UK rural property: Slowing down the green revolution

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Opinion

Pragmatist or vote-seeking, environment-trashing opportunist? Prime Minister Rishi Sunak has opened a real can of worms with his decision (as discussed below) to roll back on some of the government's net zero targets. He's been roasted by green campaigners and politicians like Zac Goldsmith, but is bringing the UK's cut-off date for the sale of petrol and diesel-engined cars in line with the EU that radical? The current EPC rules are also a blunt tool that don't take into account traditional construction methods in the countryside and should be more carefully scrutinised. To be fair, some of the things he's "scrapped" like a tax on red meat didn't actually exist in the first place, but what this move really highlights is the need for target-fixated politicians to think more carefully about what it they want to achieve in the first place AS

Do get in touch if we can help you navigate through these interesting times. You can sign up to receive this weekly update direct to your email here

Andrew Shirley, Head of Rural Research; Mark Topliff, Rural Research Associate

In this week's update:

• Commodity markets – Oil surge pushes up N
• Nutrient neutrality – Lords put focus on farmers
• Upland farming – Herdwick petition launched
• Supermarket contracts – Petition to get fair about farming
• Out and about – Deer potential
• Net Zero – Rishi scraps green targets
• TNFD - Nature reporting framework launched
• Gamebirds – Welsh licence delayed
• Interest rates – Don’t rush to fix
• Cotswold stunner – Large farming estate launched
• Development land – market tumbles
• The Rural Report – Watch the videos
• Countryhouses – Prices weaken
• Farmland values – Price growth slows

Commodity markets

Oil surge pushes up N

The continued rise in energy prices has started to hit the cost of fertiliser. As reported in Farmers Weekly, imported Ammonium Nitrate cost £362/t in August up £18/t on the month. Rising natural gas prices are to blame, but values are thankfully still well below the peaks seen during the initial stages of Russia's invasion of Ukraine. Petrol and diesel, however, have seen sharper hikes and are worryingly edging back towards last year's highs AS

Talking points

Nutrient neutrality – Lords put focus on farmers

The House of Lords Built Environment Committee has called on the UK government to deliver a new strategy to meet its housing and environmental ambitions. The Committee's report, 'The impact of environmental regulations on development', argues that current environmental regulations are having a disproportionate impact on smaller home builders, with nutrient neutrality requirements being described as 'unsustainable'. The report's criticism of the nutrient neutrality requirements comes after amendments to the Levelling-Up and Regeneration Bill in the House of Lords on this issue were defeated two weeks ago.

The report also argues that pollution from farming and water companies should be addressed. It calls for an inspection of farms within the 27 catchment areas subject to nutrient neutrality advice by the end of 2024.

Considering the 2030 deadline for upgrading wastewater treatment works, the report says that the government should also bring forward its proposals to address pollution caused by water companies and agriculture MT

Upland farming – Herdwick petition launched

Farmers in the Lake District are calling for the government to set up a Lake District Engagement Body (LDEB) to help safeguard the livelihoods of the sheep farmers in the World Heritage listed landscape. They claim that environmental policies and subsidy cuts are already threatening the future of the iconic hefted Herdwick sheep flocks that roam the fells. Although environmentalists like George Monbiot loathe sheep and would love to see the Lake District "rewilded" I would encourage anybody trying to make up their own mind to read The Shepherd's Life by James Rebanks. It was on my summer reading pile, and I've belatedly just finished it.

Without glossing over the hardships of upland sheep farming, it's a love letter to the lakes and the traditional farming methods that have shaped the area for hundreds if not thousands of years. The farmer's voice deserves to be heard. Sign the parliamentary petition to create a LDEB AS

Supermarket contracts – Petition to get fair about farming

In another effort by agriculture to lobby for its survival, Riverford, the organic veg box firm, has written an open letter to the CEOs of the six major supermarkets calling on them to adopt their five key principles: pay what you agreed to pay, buy what you agreed to buy, agree on fair specifications, commit for the long term and pay on time. The company said: "Government support is also vital – so we are petitioning for three of these principles (commitments to agreed quantities and prices, and prompt payment) to be made legally binding for all supermarkets, without exception."

As part of its Get Fair About Farming campaign, the letter is backed by more than 100 signatories, including the industry bodies Sustain and The Soil Association, the chefs Rick Stein and Hugh Fearnley-Whittingstall, the nature programme maker Ray Mears and the presenters Julia Bradbury and Jimmy Doherty. The letter comes off the back of a survey that found half of British fruit and veg growers say they may go out of business in the next 12 months. Of those asked, 75 per cent said that treatment by supermarket buyers was one of their top concerns. The petition can be signed at www.GetFairAboutFarming.co.uk MT

Out and about – Deer potential

Mark and I joined members of our Rural team on a visit to the inspirational Deer Box wild venison business last week, organised by our new Canterbury office colleague Lizzie Feakes. The brainchild of TV chef and restaurateur Mike Robinson (pictured rustling up some bespoke burgers for us), the business not only promotes the consumption of a previously wasted natural and healthy food resource (it's so ethical some vegans have even been known to dabble), but also helps estates across the country manage their deer populations so they become an income stream rather than a cost. Combined with the potential of agroforestry that we've also discussed recently, making the most of wild venison could be a real opportunity for many farms and estates. Read Mark's article on agroforestry: what it could offer land managers? AS

Need to know

Net Zero – Rishi scraps green targets

Last week, the Prime Minister announced changes to a number of government net zero pledges that affect rural businesses. The proposal that there would be no new oil or LPG boilers for off-gas-grid households after 2026 has been pushed back to 2035. But less well-off households (about a fifth of all homes) will still be exempt from this target and will still be able to buy new fossil fuel boilers after 2035. In addition, Sunak announced that boiler upgrade scheme grants will increase from £5,000 to £7,500.

The sale of new petrol and diesel cars in the UK will also be pushed back from 2030 to 2035. Second-hand petrol and diesel vehicles, however, would still be able to be bought after 2035.

The PM additionally announced that plans to force landlords to upgrade the energy efficiency of their homes have been scrapped. This reverses the government proposals for stricter standards in new tenancies from 2025 and all tenancies from 2028 MT

TNFD - Nature reporting framework launched

The final version of the framework developed by the Taskforce on Nature-related Financial Disclosures (TNFD) has been released. The TNFD framework helps address the information gap between an organisation's interaction with nature and the impact on its financial performance and risk. The significance of this is that businesses may soon be required to report on their nature-related exposures, such as biodiversity loss and ecosystem degradation.

But how does this impact farms and estates? The use of the TNFD is likely to become the norm, and when it does, organisations are going to be more focused on the impact they have on nature. In turn, we are probably going to see an uptick in interest from these organisations to invest in natural capital and nature-based solutions. This could lead to opportunities for land-based rural businesses to tap into private funding for projects such as those for improving biodiversity, peatlands, and woodlands. With changes occurring in the subsidy system and public environmental scheme funding limited, this private cash could be a useful alternative income source MT

Gamebirds – Welsh licence delayed

We have previously reported in the Rural Update about the consultation of licencing the release of gamebirds in Wales. Over 40,000 responses were submitted to the initial consultation. Well, last week, Natural Resources Wales (NRW) announced a delay to any introduction of a licence for gamebird release in Wales.

The consultation proposed that any release of gamebirds 500 metres or more from a Site of Special Scientific Interest (SSSI) or other protected site would have to apply for a general licence, while any releases within 500 metres would have to apply for a special licence with even more stringent conditions. The CLA expressed concern that, "the introduction of a license is the propensity for mission creep. Welsh Government could continue to add stricter conditions effectively regulating an industry out of existence in Wales." MT

Interest rates – Don’t rush to fix

For the first time in 14 months the Bank of England didn’t hike interest rates at its Monetary Policy meeting last week, voting narrowly 5-4 to keep the base rate at 5.25%. The four dissenting members of the committee wanted to increase the rate by a further 0.25 percentage points. Bradley Smith of Knight Frank Finance’s agri-lending team says the loan rates offered by banks should start to reduce but adds that the latest outlook does pose some tricky questions for anyone looking to borrow. “The cost of a typical two-year tracker mortgage remains slightly lower than a two-year fixed rate product, so what is the right choice? It will be interesting to see how the swap market reacts in the next few days with 5-year fixed rates down 11% from this time a month ago. Now is a good time to review your borrowing as the banks start to compete for your business again.” AS

On the market

Cotswold stunner – Large farming estate launched

Anybody looking for an archetypal Cotswold farming estate will want to take a look at Stockwell Farm, near Cowley, Gloucestershire. Its almost 900 acres of rolling arable land, woodland and pasture come with a six-bedroomed main farmhouse plus attached secondary accommodation and party barn. There are a further seven traditional cottages and over 150,000 sq ft of modern farm buildings that offer significant development potential. There are also 13 stables for equine enthusiasts. Please contact Georgie Veale for more information. Available in two lots, the guide price for the whole is £18.5 million AS

Manx magic – Island's "best" estate for sale

The scenic Ballamanaugh Estate (see main picture) on the Isle of Man has just been launched with a guide price of £17.75 million. The 932-acre property includes a main five-bed house with indoor swimming pool and eight modern and traditional secondary dwellings, as well as barns with conversion potential. All the farmland, which comprises pasture, arable soil, hill grazing and forestry, is let under a number of farm business tenancies. For more information please contact Will Matthews AS

Equine paradise – Surrey training yard available

The equine residents of the internationally renowned Robins Farm training yard at Chiddingfold, Surrey, enjoy a sumptuous range of facilities. The 48-acre property includes 52 stables, three all-weather gallops, two horse walkers, treadmill, solarium and even a vibrating floor stable. Humans get a pretty five-bed farmhouse, office and staff accommodation. The guide price is £2.7 million. Please contact Georgie Veale for more information AS

Our Latest Property Research

Development land – market tumbles

The outlook for the UK economy weighed on the residential development land market in the second quarter of this year, leading to a slowdown in activity and a decline in land prices across the board, according to the latest instalment of Knight Frank's Residential Development Land Index.

My research colleague Oliver Knight says: "We've noted previously how the economics of developing new homes in England is challenging. A slower sales market, issues related to nutrient neutrality, biodiversity net gain, higher build costs and local plan failures have all forced housebuilders to rein in construction expectations. The result? Downward pressure on land values."

Average greenfield land prices fell by 6% on the quarter, taking the annual decline to almost 15%. Prices for brownfield land showed a similar trajectory, dropping 6% on a quarterly basis and 18% annually AS

The Rural Report – Watch the videos!

You've read the book, now watch the videos! To complement the thought-provoking articles contained within this year's edition of The Rural Report our whizzy Marketing team has also created a series of videos featuring many of the report's contributors. Head to our very own YouTube channel to discover more about biodiversity net gain and regenerative farming; find out how we are helping Guy Ritchie's Ashcombe Estate on its diversification journey; and read about the travails of an entrepreneurial Zimbabwean searching for a farm for his family. Plus lots more AS

Country houses – Prices weaken

Country house prices came under pressure in the second quarter of the year, as the 'escape to the country' trend reset, and buyers re-calculated their budgets due to higher borrowing costs.

The average price of a property fell 2.6% in the second quarter, according to the Knight Frank Prime Country House Index (PCHI), compiled by my colleague Chris Druce. It was the largest quarterly fall since the global financial crisis in Q2 2008. It follows a decline of 0.5% in Q1.

It left country house prices down 4.2% since their peak in June 2022, although the average property is still worth 15% more than before the pandemic, which supported a surge in prices as people upgraded their homes and took advantage of a period of stamp duty savings.

Download the full report or contact Chris for more information AS

Farmland values – Price growth slows

According to the latest instalment of the Knight Frank Farmland Index, the average value of bare agricultural land in England and Wales rose during the second quarter of the year at the slowest rate since March 2021. Prices increased by just over 1% to £8,845/acre. Annual growth at 8% also slipped into single figures for the first time since the final three months of 2021.

Farmland, however, has outperformed the FTSE 100 equities index, gold, prime central London houses and mainstream house prices over three and 12-month periods. Over five years, only gold has seen stronger capital appreciation.

For more data and insight, please read the full report AS