning to impact on the daily

of unusual movements of Russian troops near the

life of the residents in a city called Wuhan, somewhere in China.

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Brexit happened on 31st January 2020, the day after

GSC GRAYS

when, in November 2021, the United States warned borders of Ukraine. We have all watched in horror the destruction of many urban areas following the Russian invasion and the turmoil that is ongoing.

When considering the impact of all this on those

We must have a sense of reality from those producing

involved in rural businesses it is important to remember

the legislation that what is right and to standard in the

that, before the Russian invasion, we had experienced:

middle of York or Carlisle just doesn’t work in rural

• A significant uplift in prices of wheat, oil seed

communities.

rape, lamb and beef.

• Timber values, whether growing crops, standing timber or harvested had reached unprecedented highs.

• Fertiliser prices were heading into unchartered territories.

Since the invasion, all those commodities associated with eastern Europe, such as grain, fuel and fertiliser, have increased significantly in price. This has created the perfect storm for those involved in rural businesses

YO U MAY B E B EG INNING TO WO ND E R, WHAT IS T HE P O INT ? HOWE VE R, O NE MUST ALWAYS RE ME MB E R T HAT ‘ T HE Y D O N’T MAK E LAND ANY MO RE’

and anyone doing their budgets three months ago will have had to revisit the figures.

People need food and the Ukraine crisis has refocussed

One may ask, where is the UK Government at such times?

What

provided?

assistance

and

guidance

is

being

The worrying answer is it is business as

usual, let’s focus on electric cars, increase the EPC threshold and continue to roll out test and trials/pilot projects to see how further support may be provided in the future, but we haven’t made our minds up yet!

Initiatives keep landing on our desks, the most recent being Nutrient Neutrality in specific catchment areas which will impact on future development.

attention onto food security, electricity production, and the alternatives available.

Trees can be planted but the focus must be on the right tree in the right place. Carbon will provide opportunities but significant work is still required.

The biodiversity offsetting will be another new stream for landowners in the future, but all of these need to be targeted to the right land type. There will need to be compromise between trees, butterflies, birds, peat and the production of crops/grass.

Closer to home, we have had storms Arwen and Eunice which caused more damage to woodland than we have experienced in the last 30 years. The Environment Agency are stepping up their inspections associated with water quality, although with comment from the utility companies that agriculture is a significant problem, whilst failing to deal with sewage properly.

Wild Justice and the Ramblers Association appear to regard it open season for the field sport fraternity and landowners respectively, and everyone who has an interest in trees, peat or soil are jumping onto the carbon bandwagon.

The owner of rural property, be it owner occupied or

O P P O RT UNIT IE S E XIST AND WILL CO NT INUE TO CO ME FO RWARD. RE TAIN FLE XIB ILIT Y AND B E RE ADY TO MOVE Q UIC K LY TO SE IZE AN O P P O RT UNIT Y, B UT D O SO FRO M AN INFO RME D P O SIT IO N, HAVING TAK E N ADVIC E.

let, is also being challenged by both the cost of fuel, and issues regarding the type of fuel used to keep the house warm and heat their water. The infrastructure for electricity is creaking, and while mains gas works well in the urban environment, it is non-existent in the rural world.

DAVID GRAY CHAIRMAN

01388 487000 dag@gscgrays.co.uk

G S C G R AY S M AY 2022

35

W E LCOM E TO TH E T E AM At GSC Grays we bring extraordinary people together to build a brighter future for the rural land and business community and as a rapidly growing business, we have been delighted to welcome new faces to our teams over the past few months.

JESSICA VACHER

OLIVIA FOX

DIGITAL AND MARKETING DESIGNER

SENIOR SURVEYOR

Jessica is an experienced Graphic

Olivia graduated from Harper Adams

Designer and Digital Marketer who has worked with numerous brands worldwide to create attention-grabbing digital content and help to develop their marketing and communication strategies.

University in 2018 and has since qualified as a Chartered Surveyor, and become a Fellow of the Central Association of Agricultural Valuers.

Jessica graduated in 2018 with a BA (hons) Creative Enterprise specialising in Graphic Design. She then followed on to gain a range of qualifications within Digital Marketing.

MIKE BLANS HARD

Joining GSC Grays in December 2021 within the estate and sporting management team, Olivia has brought her knowledge gained from previous roles in rural estate management to the team.

Olivia currently works with a number of estate management clients, predominately in North Yorkshire.

SENIOR FARM BUSINESS CONSULTANT

Mike is an experienced agriculturist with an extensive background in the farming industry, having held sales, marketing and consultancy roles within the accountancy and insurance sectors.

Having been born and raised on a dairy / arable farm, Mike is passionate about rural related business and championing British farming.

As an NFU Group Secretary, a position held for 15 years, he provided advice on a broad spectrum of issues affecting members including employment law, tenancy law and industry regulations.

Mike also spent 10 years in a sales and advisory role at National Milk Records, analysing and presenting trends in milk output, constituents and breeding.

He brings a wealth of experience to our team.

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GSC GRAYS

TIM LEONARD REGIONAL AGENCY MANAGER

As Regional Agency Manager, Tim is involved in all aspects of the residential agency department across all 4 offices.

Tim originally started working in the firm as Branch Manager in 2010. He now returns excited by his new role after 5 years international experience.

Tim is an experienced estate agent with over 28 years in the residential property market having worked in London, North Yorkshire, Shanghai and Dubai.

Tim has a wealth of residential property knowledge from around the world helping him support, nurture and motivate the agency team.

O U R O FFIC E S GSC Grays has dedicated consultants across the North of England ready to hear from you.

ALNWICK

NORTHUMBERLAND NATIONAL PARK

A1M NORTH

ALNWICK

COLBURN

5F Linnet Court Cawledge Business Park NE66 2GD

5 & 6 Bailey Court Colburn Business Park DL9 4QL

01665 568310

01748 897630

BARNARD CASTLE

HAMSTERLEY

12 The Bank DL12 8PQ

Swallow Cottage DL13 3QF

01833 637000

01388 487000

BOROUGHBRIDGE

HEXHAM

15-17 High Street YO51 9AW

Pod 2 Eastburn South Park NE46 1BS

01423 590500 CHESTER-LE-STREET HEXHAM

Dunns 2 Bowes Offices Lambton Park DH3 4AN

NEWCASTLE UPON TYNE SUNDERLAND

COUNTY DURHAM

0191 303 9540

CHESTER LE STREET

01434 611565 LEYBURN 15 High Street DL8 5AH

01969 600120 STOKESLEY 26-28 High Street TS9 5DQ

A1M NORTH

HAMSTERLEY

01642 710742

A66 TRANS PENNINE

BARNARD CASTLE

DARLINGTON

MIDDLESBROUGH

STOKESLEY NORTH YORKSHIRE MOORS NATIONAL PARK

COLBURN LEYBURN

YORKSHIRE DALES NATIONAL PARK

BOROUGHBRIDGE

A1M SOUTH

YORKSHIRE

WETHERBY

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