Weekly rural property and business update: 10 August 2020

Commodity markets
Arable prices weakened slightly on the week as more of the UK crop went under the combine. Values are still higher, however, than in 2019. Livestock prices edged up slightly, but in its latest report on the lamb market, the AHDB warns that a slower consumer recovery from Covid-19 and a disorderly Brexit will potentially weigh heavily on values later in the year.

Forestry update – listen to our new woodland podcast

Almost half of rural landowners plan to plant more trees over the next two years, according to the annual Knight Frank Rural Sentiment Survey.

To find out what is behind all the interest, our latest Intelligence Talks podcast speaks to forester Andrew Bronwyn, ecologist David Hetherington and Knight Frank forestry investment expert Ran Morgan.

It is well worth a listen, whether you are interested in forestry from an investment, environmental or climate change perspective.

If trees are your thing it’s also not too late to contribute to Defra’s England Tree Strategy Consultation, which closes on 11 September. A lack of government support is one of the reasons landowners say English tree planting areas are below those achieved in Scotland, so having your say is important.

Mineral rights – you might not always own what you think you do

Surprising to some perhaps, but legally it is possible for the ownership of what lies below the ground to be held separately from the ownership of the surface. Often, estates have retained these ancient ‘mineral rights’ when selling off farmland in case they might have some value* – such as gravel extraction - in the future.

A recent court ruling in Wales has, however, cast some doubt as to what these mineral rights actually cover.

The details of the case are somewhat arcane, but revolve around the use of mudstone extracted from land owned by Natural Resources Wales. The owner of the mineral rights felt that they had some claim to the value of the mudstone. The court disagreed.

Ross Murray, Chairman of Knight Frank’s Rural Asset Management Team, warns: “Landowners with reserved minerals under land conveyed should study this judgement carefully. All minerals need to be precisely registered at HMLR in future for protection. It seems likely this case will be appealed.”

*It is worth noting mineral rights do not cover hydrocarbons such as oil and gas. These are reserved to the state.

Landlords rights – Access to tenanted land

Agricultural tenancy agreements generally allow landlords access to their land for reasonable purposes. Disputes, however, can arise when the access is considered overly invasive and causes damage to the land.

But the latest court ruling in the Rees v Earl of Plymouth case offers some support for the landowner. Again, the details are quite technical so I’m borrowing the below commentary from the legal experts at Burges Salmon.

“This case came to the Court of Appeal following a High Court case where the Judge had said that a restrictive approach to reserved rights of entry in a tenancy should be taken. That approach looked to prevent entirely intrusive surveys or other work being carried out that might cause damage to the land.

“The case led on from previous cases such as Possfund Custodial Trustee Ltd v Kwik-Fit Properties Ltd and Heronslea (Mill Hill) Ltd v Kwik-Fit Properties Ltd, which have tended to restrict a landowner’s freedom of movement when relying upon reservations in tenancies.

“The leading judgment in the Court of Appeal was given by Lord Justice Lewison. This is important. Lord Justice Lewison is regarded as a, if not the, leading legal authority both on property law issues and the interpretation of contracts, particularly in the context of property contracts. We can expect this judgment to be treated with a high degree of respect.

“The Court of Appeal’s conclusion was that if rights of entry are reserved for reasonable purposes, which is a very common formulation, those reasonable purposes had to be understood in the context of the land and all relevant circumstances.

“If the right of entry was for a highly intrusive purpose, then that may not be held to be a reasonable one, but (importantly): 'what might be intrusive in [the example was given of a lease of a petrol filling station] might not be intrusive in the case of a 51 acre farm. It is, as I said, a question of fact and degree.'

“The judgment did not support an overly restrictive interpretation of reservations, and had a number of comments on the contra proferentem rule which will be of very real importance to lawyers grappling with the details of these issues.”

Alastair Paul, a partner in our Rural Asset Management Team, comments: “There is no doubt that some landlords will see this as a victory, but in cases where millions or pounds are a stake, who will decide whether the ‘landlord’s activities would result in substantial or serious interference with the tenant’s use and enjoyment of the land’?

“To me that is going to be another judge in yet another court case over development access. The best advice must be to enter a dialogue with your AHA tenant well in advance of the requirement for development related access.

“Landlords and tenants that get on well together have their interests aligned – perhaps that means that a tenant might need to get something out of it. But it seems preferable to paying a solicitor and barrister and, if you lose, your tenant’s solicitor and barrister as well.”

Contact Alastair for more advice on landlord/tenant relationships