Land and Property Round Up – 201820th December 2018
Craig Brough, Associate Director and Chartered Surveyor at H&H Land and Property
The demand for all types of rural property, with the exception of development sites which have always been more difficult to sell, has been very strong, and this has led to a continuation of new instructions for bare land, and small holdings during the usually quieter autumn months.
Uncertainty in the market has led to a reluctance in people bringing larger farms to the market for sale. Where we are seeing a buoyancy in the market is for bolt-on units, i.e. land to increase acreages, and from farmers prepared to relocate for better value-for-money units. And looking ahead we are anticipating an increased demand for farms from Ireland along with an increased supply of smaller stock units.
During 2018 we have seen continued demand for let properties under various different terms of Farm Business tenancies, which have been sought after both locally and regionally. The letting of Pond House and Slealand Farm on FBT’s this summer were good examples, in that we received significant numbers of strong tenders for both properties. 2019 will see more let properties coming to the market and we are already working on a 100-acre farm north of Carlisle to launch early in the year.
One of the developing, trends we have seen this year is existing businesses offering high rents to secure additional land and property to expand their enterprises. Of course, there continues to be a strong demand from new entrants and younger farmers looking to get their feet onto the first rung of the farming ladder. For these young people, it is a challenge, because without outside employment from their farm they can struggle to match the higher rents offered by established businesses. It takes a principled and slightly benevolent landlord to take a risk, although, I am pleased to say that some will.
On the financial front, there is still a willingness from the major lenders to support business proposals that make financial sense. There has also been a tendency for some of the high street lenders to be more selective about the businesses they will support.
Key to giving yourself the best chance of securing funding, is to have up-to-date accounts and for any fundamental changes to the business, expansion, having some forecasts or budgets certainly helps supports your application and gives a lender a better understanding of the proposals.
As regards interest rates, it is still a competitive market so it is worth shopping around. Although we are still seeing offers from some banks that purport to be guaranteeing rates for the life of the loan, when one looks at the detail they are for a shorter period, with a review mid-term and renegotiation. So, my advice is to carefully consider and check the small print of any offers that are made. I am pleased to say that across our offices we have had a good year with AMC and have organised over 40 loan offers for clients.
As a direct result of the continued keenness of lenders to support agriculture we have seen a growth in demand for valuation work for various purposes, including borrowing. Being regulated by the RICS across the H&H Land and Property businesses, we have 12 Registered Valuers all of whom are qualified and experienced in providing quality valuation advice. Between us all during the last twelve months we have completed over 200 RICS regulated valuations.
We are however, seeing changes in valuation requirements, with complexities in many instances, such as when the valuation is required for taxation or lending purposes. This often means that we are requested to provide more specific guidance for clients and their other professional advisors, such as their accountants and solicitors. This liaison is becoming increasingly important and selecting the right valuer rather than the cheapest quote can save money in the long run.
Looking forward, Brexit has the obvious potential impact on all these areas, and the full consequences remain to be seen.
We know BPS will be phased out over the coming years and there will be new environmental schemes. Detail of the trade deals is key to financial performance in many businesses, and we wait with anticipation to see how that develops, and then impacts on profitability and thus rents; the appetite for lending and the demand from agricultural businesses to borrow; and the need for businesses to seek valuation advice.
Uncertainty is, as with all sectors of industry, the one thing that no one wants, and which then effects business activity. Certainty as to the trading environment is key over the coming year as well as how the Government’s environmental policy and the concept of “payments for public goods” develops to offset the potentially negative effects of reduced BPS payments.
Clearly business efficiency will also be a key area that many will need to focus on.
How all these unknowns come together will produce a plethora of different answers for different businesses but being resilient is something that the UK agriculture sector has, and will continue to be, and there will be those who will take the opportunities that will inevitably come.
In terms of the areas of investment we would expect to see an increase in the number of dairy start-ups and diversifications into egg units, along with the increasing environmental scheme submissions.
H&H Land and Property are one of the largest firms of independent rural property advisors in the North of the UK. With offices in Durham, Carlisle, Kendal, St Boswells and Thornhill, H&H Land and Property offer a vast range of professional advice and services including Farm Business Advice, Land Management and Development and Land Agency.
H&H Land and Property, Durham – 0191 370 8530
H&H Land and Property, Carlisle – 01228 406260
H&H Land and Property, Thornhill – 01848 260395
H&H Land and Property, Newtown St Boswells – 01835 344860
H&H Land and Property, Kendal – 01539 721375