The Rural Update: Planning together
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership
10 minutes to read
Viewpoint
Some might say that Labour’s proposed change to the National Planning Policy Framework, which could significantly cut the amount of compensation Greenbelt landowners would receive if their land is compulsorily purchased (see below), is just a stick to ensure enough land comes forward voluntarily. The new government has ambitiously pledged to build 1.5 million new homes in just five years, so needs to get its skates on.
Aspects of the planning system are ripe for reform, but it is important that policymakers properly understand the concept of viability for all participants in the development chain, particularly when it comes to affordable housing provision and the benchmark land values (BLVs) that are used to assess what social amenities, such as affordable housing, developers must deliver.
The fact that officials and commentators often refer to a discredited statistic that suggests gaining planning permission can increase the value of farmland by up to 93 times, but don’t consider the huge infrastructure costs that eat away much of the uplift, reveals the level of misunderstanding.
Rather than setting a 50% blanket allocation of affordable housing for Greenbelt development, levels should be informed by local-plan viability work to determine at what point affordable requirements become unviable in the context of other development costs.
There is also a risk that in time BLVs could impact the sums developers are willing to pay for land thus reducing the willingness of landowners to sell. Better to work collaboratively with those needed to deliver the required new homes, not cast them as the problem.
In this week's update:
• Oil demand slackens
• Wheat harvest uncertainty
• Planning pains
• Welsh rural broadband bolstered
• CLA and Wildlife Trust cash call
• Dutch farm eco shutdown
• Regen brain boost
• Nature impact deficit
• Biomass power credentials
• Farming fell-runner inspires
• Country houses - Dipping but outlook brighter
• Farmland - Values hold firm
• Development land - Market stays flat
• Northumberland opportunity
Commodity markets
Oil demand slackens
Global demand for oil is rising at a much slower rate than last year, according to the International Energy Agency. In 2023 consumption was ticking up by over two million barrels a day, this year it is less than one million. Chinese demand fell in June for the third month running and the country’s crude oil imports are at their lowest since the height of the Covid-19 lockdowns in 2022. Hopefully, this will feed through to lower pump prices in the UK.
Wheat harvest uncertainty
The continued dry weather means over half the UK’s wheat crop has been combined but estimates of the total harvest volume still vary widely. The USDA is predicting almost 10.9 million tonnes while analyst Strategie Grains has upped its forecast by around a million tonnes to just under 11.5million tonnes. The protein quality of breadmaking varieties is still apparently an issue, which could put pressure on feed wheat prices if wheat destined for milling has to find a new home.
Headlines
Planning pains
It’s fair to say that the consultation on proposed reforms to the National Planning Policy Framework (NPPF), which the government published at the beginning of the month as part of its bid to deliver 1.5 million new homes over the next five years, has generated a fair bit of controversy.
A number of rural campaigners have hit back at seemingly sensible proposals that would make it easier to build new homes on what has now become widely known as the Greybelt. This consists of previously developed bits of the Greenbelt, such as old petrol stations, that are far from green and deliver no social or environmental benefit.
Some have gone as far as to claim that this could encourage landowners to actively degrade their land to increase the likelihood that they would get planning consent to build houses on it. “Our members are long-term stewards of the countryside and the idea that they would purposefully damage land for a potential short-term profit is preposterous,” was the understandably angry response from the CLA.
Meanwhile, the owners of potential development land in the Greenbelt are more concerned about how much they will get paid for it if compulsory purchase powers are used in the absence of enough land coming forward voluntarily to meet local housing needs.
The former government had already passed legislation that would provide limited compensation above existing-use value for land compulsorily purchased for affordable housing, healthcare and educational purposes. However, the current reforms moot applying this principle more widely in the Greenbelt where development is for the “public good”.
They also suggest that “fair” compulsory purchase (CPO) compensation values should be lower in the Greenbelt because it is much harder to get planning permission there so land values are inherently lower.
“If the government can give certainty to landowners on which sites obtaining consent is likely then instances of CPO would hopefully be rare as landowners would be more likely to bring forward sites for development themselves,” retorts the CLA.
There has also been criticism by some farming groups of a move to remove a clause from the NPPF that puts a duty on planning authorities to consider food security when approving applications. The CLA, however, is more sanguine saying the best farmland is already protected.
Please get in touch if you need help with any residential development or planning issues
In brief
Welsh farm broadband bolstered
Seventy thousand “hard-to-reach” homes and businesses in Wales are set to benefit from a £170 million government support package that will speed up the rollout of the latest gigabit broadband technology in rural areas. Wales lags behind the rest of the UK when it comes to superfast broadband, according to data from Think Broadband. Only 74% of its landmass is covered by gigabit-capable connections, compared with 84% in England, 78% in Scotland and 95% in Northern Ireland.
CLA and Wildlife Trust cash call
The CLA is calling for the new government to splash a bit more cash on farming. It points out that the UK’s agricultural budget has been stuck at the same level since 2014. It says the farming sector in England needs £3.8 billion while Wales requires £1 billion. CLA President Victoria Vyvyan said: “Landowners can feed the nation and improve the environment – but they can't do it on a shoestring budget.” Meanwhile, Embracing Nature, a new report from the Wildlife Trust, says drought is set to be the biggest threat to the UK’s nature reserves over the coming decade and the government should be investing at least £3 billion in nature adaptation and nature-based solutions per year up to 2030.
Dutch farm eco shutdown
The EU has approved a €700 million proposal by the Dutch government to compensate small and medium-sized farmers for voluntarily shutting down their livestock enterprises in environmentally sensitive parts of the country. To be eligible under the scheme, the annual nitrogen emissions of the site must reach certain thresholds to ensure that their closure has a sufficient positive environmental impact. Although the cash will come from developers rather than the government, certain livestock businesses in nutrient-sensitive water catchment areas in England, such as Poole Harbour, can also potentially get paid to get rid of their animals under nutrient-offsetting schemes. Contact Jamie Evans-Freke to find out more.
Regen brain boost
The health benefits of adopting regenerative farming techniques could extend even further than previously thought, according to new research. Although it’s widely agreed that there is a link between soil quality and the nutritional value of food, there has been less of a focus on mental wellbeing. Now scientists reckon that regen farming also promotes Mycobacterium vaccae, a soil bacteria that apparently increases the human brain’s natural production of serotonin, which can alleviate serious mental and physical suffering. Given the cost of the UK’s mental health crisis, this should be of interest to policymakers.
Nature impact deficit
Only 5% of all companies have carried out an assessment of the impact of their operations on nature and less than 1% have assessed their dependencies on it, according to The World Benchmarking Alliance’s updated nature benchmark report. Although somewhat depressing from an engagement perspective, the findings do reinforce the view held by some that the market for nature credits is set to become much more exciting and lucrative if reporting and offsetting any detrimental impact on nature becomes mandatory.
Biomass power credentials
A supposedly green power station has topped the list of the UK’s top 10 biggest carbon emitters including traditional coal-fired stations. Drax, which burns wood pellets imported from North America, emitted 11.5 million tonnes of carbon dioxide in 2023, according to a new report from analyst Ember. The findings reignite the row about how environmentally friendly burning biomass really is and question the assumption that any emissions are offset by forest regrowth.
Knowledge Exchange
Farming fell-runner inspires
Without wishing to sound too macabre some of the best journalism around can be found in The Economist magazine’s weekly obituary section. The eulogy in the latest edition is no exception. It celebrates the life of Lake District sheep farmer and noted fell-runner Joss Naylor who died earlier in the summer aged 88. For those who wonder why farmers persevere when profits are scarce, the article provides some poignant answers and is well worth a read.
Research
Country houses - Dipping but outlook brighter
The average value of country houses nudged down by a further 0.6% in the second quarter of the year taking the 12-month fall to 3%, according to the latest results from the Knight Frank Prime Country House Index. Homes priced between £1 million and £2 million recorded the biggest annual fall of almost 4%, while those worth between £4 million and £5 million dipped by just 0.4% - potential buyers at this level are less dependent on mortgage funding, points out Head of UK Residential Research Tom Bill. He predicts a total average price slide of 2% this year, with values bouncing back by 3% in 2025 as interest rate cuts boost market confidence.
Farmland - Values hold firm
The farmland market in England and Wales shrugged off the potential impact of the recent general election to register another quarterly price increase, according to the latest results from the Knight Frank Farmland Index. Average values nudged up by almost 1% in the second quarter of the year to hit £9,335/acre. For more insight and data please download the full report.
Development land - Market stays flat
The value of greenfield development sites remained static in the second quarter of the year, according to the latest results of the Knight Frank Residential Development Land Index. Over the past 12 months, the index is down 2%. According to Anna Ward, who compiles the index, developers have welcomed Labour’s commitment to reinstate local housing targets and recruit more planning officers. But with interest rates failing to shift and build costs increasing, homebuilders still face significant headwinds, she adds. Download the full report for more insight and data.
Property of the week
Northumberland opportunity
It’s back to the north of England this week for another look at a fantastic 2,010-acre Northumberland farming, sporting and environmental opportunity at Eglingham, near Alnwick, being offered in two lots. West Ditchburn Farm is a productive livestock unit that comes with a Grade II listed farmhouse in need of modernisation, modern farm building and 1,094 acres of grass and woodland. The guide price is £9.5 million. Hagdon Farm, by contrast, offers a wilder experience. It includes a farmhouse surrounded by 815 acres of scenic moorland and 100 acres of grazing. The price is £2.5 million. Please contact Claire Whitfield for more information.