UK rural property: Land taxes

Opinion

The idea of a tax on land is nothing new and has been proposed by many economists over the years. But despite being a party manifesto pledge for much of the 20th Century, even the Labour party leadership doesn’t seem to give it too much public credence these days. So it was intriguing, as discussed below, to see a Sunday Times columnist, who once stood as a Labour candidate for parliament, urging Kier Starmer to consider it if he wins power. Given one of the main aims of such a tax would be to replace income tax, it would probably need to be levied on as much land as possible, including farmland. While campaigners like to draw attention to the significant acreages of this island long-owned by wealthy families, they overlook the very large number of family farms that underpin the UK’s farming industry. What would a land tax mean to them and the sector as a whole? My guess is we’ll never find out, but if Labour does win a landslide as some are now predicting, calls for a land tax will likely grow louder.

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Andrew Shirley Head of Rural Research  

In this week's update: 

• Commodities – Ukraine bears up
• Permitted developments – New rules coming
• Bovine TB – Consultation deadline extended
• Wales – Grant scheme window
• Land tax – Labour urged to reconsider
• The River Summit – Knight Frank speaking
• Out and about – The Last Keeper premiere
• New launch – Cotswold stunner 
• On the market – Exmoor opportunity 
• Farmland values – Prices rise in first quarter 
• Farmland – 2024 off to a good start
• Country houses – More good news
• Development land – Market stabilises

Commodity markets

Ukraine bears up
Ukrainian grain exports continue apace despite a growing number of attacks on the country’s Black Sea ports like Odesa. According to trader Frontier 40.7 million tonnes have been shipped so far this year, just below the 41.4 million tonnes exported by the same point in 2023. Last month alone almost 6 million tonnes of grain were dispatched. The potential threat to this trade if Russia ratchets up it attacks on Ukraine’s ports, combined with uncertain weather conditions around the world, mean grain markets remain in a fairly volatile state. 

Need to Know

Permitted developments – New rules coming
New rules concerning Permitted Development Rights (PDR), which enable the conversion of agricultural buildings to residential use, will come into force in England on May 21st. Lewis Godsmark of our Planning team, highlights the changes and implications for property owners.

“These impending changes to Class Q PDR represent a switch in direction for the now well-used and expedited route by which many landowners have secured planning permission for the residential conversion of barns and other agricultural outbuildings since 2014. Key beneficial changes, among others, include: A doubling in the maximum number of dwellings that can be created per agricultural unit from five to ten; an increase in potential converted floor area to 1,000 square metres; and new provisions permitting the limited rearward extension of converted buildings.”

Lewis adds: “It is critical that any landowner intending to pursue Class Q PDR is aware of these changes and consults their advisors as to the updated prospects for the conversion of their agricultural land and buildings. Some changes due to come into force, such as those limiting the size of any dwelling created to 150 square metres, may impact the delivery of proposals currently undergoing architectural design or finalised proposals due to be submitted to the Local Authority for consideration.

If a proposal is non-compliant under the new regulations, a window of time remains to submit applications under the current regulations until May 21st 2024.”

Bovine TB – Consultation deadline extended
Anybody looking to contribute to Defra’s bovine TB consultation on its proposals “to introduce what is termed a targeted badger intervention policy, through an approach that builds on the adaptive strategy taken in response to outbreaks in the Low-Risk Area of England, as well as the success of farmer-led and centrally co-ordinated intensive culling, has until May 13th to share their thoughts.

Wales – Grant scheme window 
Farmers in Wales will soon be able to apply for three grants to help improve the environment. Applications for the Small Grants Woodland Creation, Environment (Carbon) and Yard Covering Scheme (to help prevent rain water entering slurry stores) modules open on May 20th and close on June 28th. For more information on grants please contact Henry Clemons.

Talking points

Land tax – Labour urged to reconsider
It was interesting to read an opinion piece in this week’s Sunday Times urging Labour leader Kier Starmer to consider introducing a land tax if he wins power at the forthcoming general election. Such a tax would be based on the rental value of land and could replace income and corporation taxes, according to columnist Matthew Syed. Removing taxes on work would encourage people to be more productive and entrepreneurial, potentially boosting UK growth by 15%, he argues. Taxing land values would also “end the Ponzi scheme at the heart of the British economy whereby low productivity is mitigated by mass immigration and quantitative easing. Thereby inflating the value of land, leading to more aggressive rent seeking and conferring ever larger gains on the 25,000 people who own half the land in England.” Although a land tax is not official Labour policy (it has also ruled out a wealth tax) it is still a popular idea among much of the party’s membership.

The River Summit – Knight Frank speaking
Henry Clemons of our Agri-consultancy team will be sharing his insight on grant funding opportunities and the Sustainable Farming Incentive at The River Summit later this month, which this year is being held on the River Wandle, south London’s very own chalk stream. The event is a celebration of fishing and the country’s rivers, but also plays an important role bringing together key stakeholders to lobby for change and discuss the very real challenges facing some of our most beloved waterways, which are at dire risk from sewage outflows and other forms of pollution. Find out more and book your ticket here. 

Out and about

Film premiere - The Last Keeper
My colleague Katharine Beswick from our Bristol Rural Consultancy team reports back on the UK premiere of The Last Keeper by US filmmaker Top Opre. Although supported by the GWCT, the production independently examines all sides of the often-heated debate around land use in Scotland. Katharine explains: “It was a very thought-provoking film that captured perfectly the current situation around the land-use argument in Scotland that can easily be paralleled in both England and Wales. It is so important the right balance is struck between how land has been managed historically and how land is managed going forward. With a greater focus by society today on carbon markets and rewilding, the film showed the important role historic estates and gamekeepers play in not only managing the landscapes and nature for the future, but also the vital role they occupy in the local community in keeping local communities together and thriving.”

Property News

New launch – Cotswold stunner 

Manor Farm at Syde, near Cheltenham, is the latest spring release from Alice Keith of our Farms & Estates team. The 331-acre property includes an attractive, but unlisted, six-bed Victorian house with glorious views over the land, a pair of traditional cottages and a range of stone barns with development potential. The farm is guided at £7.5m for the whole and is also available in eight lots. 

On the market – Exmoor opportunity 
Our Farms & Estates team now has two new amazing Exmoor options on offer for view-loving buyers to choose between. The latest offering is the 2,075-acre Lanacre Estate near Withypool, which includes a traditional farmhouse and four other dwellings. The estate has been split into two lots with the houses, farm buildings and 198 acres of pasture and woodland priced at £3.5 million. Almost 1,900 acres of rough grazing and moorland on Withypool Common are available for £1 million. Contact Alice Keith for more information.

Our Latest Property Research

Farmland values – Prices rise in first quarter

The average value of bare agricultural land in England and Wales rose by 1% in the first quarter of 2024, according to the latest results from the Knight Frank Farmland Index. The rise takes annual growth to 6%, outperforming other asset classes like equities and residential property. There is still an imbalance between supply and demand, but competing pressures, including the uncertainty of a general election, will probably keep values in a fairly narrow range for the remainder of 2024. Download the full report for more data and insight.

Country houses – More good news

The latest figures from our prime Country House Index, compiled by my fellow researcher Kate Everett-Allen, show that values have started to rise again for the first time in almost two years. Prices increased 0.3% in the first quarter of the year, the last time the index registered positive quarterly growth was in June 2022. Year-on-year, however, values are still down 5%, but they are almost 12% higher than at the beginning of the Covid-19 pandemic in March 2020. Read Kate’s full report for more numbers and insight.

Development land – Market stabilises

Newly released figures from the Knight Frank Residential Land Index show that England greenfield and urban brownfield values were flat in Q4 2023 compared with the previous quarter. Previously, urban brownfield values had fallen by 20% since the most recent peak of the market in the first quarter of 2022 up to Q3 last year, with greenfield down 17% during the same period. Greater economic confidence and a slowdown in the rise of build costs helped underpin values, says my colleague Anna Ward. Read her full report for more numbers and insight.