The Knight Frank Rural Property and Business Update – 22 February
Our weekly dose of news, views and insight from the world of farming, food and landownership
The future of environmental support for farmers and landowners is increasingly likely to rely on non-governmental funding streams. A new government grant that encourages rural businesses to look at delivering ecosystem services in a more transactional way is good indicator of the direction of travel. There is also the opportunity to find out from one of our residential development experts how a patient approach could also be the most productive when it comes to providing rural housing.
Please do get in touch with me or my colleagues mentioned below if you’d like to discuss any of the issues covered. We’d love to hear from you
Andrew Shirley, Head of Rural Research
5 minutes to read
In this week’s update:
• Commodity markets – Rape seed gains continue
• Covid-19 – Latest business update for landowners
• Patient capital – Find out what it all means
• Green grants – New environmental scheme opens
• Electrical safety – new rules kick in from April
Commodity markets – Rape seed gains continue
OSR prices continue to edge their way to £400/t despite sterling gaining ground and a lack of Chinese buying activity over the Lunar New Year holiday period. European demand has held up more strongly during the latest round of Covid-19 movement restrictions than previous lockdowns, while too little rain in Argentina and too much in Brazil could have an impact on Latin American soybean harvests. According to trader Frontier, the global stocks-to-use ratio for rapeseed and canola is expected to drop to a perilously low level of 9% at the end of 2020/21, suggesting that 2021/22 is well set up to be a seller's market.
Covid-19 – Latest business update for landowners
Georgie Veale of our Rural Asset Management team has just updated her handy Covid-19 rural business guide, which details all the pandemic-related issues that rural property owners need to be aware of.
This instalment includes thoughts on the 3 March Budget, widening footpaths, staycation trends and seasonal workers.
Read Georgie’s latest guide
Patient capital – Find out what it all means
When it comes to residential development on your land, the quickest wins are not always the best long-term options. In a webinar on 3 March, Knight Frank’s Charlie Dugdale and Gail Mayhew of the Building Better, Building Beautiful Commission will be discussing how adopting a stewardship approach to development could be transformative.
“If landowners opt to remain actively involved in a development project they can maximise their returns whilst significantly improving the quality of housing being built in the UK,” points out Charlie.
The webinar will discuss what obstacles are blocking stewardship, and how a ‘stewardship initiative’ might make a difference.
Sign up or find out more about the webinar
Green grants – New environmental scheme opens
The government has launched its Natural Environment Investment Readiness Fund (NEIRF) which will provide grants of £10,000 to £100,000 to English landowners. The scheme is open for applications until 26 March.
NEIRF supports the goals of the government’s 25-year environment plan, green finance strategy and 10-point plan for a green industrial revolution. It aims to stimulate private investment and market-based mechanisms that improve and safeguard our domestic natural environment by helping projects get ready for investment. Projects should:
- Help achieve one or more natural environmental outcomes from the 25 year environment plan
- Have the ability to produce revenue from ecosystem services to attract and repay investment
- Produce an investment model that can be scaled up and reproduced
Examples of ecosystem services that could produce revenue include:
- Selling carbon credits from woodland creation or peatland restoration, using the Woodland Carbon Code or Peatland Code
- Selling biodiversity units from a habitat bank, using the Natural England biodiversity offsetting metric
- Selling ‘catchment services’ (such as improved water quality and natural flood management benefits) resulting from natural environment improvements
The grants are to help:
- Get support from professional advisors to develop your project, address barriers to investment and present an attractive case for potential investors
- Build capability to attract financial investment into natural environment projects
- Develop a market for ecosystem services (such as investment or trading platforms, codes for verifying benefits, aggregator vehicles)
“This could be a great opportunity for innovative landowners and farmers looking to tap into the growing demand from funds and institutions for schemes that help them to deliver on their ESG commitments,” says my colleague Tom Heathcote, Head of our Agri-consultancy team.
Find out more about NEIRF
Electrical safety – new rules kick in from April
The Electrical Safety Standards came in to force in England in June last year, introducing a legal requirement for landlords in the private rented sector to regularly complete electrical safety checks of their let properties.
The regulations have applied since July 2020 for new tenancies and will apply for all existing tenancies from 1st April 2021. My colleague Kathryn Brown from our Rural Asset Management team has kindly provided the following guide:
The regulations apply to 'specified tenancies', which essentially covers tenancies of properties which all, or part, comprise a dwelling and where the term is less than seven years, it is the tenant's only or main residence and rent is paid (whether it is a market rent or not).
This clearly captures ASTs and protected tenancies, but the regulations also apply to the residential element of Farm Business Tenancies (FBTs) and Agricultural Holdings Act tenancies (AHAs).
Landlords need to arrange for a qualified person to inspect and test every electrical installation and issue a report with the results, which will include a date for when the next test is required (no more than five years apart).
"If the inspection finds remedial works, this must be carried out within 28 days of the original report. Landlords need to provide a copy of the report to the tenant, and hold on to a copy to be given to the contractor when the next inspection is due."
This means landlords have responsibility for the main farmhouse, but where there is more than one residential property on a holding, such as a cottage sublet by the farm tenant, responsibility should fall on the immediate landlord (the farm tenant).
There is potential for an overlap of responsibility if the farm tenancies follows the 2015 Model Clauses, so it is worth reviewing the tenancy document and confirming with farm tenants who will be organising the inspection. If the farm tenants are responsible, we recommend asking for a copy of the report.
With a couple of months before the regulations apply to existing tenancies, landlords still have time to organise the inspection and provide the report to the tenants. The government has provided guidance that if tenants refuse access to a qualified person due to Covid-19 they will not be in breach of the regulations but landlords must demonstrate they have taken all reasonable attempts to comply and keep evidence of these attempts.
For more information please contact Kathryn
Photo by Joseph Whyle on Unsplash