The Rural Update: Land managers need nature certainty

Viewpoint

The threat that land currently devoted to nature restoration could be lost if Defra delays the rollout of new environmental support schemes is far from idle. Our Rural Consultancy team is in the process of preparing the next edition of The Rural Report, Knight Frank’s market-leading publication for rural property owners, and even the most nature-friendly land managers we’ve interviewed are concerned about how to bridge the financial gap once their current environmental schemes expire. Given the marginal returns from farming and the unexpectedly sharp cuts of Basic Payment Scheme rates, every acre must pay its way. Sadly, given that the current iteration of the Sustainable Farming Incentive has generally been considered a rare policy success for farmers, that may well mean tens of thousands of acres going back under the plough.

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Commodity markets

Whisky hit for barley

An already weak malting barley market has been hit further by an enforced cut in whisky output at many Speyside distilleries. The dry weather has caused “significant water scarcity” in several of the region’s rivers, according to the Scottish Environment Protection Agency, which has told distilleries to cut their water usage as a result. Some are now running at just 20% capacity.

The headline

SFI threat to farms and nature

Concerns are growing over a timely rollout of a new version of the Sustainable Farming Incentive (SFI), with suggestions that April 2026 is the earliest it could be introduced.

When Defra shut the current iteration of SFI without warning last March, it said details of the next scheme would be announced in the summer.

However, new Secretary of State Emma Reynolds has not provided any updates since taking over from Steve Reed, who was promoted to Housing Minister following the resignation of Angela Rayner.

The loss of experienced Farming Minister Daniel Zeichner in the subsequent reshuffle, as well as the departure of several key personnel at Defra, including Janet Hughes, the influential programme director behind Defra's Future Farming and Countryside Programme (FFCP), have led to doubts regarding the ability of policymakers to effectively deliver a new scheme.

These fears have been exacerbated by reports that the next generation of SFI could be quite different from the one that land managers have only just got to grips with, with the planned introduction of new software at Defra to manage the SFI only adding more worries.

Newly released figures from Land App highlight the scale of the issue. Over 136,000 unique Countryside Stewardship mid-tier options, affecting 4,525 farming businesses and 51,000 hectares of arable land, are set to expire at the end of the year.

Without an SFI option to roll those agreements into, it is feared that much of the land devoted to nature will be ploughed back up, not to mention a significant hit to the bottom line of those businesses affected.

News in brief

Wales nature scheme impact

The introduction of the Sustainable Farming Scheme (SFS) in Wales could lead to the loss of almost 1,200 jobs, a reduction in livestock numbers by 60,000 and an average £5,800 hit to farming businesses, according to an economic impact assessment carried out for the Welsh Government and published last week. The figures, however, are better than those for the previous version of the SFS, which led to numerous farmer protests across the country.

Abattoirs critical infrastructure

A UK-wide abattoir network should be explicitly recognised as critical national infrastructure, according to the conclusions of a new report and survey published by the Sustainable Food Trust, Rare Breeds Survival Trust and Soil Association. Over 60% of livestock businesses that responded to the survey said demand for local meat is increasing, but a lack of abattoir capacity is making it difficult to capitalise on the interest.

Oxygen rescues beer forest

BrewDog has sold its controversial Scottish tree-planting scheme to natural capital business Oxygen Conservation. The beer business disruptor bought the 9,300-acre Kinrara Estate in the Cairngorms in 2020 for £8.8 million. It had ambitious tree-planting and carbon-capture plans, but local communities complained they had not been consulted, and 250,000 of the trees planted reportedly died.

Scottish nature plan

Meanwhile, a new report suggests that nature restoration in Scotland needs to be less reliant on private capital if the nation wants to hit its environmental targets. Restoring nature to deliver a just transition to net zero by thinktank Future Economy Scotland claims that it would be cheaper to fund landowners directly to deliver peat and woodland restoration schemes, rather than “de-risking the ability of financial intermediaries to make a commercial return”.

Premium carbon credit hike

But there is more good news for those delivering high-integrity carbon credits. The latest analysis from carbon-credit rating business Sylvera reveals that corporates are increasingly willing to pay more for credits with robust and transparent methodologies. “The level of demand we’ve seen at these prices suggests that buyers are increasingly willing to pay a premium for integrity and proven climate impact, viewing these projects as a more secure, long-term investment,” said the firm.

Retailers lag on nature progress

Britain’s retailers may need some help from landowners to help hit their environmental commitments. According to Planning for Nature, a new report from the British Retail Consortium, half have not made any commitments to protect or restore nature, and three-quarters are not yet engaging with their suppliers on nature-related impacts and risks, leaving them exposed to forthcoming regulatory changes in the UK and EU.

Miliband fracking ban

Energy Minister Ed Miliband announced a permanent ban on fracking in the UK at the recent Labour Party conference. The move was a riposte to Reform leader Nigel Farage, who wants to encourage the controversial extraction of shale gas to boost energy self-sufficiency. Fracking in the UK has been on hold since a Lancashire test well reportedly created local earth tremors in 2019.

Tory climate act threat

Speaking before the Conservative Party’s conference this week, Tory leader Kemi Badenoch took the opposite tack in a bid to win the climate-sceptic vote. She said that if elected at the next General Election, the Conservatives would not only scrap the UK’s 2050 net-zero target but all interim carbon budgets recommended by climate scientists. Badenoch pledged to replace the Climate Change Act with a plan that would “prioritise” cheap energy and economic growth.

Heather management code

Following the recent extension of its ban on burning on English peatlands, Defra has just released new guidance for land managers needing to cut or burn moorland vegetation. The Heather and Grass Management Code 2025 provides additional advice on the planning and control of specific management interventions, as well as the habitats and features that should be avoided.

The Rural Report SS 25 – Out now

The Spring Summer 2025 edition of The Rural Report, Knight Frank’s flagship publication for rural businesses, which looks in more detail at many of the issues discussed in The Rural Update, is available online and in print. You can click here to access the full report.

Properties of the week

Devon delight

Those looking for a small residential estate with extra income in the southwest may well want to take a look at Ebberly House at Roxborough, near Winkleigh. A Grade II* listed Georgian house with nine bedrooms sits at the heart of the picturesque 249-acre property, while seven further houses let under assured shorthold tenancies generate a significant rent roll. The guide price is £6,950,000. For more information, please contact Will Oakes or Florence Biss.

Historic Kent estate home to rent

Knight Frank’s Rural Consultancy team in Kent has an intriguing option on offer. Newhouse at Mersham, near Ashford, which was once home to Countess Mountbatten of Burma and Lord Brabourne, is part of the idyllic 2,700-acre Hatch Park Estate. Now available to rent, the nine-bed period property costs £6,995 a month. For more information, please contact Katie Bundle.

Discover more of the farms and estates on the market with Knight Frank

Property markets Q2 2025

Development land – Market weakens

The value of development land continues to fall, despite the government’s pledge to build 1.5 million new homes during this parliamentary term. According to the newly published Q2 2025 instalment of the Knight Frank Residential Land Index, prices for green and brownfield sites have dropped by 5% over the past 12 months. Lower levels of supply mean values in London slid by just 2.5%. Housebuilders are grappling with planning delays, viability challenges, skills shortages and weak demand, explains Oliver Knight.

Farmland – Uncertainty dominates

Despite cuts to support payments and lacklustre grain prices, the average price of bare agricultural land fell just 2.3% in the second quarter of the year, according to the latest edition of the Knight Frank Farmland Index. “It’s really difficult to discern any clear value trends at the moment because of reduced transaction levels,” says Will Matthews, Head of Farms & Estate Sales. Download the full report for more data and insight.

Country houses – buyers’ market

It’s a buyers’ market when it comes to rural homes, according to the latest research from Tom Bill, Knight Frank’s Head of UK Residential Research. The Knight Frank Prime Country House Index slipped by 2.5% in Q2, the second-largest quarterly decline since Q1 2009. At the same time, the number of properties for sale is up 9% compared with this time last year. On average, there are six prospective buyers for each new instruction, compared with 19 at the height of the Covid-19 pandemic, with sales achieving an average of 94% of asking prices. Read more of Tom’s numbers and insight.