UK rural property: Having a local impact
The Knight Frank Rural Property and Business Update – Our weekly dose of news, views and insight from the world of farming, food and landownership
12 minutes to read
As a customer of one myself, I’ve always thought that local independent butchers have been undervalued. So, it was nice to read the results of a craft butchers survey (see story below) confirming the local sourcing, carbon footprint reductions and social engagement that they conduct. And it should not be forgotten that independent butchers provide additional competition in the meat and livestock markets that can help local livestock producers get better prices. But any rural business like the butcher I use, can also provide employment for local people in many instances and be destination shops for farms and estates to bring in useful income. They can be a vital service in many remote areas not close to significant urban communities. Overall, helping the local economy and reducing the impact on the environment. So next time you buy something, think whether that purchase will have as big a positive impact as buying locally MT
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 – Sterling continues pressure on wheat exports
• Craft butchers – Survey highlights benefit to the planet
• Retained EU Law Bill – Finally gets Royal Assent
• Renewable energy – Projects pipeline blockage revealed
• Nature recovery – New initiative to unlock private funds
• Dairy – Government promises new code
• Welsh farming scheme – Government sticks to tree cover plan
• FBTs – Tenancies getting longer
• Pollution – Offenders face unlimited penalties
• Land values – Price growth slows
• Nutrient neutrality – Judgement could affect assessments
• Campsites – Temporary sites period extended
• International news – EU Green Deal scrapes through
• The Rothbury Estate – Biggest opportunity in decades
• The Rural Report – 23/24 edition is out now
• House prices – Country homes take a dip
Sterling continues pressure on wheat exports
Sterling’s now 15-month high against the US dollar and potential further Bank of England interest rate rises, are still weighing on wheat export competitiveness. Why is this important? Well, the higher-than-average crop carryover and slow domestic demand, means the UK is struggling to absorb stocks along with a potential large crop this harvest which will keep a lid on prices.
Also on the immediate horizon is a possibility that the Black Sea Grain Initiative could be extended if Putin accepts a UN deal to allow Russia access to SWIFT (international payment system) again.
The AHDB’s latest crop condition report says that 76% of the GB winter wheat crop is looking “good” or “excellent”, up slightly on last year. Winter barley also seems marginally better than last year. However, spring crop conditions are more varied, having been affected by dry conditions earlier in the year MT
Craft butchers – Survey highlights benefit to the planet
The majority of National Craft Butchers (NCB) estimate that their average food miles is just under 25 miles with 87.5% saying that they prioritise local produce. According to their interesting annual Big British Butchers Survey, this percentage has grown marginally from 86.5% in 2021.
Many survey respondents also have reducing their carbon footprints at front of mind. There were 80% who reported taking decisive action to reduce their carbon footprint over the past two years, with 70% moving to recycled or compostable packaging, 55% improving their waste management practices and 30% investing in electric vehicles or renewable energy, according to the NCB survey.
“The survey also found community support and involvement alive and well among the nation’s independent butchers, as 84% of respondents claimed to be actively supporting their local community. Among the most commonly reported initiatives, 74% supported local charities, 48% sponsored a local sports team and 30% worked with a local food bank or provided replacement school meals.” says the NCB MT
Retained EU Law Bill – Finally gets Royal Assent
It has been a long time coming and after much debate the Retained EU Law Bill (REUL) has received its Royal Ascent and is now an act of parliament. The Bill sought to incorporate EU laws into the UK legal system after Brexit. Controversy around the Bill centred around the perceived lack of safeguards to prevent policy regression in several areas, such as environmental standards, as well as the sweeping powers handed to ministers allowing them to repeal EU laws. It’s reported that around 4,800 laws have been retained but 600 will still be removed with ministers having the power to revoke more before the end of 2026. A proposal to include an environmental non-regression clause was not voted through MT
Renewable energy – Projects pipeline blockage revealed
Around 1,300 wind, solar, hydrogen, waste and other clean energy projects are stuck in the pipeline according to the latest analysis by the Local Government Association (LGA). I have previously reported on the problems with connection issues to the National Grid and this study cites that as being the major barrier. Just 164 projects are under construction. This is despite the number of clean energy schemes winning planning permission from councils doubling almost every year since 2018. There is at least a 10-year wait for 20% of planned generation capacity to be hooked up to the grid with another 40% having to wait until at least 2030 MT
Nature recovery – New initiative to unlock private funds
The Green Finance Institute (GFI) has launched a new market infrastructure initiative to enable the flow of private sector capital into nature recovery and nature-based solutions. It brings together some of the UK's major financial institutions with a collective vision to leave a thriving natural legacy for future generations. The GFI Hive UK Financial Institutions for Nature Group aims to explore avenues for the finance sector to contribute to nature-related goals. This includes reserving 30% of habitats for conservation within this decade and ensuring a better state for nature overall. The group will develop a national database to track private investments in nature projects, with the ultimate target of reaching £1 billion in funding. Furthermore, member firms are committed to amplifying their own efforts in habitat restoration, conservation, and creation.
One of the key aims of the group is to advocate for a robust green finance taxonomy in the UK. This taxonomy will serve as a framework to guide investors towards nature-based asset classes, fostering increased investment in emerging sectors that prioritise the environment. Although the release of the UK taxonomy was initially slated for earlier this year, its launch is now expected this autumn or winter. While the primary focus of the taxonomy will be on energy-related sectors, there is a growing movement to include comprehensive guidance on investments relating to natural resources and nature-based climate solutions MT
Dairy – Government promises new code
There have long been difficulties between dairy producers and processors when it has come to contracts. But the government has announced that it will table legislation later in the year to set up a statutory code of conduct for contracts between dairy farmers and buyers. The code, which will be phased in over two years, will let farmers challenge prices if the terms of business are not being met. There will also be clearer rules about notice periods and contractual exclusivity. An enforcement mechanism will be created via a dairy ombudsman who would have the power to impose penalties for breaches of the code. Farm minister Mark Spencer said that “he was convinced the new rules would lead to greater price certainty and stability for producers.” In contrast there has been comments that market forces are going to be much greater than what a code could possibly control MT
Welsh farming scheme – Government sticks to tree cover plan
Under the proposed Sustainable Farming Scheme (SFS), the Welsh government has confirmed its position that every farm in Wales would require to have at least 10% tree cover. Although it has clarified that “changes are being explored so the planting action is not 10% of the entire holding, but 10% of the remaining area once unsuitable areas have been identified,” farming unions are dismayed at the proposal and believe it will be a barrier for many farms and estates to get involved in the SFS.
The challenge the Welsh government has is that it has an ambitious target to plant 86 million trees by 2030 to reach its climate goals. The last consultation is due to be published later this year, with the final scheme announced in 2024 to start in 2025 MT
FBTs – Tenancies getting longer
The overall average length of FBT has grown according to the latest Central Association of Agricultural Valuers (CAAV) report. In 2022 the average length was 3.66 years compared with 3.03 years in 2021. When grass lets are excluded the average length of a FBT was 5.46 years in 2022 compared with 4.67 years in 2021 MT
Need to know
Pollution – Offenders face unlimited penalties
Defra has announced new laws ditching the cap on civil penalties and covering a much wider range of environmental offences. The move will lift the current cap of £250,000 that the Environment Agency and Natural England can impose directly on operators. This should mean that the regulators have a quicker method than the typically lengthy and costly criminal prosecution route. The most serious cases will still be subject to criminal proceedings. The widening of the scope of the new laws will include breaches of storm overflow permits and the reckless disposal of hazardous waste MT
Land 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
Nutrient neutrality – Judgement could affect assessments
A recent court case could mean that there’s a significant increase in the number of developments affected by nutrient neutrality issues in England. The case was concerning potential adverse effects on the Somerset Levels and Moors Ramsar Site from the claimant’s proposed housing-led development on land near Wellington. The judgement has said that nutrient neutrality requirements can be imposed on a reserved matters or condition discharge application even though the original permission pre-dates the Natural England (NE) guidance.
The Habitats Directive and Habitats Regulations 2017 mandate that an appropriate assessment be undertaken before a project is consented. That applies irrespective of the stage the process has reached according to UK planning law. If an appropriate assessment is required, then it can be carried out at any stage at which a decision is made - be that grant of planning permission, reserved matters or condition discharge. If an assessment is carried out at condition discharge stage, then it is not limited to matters related to the condition in question. The assessment still relates to the project as a whole.
So, in summary, it does not matter if the original permission you are looking at was granted before the nutrient neutrality guidance took effect - if there are any approvals left in the planning process, then a scheme can still be affected. This will impact any councils or developers who are currently affected by nutrient neutrality issues MT
Campsites – Temporary sites period extended
It is now possible for farmers in England to run temporary campsites for up to 60 days a year without planning permission. Under permitted development rights periods it was originally 28 days which was raised to 56 days during the Covid-19 pandemic in 2020. Pitchup.com estimate that this was worth an extra £25 million per year to campsite operators, local pubs, shops, restaurants and other rural businesses MT
International news – EU Green Deal scrapes through
European Union (EU) MEPs fended off a deeply polarizing right-wing effort to kill EU legislation aimed at restoring nature, but only just, reports Politico. The Green Deal is the EU’s main new growth strategy to transition the EU economy to a sustainable economic model. First presented in December 2019, the overarching objective of the Green Deal is for the EU to become the first climate neutral continent by 2050.
There are many elements to the Green Deal covering many sectors. Farming comes under the farm to fork and preserving biodiversity elements. These strategies aim to address environmental issues as well as fairness, sustainability of the food system and the health of Europeans. Focussing on reducing waste, and transforming the manufacturing, processing, retailing, packaging, and transportation of food. But they also include reducing pesticide use and expanding the percentage of land under organic farming MT
On the market
The Rothbury Estate – Biggest opportunity in decades
One of the UK’s most prestigious estates, The Rothbury Estate, is on the market. Comprising 9,486 acres, it boasts an incredible variety of landscapes that offer a huge amount of opportunity for farming, country pursuits and natural capital solutions. It is steeped in the rich heritage and history of Northumberland and the biggest ring-fenced property to come on the market for 30 years.
Rothbury has a guide price of £35 million. For more information, contact Will Matthews or Claire Whitfield and check out the film MT
Knight Frank Research
The Rural Report – 23/24 edition is out now
The Rural Report 23/24 explores the opportunities for businesses, people and this year’s theme ‘Planet’. With insight and case studies on natural capital, biodiversity net gain and environmental legislation, it’s a guide to the ever-changing rural landscape and how Knight Frank’s rural teams are supporting their clients make the most of the opportunities on offer.
Whether you are a rural business owner or a commercial business wanting to make the most of your land, read a selection of articles online and download the full report here MT
House prices – Country homes take a dip
The average value of country houses fell by 0.5% in the first quarter of the year as the cost of borrowing continued to rise, according to the latest findings from the Knight Frank Prime Country House Index. On an annual basis prices have dropped by 0.8%. Demand remains strong, but transaction numbers fell in the aftermath of Liz Truss’s mini budget last autumn. “Ultimately, despite resilient demand, we expect the reduction in spending power caused by the increase in the cost of borrowing and improved supply to see prime regional prices decline by a few percentage points in 2023,” predicts my colleague, Chris Druce AS
Photo by Iñigo De la Maza on Unsplash