The Knight Frank Rural Property and Business Update – 5 July

One of my colleagues is absolutely passionate about soil health stating that it lies at the heart of every food and farming system. The government seems to be listening with its announcement of payments that it hopes will encourage farmers to boost their soil carbon levels. But it still won’t be enough to offset the loss of the Basic Payment Scheme. Farms and estates will need to develop new business models to allow them to thrive in the future. New environmental payments will help with that transition, but aren’t the whole answer.

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

In this week’s update:

• Soil health – Government boosts support for dirt-friendly farmers
• Species reintroduction – Should we welcome back the lynx?
• Environmental support – Farming in protected landscapes scheme open
• Commercial tenancies – Covid legacy to linger
• Nutrient neutrality – Rules holding back development
• The Rural Report – Sign up to watch our ground-breaking video
• Overseas news – Australian farmland returns fall

Soil health – Government boosts support for dirt-friendly farmers

Speaking at this year’s Cereal’s event Defra Minister George Eustice says farmers who take care the best care of their soils will be rewarded with higher Sustainable Farming Incentive payments from 2022.

Mr Eustice said the new payment levels are 30% higher than the rates available under former EU schemes. £70 per hectare will be available for farmers who boost the organic matter of their soils.

Tom Heathcote, Head of Knight Frank’s Agri-Consultancy team, said: “Soil lies at the heart of every farming business and without the support of area-based payments looking after it through practices such as regenerative agriculture is more vital than ever.

Contact Tom for ideas on how to improve your soil

Species reintroduction – Should we welcome back the lynx?

In this year’s edition of The Rural Report we examine the potential benefits of the reintroduction of species like the lynx and beaver, and also listen to the concerns of farmers. Do you think the lynx should be reintroduced? Let us know by taking our Linked In survey.

Environmental support – Farming in protected landscapes scheme open

English landowners and managers in AONBs, National Parks and the Broads can now apply to the government’s new Farming in Protected Landscapes programme that will fund projects that support nature recovery, mitigate the impacts of climate change, provide opportunities for people to discover, enjoy and understand the landscape and its cultural heritage, and support nature-friendly, sustainable farm businesses

Commercial tenancies – Covid legacy to linger

Despite the prospect of most of the remaining Covid-19 regulations being lifted by the end of July managing relationships with commercial tenants will still require sensitive handling for some time.

John William’s of Knight Frank’s Rural Asset Management team says: “Over the past 15 months many rural estates with commercial tenants have had to reach difficult agreements with tenants that have fallen behind on rents or have collapsed completely.

“The government support has given some relief but landlords and their agents have had to take a pragmatic approach to collecting rent. Communication has always been key but now perhaps more than ever. It is vital to pick up a potential issue as early as possible and work together towards a remedy.

“In some cases rent holidays have been agreed or even a proportion of the rent written of completely. This long term view of supporting tenants should hold good in the future allowing the tenant to continue to trade and the landlord to maximise occupation.”

Nutrient neutrality – Rules holding back development

The construction of 30,000 to 40,000 homes is being delayed and the future supply of up to 20,000 a year put in jeopardy by rules that require new developments to be nutrient neutral in terms of phosphate and nitrate leaching, warns the Home Builders Federation (HBF).

Nature-based projects are the government’s preferred offsetting solution, but land availability, the time taken to create alternative habitats, such as wetlands, and the cost of such schemes will hinder delivery.

“Achieving nutrient neutrality is blocking development and something has got to give,” agrees Charlie Dugdale, of Knight Frank’s Residential Development team. “If it’s just down to house builders they will need to find some four hectares of mitigation land for every one hectare they develop.

“That implies a reduction in land value that won’t be accepted and so other solutions – or a combination of solutions – will be needed.”

Find out how Charlie is helping a Hampshire estate owner to develop a new garden village

The Rural Report – Sign up to watch our ground-breaking video

This year’s edition of The Rural Report, our unique publication for rural landowners and their advisors, launched last week. If you missed it, you can sign up to watch on demand at your leisure. It was a lot of fun making it and includes a thought provoking interview on diversity, with Wilfred Emmanuel-Jones AKA The Black Farmer. I think you’ll find it both entertaining and informative.

Sign up to watch The Rural Report launch video

Overseas news – Australian farmland returns fall

The Q1 2021 instalment of the ANREV Australian Farmland Index shows an average annual total return on investment of almost 8.5%. Income accounted for just over 3% with capital appreciation making up about 5% of the total. It was the first time annualised returns have dipped 10% since the beginning of 2016.

Image by Tim Hill from Pixabay