Tying the knot with a wedding venue… what to know when the estate you are buying includes a wedding venue
13 February 2025
News
There was a time when the only commercial component of buying a country estate would have been farming. But as estates have sought to build financial stability through diversification, the spectrum of business activities that come with them has grown. Due to the picturesque, romantic nature of stately homes, a rising number are converting their historic houses into wedding venues.
So, what do you need to know when your dream stately home includes a wedding venue?
Extent of property used for the wedding business
First, you will need to know how much of the property is used for the wedding business. Weddings inevitably mean opening the gates of your estate to tens, if not hundreds of strangers. You will want to be sure that your personal area is sufficiently separated from the areas open to guests to offer you the privacy you would expect of a home.
Planning permission
A crucial matter your solicitor will need to confirm is that the property has the necessary planning consents to be used as a commercial event space. Given the age of the property in question, the permitted use for the estate will likely have been established through long use as residential and agricultural.
When the decision was made to run a venue from the property, the sellers ought to have obtained planning permission to change its use. You will want to know that the planning permission for the change of use was granted and that it covers the full extent of the property used to host the weddings.
Licences and risk assessments
Weddings (often) mean providing alcohol and live music or entertainment. As such, there needs to be a premises licence in place for the provision of these services. If the wedding venue offers ceremonies as well as receptions, it will also need to hold an approved premises wedding licence. You will also want confirmation that the obligations of said licences have been complied with.
Existing bookings and contracts
If the sellers are already running a thriving wedding business, they likely already have future bookings in place. You will need to know what bookings are already in place for any dates following completion and the terms of said bookings. The same goes for any suppliers the sellers have relationships with.
Structure of the acquisition
Much will depend on the structure of the purchase; are you buying the business as whole or just the assets of the business? This will determine how you address the question of employees, existing bookings and contracts with third party suppliers.
Neighbourly disputes
Be wary of the disgruntled neighbour. Weddings mean unusual levels of people and noise in the otherwise peaceful countryside. There is a risk this could lead to noise complaints and disputes with neighbours, which could complicate the running of the wedding business. Be sure to enquire into whether there is a history of such issues at the property.
In short, purchasing an estate with a wedding venue business attached to it offers a valuable opportunity. However, it will require a solicitor who understands the complicated nature of the transaction and can establish that it has everything you need before you say ‘I do’ to your new home.
Forsters advises Frank Butler Farms on the development of Barnsgrove
5 February 2025
News
Forsters’ Rural Land and Business team has been crucial to the development of Barnsgrove, a new private membership club near Greywell, Hampshire. Owned by James and Jo Butler of Frank Butler Farms, Barnsgrove spans 20,000 sq.ft. and offers a clubhouse, café, bar, fitness studio, gym, private offices, and wellness rooms. This project aims to provide locals with a space to work, exercise, relax, and socialise.
Forsters supported the Butler’s to transform their farm’s future amid economic challenges.
Jo Butler commented, “our journey to get to where we are today has not been an easy one, especially when it came to planning – S278 and S106. Forsters have been such a support to the business throughout that process. Barnsgrove is not a standalone business project at Frank Butler Farms. Like any other farm in the current economic climate, we’ve had to constantly look at alternative sources of income and safeguard the farm for future generations by utilising the land we’re custodians of. Alongside Barnsgrove, Forsters have also helped us with legal support for a solar farm project; with new commercial property lets; refinancing; and in securing sales on development areas we’ve managed to recoup as a result of coming out of dairy”.
Victoria Salter-Galbraith commented, “Forsters has a long-term relationship with Frank Butler Farms and I have been fortunate to act for Jo and James for most of my career. Jo and James are both so driven and forward-thinking so it’s always exciting to be involved with the next step in their plan for the farm which has been in James’ family for several generations. Having spent some time working at Barnsgrove, I can attest to what a wonderful space they have created right in the heart of the North Hampshire countryside.”
Forsters’ advice has been pivotal in realising Barnsgrove, ensuring it stands as a testament to community-focused development.
Ploughing through taxes: what do the IHT changes really mean for farmers?
28 November 2024
News
The latest Government budget, as has been well publicised, has caused outcry amongst the farming community with somewhere between 20,000 – 40,000 braving snow to make their voice heard. But what do the inheritance tax (IHT) changes really mean for farmers?
Agricultural and Business Property Reliefs
Most of the discussion has centred around the Agricultural Property and Business Property Reliefs being capped at £1m, with IHT payable at 20% thereafter. The Government say that only 500 estates or so will be affected each year. Is this true? Let’s look at some recent government figures.
The below graph is from the Government’s “Farm Business Income in England, 2023/24 forecast“. Farm Business Income (“FBI”) is the total output generated by the farm business minus total farm costs. There is some discussion as to what an “average farm” is but the Government suggests that the English average is about 210 acres. It is not immediately obvious how they defined “farm”. For example, is this the area owned by one entity or is it the area farmed by one business? To highlight a different view of “average”, Tom Heathcote, former head of agri-consultancy at Knight Frank and founder of Heathcote Farm Consultancy, said that “an average UK farm to include around 800 acres (600 arable, 150 grass, 50 woodland), one house, two cottages, and a mixture of modern and traditional buildings” (Farmers Weekly).
Calculating your potential IHT bill
If we proceed assuming that the “government average” is correct combined with the average price of arable land (£11,000 per acre or so currently), you reach a pure land value (excluding buildings, machinery or any farm houses) of £2,310,000 for an “average” arable farm. Assuming there is a farm house, agricultural buildings, expensive machinery (bearing in mind second hand combine harvesters that are one or two years old can cost £300,000 or more) some woodland and possibly farmworker cottages, this could value of the overall business could easily reach £3,000,000 (if not more).
The impact on farms
If we however assume a relatively conservative value of £3,000,000, this means that an “average” arable farm based on government numbers could be looking at an IHT bill now of up to £400,000 (assuming they are paying 20% on the value above £1,000,000). If we assume that it is owned by a married couple, it includes their main home, they make full use of their gifts to each other and some land up to the £1,000,000 cap is transferred to the next generation on the death of the first, this could reduce the bill to nothing (with the £1,000,000 APR allowance having been used twice and the full £1,000,000 nil-rate band having been used). That, however, relies on multiple moving parts, the above assumptions and planning structures that are not appropriate or even possible for many farms.
An average general cropping farm (according to the Government forecasts) such as this would have made £53,000 in 2023/2024, a cereals farm even less at £34,000. This will also be subject to income and other taxes. Bearing in mind subsidies are disappearing, how volatile farming can be and just how expensive machinery is, how is the “average” farm going to find the money to pay their IHT bills?
While larger estates, particularly those in trust where the tax bill will be 3% every 10 years on the value above £1,000,000, may be able to absorb the cost, it is still going to have a large impact on farming. I have already been involved in discussions where trust owned estates are planning to move away from agricultural land holdings because they no longer make sense against higher-yielding assets in order to meet their tax liabilities. This will ultimately mean farmland will be sold and it will lead to reduced investment into our agricultural sector. Neither of these are necessarily good for food security or the tenant farming sector.
Succession planning
The figures will be much more nuanced than this article suggests, but this will clearly impact many farms. Farm owners will need to ensure that they have considered their succession planning in detail, and not just from a financial perspective. For example, the farm will likely need to provide for the person gifting in their retirement, so gift with reservation of benefit rules need to be carefully considered. It is also a big decision to give away part of your business during your lifetime when you still rely on it and potentially farm on it.
It is more important than it has been for decades to take advice on farm succession planning.
Land Registration Gap – Stalled titles: Tackling the Land Registry Delays
26 November 2024
News
The land registration gap in the UK is a significant issue, being the period between the date of completion of a purchase and the date on which the purchaser is registered as proprietor of the relevant title at HM Land Registry. The “gap” has been exacerbated by delays in processing applications as, although the Land Registry aims to provide an efficient service, many applicants experience extended waiting times, which can hinder property transactions and affect land ownership clarity.
Recent reports state that the average processing time for straightforward applications has stretched to several weeks and complex cases can linger for months, with registering a transfer of part estimated to take up to 20 months. These delays are often attributed to a combination of increased demand, staffing shortages, and the growing complexity of applications due to changes in property law and ownership structures. As a result, a backlog has developed, leaving many property owners in limbo regarding their land rights. However, the assurance of the Land Registry is that legal ownership rights are secured from the moment the application is received, not at the point at which it is processed and completed. The Land Registry states it protects the transaction it is registering from the day it is received by it.
Notwithstanding the Land Registry’s position, this registration gap poses various risks. Unregistered land can lead to disputes over ownership, complicate sales or mortgages, and create uncertainty for developers. Furthermore, delays can result in financial losses for individuals and businesses that depend on timely transactions for investment and development. The long delays at the land registry exacerbate issues as parties may not have access to accurate or up-to-date information, which can cause uncertainty when serving break notices and notices under the Landlord and Tenant Act 1954, which must be served by or upon the legal owner. However, should the delay in the registration cause legal, financial, or personal problems not related to a land transaction or put a property transaction at risk, there is the option to apply to the Land Registry for the application to be expediated. The Land Registry are aiming to process expedited applications within 10 working days.
To address these challenges, the Land Registry has been implementing measures to improve efficiency, including digital transformation initiatives and enhanced staff training. However, the urgency to close the registration gap remains. Streamlining the application process and reducing wait times is essential for ensuring clearer property rights, fostering confidence in the real estate market, and supporting economic growth in the UK. As these efforts continue, closing the registration gap will be crucial for the stability and transparency of land ownership in the country.
It is not uncommon to find that rural properties are served by private drainage systems, however, it can be uncommon for property owners to be aware that they must ensure that their system complies with current regulations, known as the General Binding Rules. If a system is not compliant, it can affect or delay the sale of a property. The most recent update to these rules was in October 2023.
There are different types of private drainage systems, but we find that there are two main types:
Septic tanks
Sewage treatment plants
The regulations apply to all systems, but septic tanks and sewage treatment plants are especially affected as they can involve discharging sewage or water into natural water courses or the environment in general.
Septic tanks:
A septic tank is used for the partial treatment of wastewater from properties that are not connected to a mains sewage system. It works by collecting wastewater from toilets and drains, and retains solids within the tank, while draining the water to (usually) a drainage field, if it is compliant with regulations. The tank itself is then emptied when necessary.
In the past, septic tanks have been known to drain into water courses which is what the regulations now protect against, as this was causing polluted water. Property owners were required to upgrade their systems before 2020 to ensure that they did not drain to a water course. It is surprising how many systems are still not complaint with the current regulations.
Any upgrade or replacement system has to comply with the regulations as well as the current British Standards. It also needs to be large enough for your purpose, which is based on the daily volume of waste discharged. A permit is required from the Environment Agency where a system discharges more than two cubic metres of wastewater per day. It is not unusual for property owners to not have the required permit, which can also cause delays when selling a property.
Since October 2023, it is not permitted to discharge using the same outlet as another property if the combined discharge is more than 2 cubic metres per day; and it is not permitted to have a system which is within 50 metres of another drainage system. This can cause issues if neighbours each have septic tanks.
Property owners upgrading their systems need to ensure that they have the relevant planning permission and building regulations approval to do so.
Sewage treatment plants:
Unlike septic tanks, sewage treatment plants are permitted to discharge into water courses. This is because they include a secondary treatment for waste, making it clean enough to discharge into the water, as well as to a drainage field.
A sewage treatment plant is subject to all of the same regulations as septic tanks (except for the above difference), must comply with the British Standards and have the relevant planning permission and building regulations approval.
Summary
In property transactions, it is always advisable for a buyer to carry out a specific survey to establish whether the drainage system is compliant with current regulations. If it is not, then it is generally a seller’s responsibility to ensure that this is rectified before completion of a sale. In practice, this can be, and is more often than not, dealt with by way of reduction to the sale price of a property, with the buyer confirming they will upgrade the system following purchase. Costs to upgrade a system differ from property to property, but it is said that upgrading a system can cost in the region of £20,000 (and it is not unusual for a sale price to be reduced by that amount), and so it is important for a seller to ensure that their system complies with current regulations before they agree a sale.
Diversification opportunities for farmers following recent planning changes
30 May 2024
News
There has been some good news for owners of farms and estates with the government confirming a series of reforms to permitted development rights under Classes Q and R of the GPDO 2015 which will make diversification and growth on farms and estates easier.
Class Q covers the change of use from agricultural buildings to dwellinghouses, and Class R covers the change of use from agricultural buildings to various commercial buildings. The new reforms introduce the following changes:
An increase from five to ten on the maximum number of residential dwellings which can be created from a barn conversation;
An increase from 865m2 to 1,000m2 on the total permissible floorspace for residential dwellings created from barns, with a limit of 150m2 per individual unit;
The ability to construct small single storey extensions to barns (subject to certain size constraints);
An extension of the permitted uses to which agricultural buildings can be converted under Class R. The new permitted uses include outdoor sport and recreation facilities, larger farm shops, and farm training centres; and
An increase from 500m2 to 1,000m2 on the limit to the total internal floorspace of buildings that can be converted under Class R.
As of 21 May 2024, all of these changes have now taken effect. However, it is worth noting that the changes will not apply to ‘Article 2(3) land’ such as National Parks, World Heritage Sites, the Broads, Areas of Outstanding Natural Beauty, or conservation areas. In addition, the changes are subject to a number of more specific parameters, limiting their scope in places.
The changes have come as a result of the Department for Levelling Up, Housing and Communities’ consultation on introducing additional flexibility to the agricultural sector, published last year. The intention behind the changes is to encourage greater housebuilding and commercial development on farms, areas which have typically lagged in light of stringent planning requirements. It will also help create new sources of income, diverse business opportunities and increase the value of property. It remains to be seen whether the major parties will commit to any further changes to permitted development rights going into the upcoming General Election, but the recently published DLUHC consultation on changes to permitted development rights certainly indicates that this could be the case.
Private drainage systems on third party land – all the information you need at your disposal…
28 May 2024
News
Buying a property with a private drainage system, such as a septic tank, comes with an array of factors to consider. However, those factors are amplified when the system is located on land that is not part of your property.
The first and most pressing concern is to understand how a system on third party land works (for example, who uses it, rights to use it, access for maintenance, splitting maintenance costs).
You also need to consider whether the drainage system complies with the General Binding Rules.
How the drainage system works
Where a drainage system is located on third party land it may either be used exclusively by your property, or sometimes is shared with neighbouring parties.
Where the drainage system is located on neighbouring land you should ask the question:
‘Does the title to the property have a sufficient legal easement for use of, and access to, the drainage system (for repair and maintenance)?’
The length of time the drainage system has been there should also be considered. There may be the possibility of acquiring an easement due to a long historic period of use. If this is the case, and you are buying the property in question, you should obtain a statement of truth or statutory declaration. The statement can be from the seller, or the neighbours on whose land the drainage system is located (if amenable and with sufficient period of knowledge), which will confirm the length of use. This will support an easement application at the Land Registry.
If the drainage system is shared with neighbouring properties you should make enquiries as to how many share the system, any maintenance regimes and costs, and consider a survey to ensure there are no issues.
The General Binding Rules
Drainage systems can either be:
Cesspits/cesspools – these are sealed tanks that collect effluent, but don’t discharge any liquid residue to the surrounding land.
Septic tanks – these collect effluent and historically then filter liquids out over a ‘soakaway’ or ‘drainage field’. Soakaways are no longer permitted and need to be upgraded to a drainage field. It is also illegal to discharge effluent into a watercourse from a septic tank without an environmental permit. Without such a permit, the septic tank would need to be upgraded to a sewage treatment plant (mentioned below) or connected to the public foul sewer, however this may not be possible.
Sewage treatment plants – these clean the effluent to a greater degree, and so can sometimes discharge into ditches or watercourses.
The General Binding Rules (the guidance to which was most recently updated in 2023) govern situations where a septic tank or small sewage treatment plant discharges waste water to surface water (such as a stream or other watercourse). They therefore do not apply to cesspools.
Where a drainage system which is subject to the General Binding Rules doesn’t comply with them, the person responsible for it must either connect it to a public foul sewer, or change the system so that it complies. If neither of these things are possible, the operator must apply for a permit. Note that a permit won’t be granted if the Environment Agency think it is reasonable for the operator to connect to the public foul sewer, or that it could meet the General Binding Rules by making changes to the system.
The guidance to the General Binding Rules particularly notes that, in the case of septic tanks, prior to a sale an agreement taking responsibility for the replacement or upgrading of the septic tank should form part of the sale negotiations.
Once you have determined that the General Binding Rules apply, which ones the system needs to comply with depends in part on when it was installed. The key dates are:
discharges starting before 1 January 2015
discharges that started after 1 January 2015 but before 2 October 2023; and
discharges starting after 2 October 2023.
Some of the rules apply to all discharges irrespective of when the system was installed. Examples include:
limits to discharge volumes
the type of waste that may be discharged; and
ensuring that any discharges are not in a groundwater source (protection zone 1) without an environmental permit.
On a sale, it is therefore important to determine the nature of the drainage system in order to assess whether the General Binding Rules apply, how the system complies with them, and if an agreement for upgrading or replacing the system will be needed.
Please note that building regulations and planning permission may also have been, or will be, needed for any drainage system.
Key takeaways:
If the drainage system is on third party land, it is important to establish that there are adequate rights to use it.
The application of the General Binding Rules depends on the nature of the drainage system and the date of commencement of discharges.
It may be necessary to agree to upgrade or replace any non-compliant septic tank as part of a sale.
The key to a successful country home or farm sale – Adam Saunby shares his insights
15 May 2024
Views
Adam Saunby joins Matthew Allen and Richard Gadd of Fisher German, on their podcast ‘Fisher German Talks’, to share his insight and expert analysis of the rural property market.
In the podcast, Adam highlights the importance of thorough preparation before properties are marketed. He covers:
If you are preparing to sell your country home or farm and would like expert advice on the process, please do give Adam or a member of our Rural Land and Property team a call.
Understanding Biodiversity Net Gain: part two – landowners
9 May 2024
Podcasts and videos
With many environmental factors and new green legislation for the real estate industry to consider, we continue to focus on Biodiversity Net Gain in the second of our two-part special.
In part one, we discussed Biodiversity Net Gain obligations imposed by the Environment Act 2021 through the lens of developers; today in part two, we focus on landowners. Alongside Polly Montoneri, Partner in our Rural Land and Business team, and Planning Associate, Sophie Smith, we talk about the impacts of Biodiversity Net Gain obligations and the challenges landowners are faced with.
Five factors shaping the future of landed estates: Henry Cecil quoted in Spear’s
9 May 2024
Views
Henry Cecil and other industry experts have provided their insight on the future of landed estates to Spear’s.
The article, ‘Five factors shaping the future of landed estates’, discusses various challenges and emerging trends in the management and ownership of landed estates. Henry’s key takeaways are summarised below:
Legislative Changes
The phasing Basic Payment Scheme (BPS) has previously acted as a safety net for farmers and crofters by supplementing their main business income, but it also presents a challenge for in-hand estates.
It could lead to significant opportunities with new streams of income in natural capital markets.
Diversification
There is a growth in interest for landowners wanting to enter into natural capital markets, ranging from biodiversity net gain projects to nutrient neutrality and exploring landscape recovery schemes.
There has been an expansion in the scope of Agricultural Property Relief which now includes environmental land management schemes. This is a step in the right direction for landed estate owners to have confidence to enter natural capital markets.
With diversification on the rise, there are growing opportunities in renewable energy and other emerging markets.
Climate Change
There is an increase in flooding in parts of the UK at the moment. While it is area dependent, estates must prepare for changes in response to environmental and climate shifts.
Global Ownership
Although British farmers and entrepreneurs make up the majority of buyers and sellers, there has been a recent uptick in interest from American buyers.
Spear’s Legal Indices: Forsters’ Landed Estates lawyers retain their Top Recommended status
3 May 2024
News
Forsters Partners Henry Cecil, Andrew Lane, Rupert Mead, Polly Montoneri and Consultants Penny Elliot and Christopher Findley, have retained their ‘Top Recommended’ status in the latest Spear’s Legal Index.
The Spear’s rankings showcase the highest calibre of landed estates lawyers, advisers who can support their clients on wide ranging issues, from tax and succession planning to land development and diversification.
A look at landed estates: Charles Hancock is quoted in CityWealth
7 March 2024
Views
Private Client Senior Associate, Charles Hancock, has been quoted in the CityWealth article ‘A look at landed estates’. In the article, CityWealth editor, Ashleigh John, discusses the current trends and concerns for landed estates and their owners with leading industry experts.
Connected thinking on rooftop solar – Victoria Towers writes for EG
4 March 2024
Views
Victoria Towers, Partner and Co-Head of Industrial and Logistics, has written a piece for EG on the benefits of collective thinking to streamline the legal processes causing delay to rooftop solar.
With time running out for promised legislative change to facilitate rooftop solar, there is much to be achieved in banging a few heads together and streamlining some of the legal processes currently causing delays.
The issue is acute for power-hungry industrial and logistics development, when rooftop solar is often incorporated as part of any planning application and the market is clamouring for fast delivery of new space in the right locations.
It was October, in energy secretary Claire Coutinho’s speech to the Conservative Party conference, promising to reduce red tape for solar panels on industrial rooftops, that she bemoaned solar farms covering our green and pleasant land, and pledged to make it easier for solar panels to be installed on industrial rooftops, warehouses, car parks and factories, cutting through the planning red tape that limits the amount of solar that businesses can currently install.
At the same time, her department’s Solar Taskforce has been looking at barriers to rooftop solar after highlighting the untapped potential of commercial sites, such as warehouses. The task force is due to be wound up around February, and its work will be used for a solar roadmap, to be published later this year.
This time last year, a survey by Forsters found 77% of developers and investors currently used solar panels on industrial and logistics real estate or planned to. The Department for Energy Security and Net Zero should be pushing at an open door.
The government’s own figures show progress in getting photovoltaics on to buildings. An update published in January showed that 50% of capacity came from ground-mounted or stand-alone solar installations at the end of September 2023, but – rather perversely – the majority of the remaining capacity was on domestic buildings, not commercial.
November’s Autumn Statement addressed the issue, promising reform of the grid connection process to cut waiting times, including freeing up more than 100GW of capacity so that renewable energy projects can connect sooner, potentially reducing connection delays from five years to no more than six months.
Co-operation is key
For those of us negotiating these connections for industrial developments, day in and day out, investment is certainly needed. Not only in the grid infrastructure itself but also – much like the challenges around the planning process – in the process of securing a connection. Client projects seem to be held to ransom on substation and wayleave arrangements when they want to connect to the grid.
A question often presents itself when repeatedly agreeing substation leases with providers: why, when dealing again with the same provider, can we not cut through the negotiation and proceed on similar terms? There are a handful of points that are site-specific, but the usual obligations around repair, alterations, use and works in the vicinity of any cabling do not need to be brokered every time. Surely it is better for all those concerned to ensure that the legal documentation is progressed as swiftly and efficiently as possible.
To that end, it does not seem beyond contemplation to have a common ground as a starting point – but standard terms will only work if drafted well. A few years ago, a template wayleave agreement was introduced, but the result was too complicated and everyone quickly broke away from the standard approach. As the pressure increases on all those involved, it seems that we should look at agreeing a succinct, market-appropriate suite of documents that can be called on.
We know that most substation providers have a list of requirements – for example, uncapped indemnities – but many of these are unrealistic and deter investment. Investors don’t like indemnities where they are unnecessary, and quite often facts can allay the concerns that providers have. For instance, an indemnity should not be required on a site that is verified as remediated from an environmental perspective.
Mindset shift
Another frustration comes in the interplay between utility companies. If a gas pipe and an electricity cable are both needed, we would expect some joined-up thinking in using the same route and consulting with each other over installation.
We need more co-operation between independent distribution network operators and distribution network operators. We find ourselves in situations, albeit rare, where we are only permitted to liaise with the IDNO, which in turn has to pick up with the DNO. Alternatively – and again rather confusingly – we liaise with each entity but they do not have any contact with each other. This makes negotiations more protracted and challenging.
There is an interesting legal question here as to whether a potential power user has a right to be connected to the grid. We know the regulatory backdrop, but more and more we are being presented with a “take it or leave it” attitude to negotiations, where the view seems to be that if the end user does not agree to the terms, then the relevant development can be left without power. How has it come to this?
An attitude shift and greater uniformity should not require test cases or legislation. Instead, there should be a focus on working together, taking a sensible approach and not reinventing the wheel every time negotiations are commenced. Strict timelines, set in legislation, would focus minds, but it is hard to imagine a sanction that would not make the situation worse by drawing resources away from investment in grid infrastructure.
Developers are incurring huge costs as a result of delays in getting substations built, signed off and energised. Industrial and logistics development needs to be quick to meet demand – and we need the providers to be more responsive and more reasonable.
The article was originally published on 27 February 2024 and can be read here behind the paywall.
Victoria Salter-Galbraith is named Fellow of the Agricultural Law Association
23 February 2024
News
We are delighted to announce that Rural Land and Business Senior Associate, Victoria Salter-Galbraith, has been made a Fellow of the Agricultural Law Association (ALA).
The ALA is the UK’s most esteemed organisation on matters related to law and business of the countryside. The association focuses on the law in an apolitical way to promote its knowledge and understanding among those who advise rural business.
To achieve the status of Fellow, Victoria sat an in-depth examination for which she received the joint highest mark in the country.
Testing the limits of transparency: Guy Abrahams is quoted in Property Week on land ownership
7 February 2024
Views
Private Client Partner, Guy Abrahams, has been quoted in the Property Week article ‘Testing the limits of transparency’.
The article seeks the opinion of industry experts on the transparency of Britain’s property market regarding land ownership. The push for greater transparency is to help target illicit finance and corruption in the property sector.
Guy explains a key issue in identifying property owners is balancing the need for transparency with the right to privacy. On whether the government should enforce the publicity of property-owning trusts, he comments that it would not go far enough to minimise the chance of illicit funds infiltrating the property market.
About one percent of the population rely on a private water supply, where water is drawn from a borehole, well, spring, lake, stream or river to service their properties. A borehole is likely the most common method for domestic properties.
There are extensive regulations surrounding a private water supply, these are contained in the Private Water Supplies Regulations 2016, which focus on the quality of water, and the Water Resources Act 1991, which focusses quantity and supply. Local authorities have wide powers to enforce these regulations, and breaching them, or abstracting water without a licence can be a criminal offence.
Relevant persons:
Responsibility for the quality and quantity of private water supplies lies with the owners/occupiers of the property serviced by the water supply, the owners/occupiers of the property where the water supply is sourced, or any other person who has management or control of the water supply. The law identifies these people as ‘relevant persons’.
Understandably, there is a requirement for a water supply to meet basic regulatory standards, ensuring that it is safe for use and consumption at all times. This is measured by testing the number of contaminants in the water and depends on the size and nature of the supply.
1. Commercial supplies (including supplies to a number of dwellings):
These are defined as supplies of a daily average of over 10m3 or to either public or commercial premises. Properties let to third parties also fall under this category. Risk assessments must be carried out at least every 5 years and a water test must be carried out at least annually. If it is determined that a supply is a danger to human health, a local authority has a duty to warn the occupants of the property and advise how to minimise the danger.
2. Standard private supplies:
This is a supply to any premises, other than a single dwelling, not used for commercial purposes. Again, these are subject to 5-yearly risk assessments and an annual test, however, a narrower number of contaminants are tested.
3. Single dwelling supplies:
Single dwellings that are not used for any commercial activity. In this case, a risk assessment is required only, and the supply is monitored, if requested by the owner or occupier of the property.
4. Distributed mains supplies:
These are rare, but occur where water is supplied by a mains provider and then further distributed through a private water network. Risk assessments are still required, even though the water originates from a mains source.
Relevant persons are also responsible for the sufficiency of a private water supply. Supply can change in drought or severe cold weather, or as a result of a burst or leaking pipe etc.
In these cases, relevant persons are responsible for putting in place alternative arrangements and central responsibility is with the owners of the supplies, who should have an emergency plan in place. An owner of a water supply can never just disconnect the supply, even in the event of non-payment by a user.
If a local authority finds that a water supply is insufficient, either due to quality or quantity, then they are able to serve a ‘private supply notice’ on the owner of the supply, setting out the steps they must take to rectify the situation. This can prove expensive, particularly if the required action is to connect to a mains water supply. If an owner of a water supply does not comply with the notice, the local authority can do it on their behalf and recover the costs from the owner.
A more serious notice – ‘a regulation 18 notice’ is served where a supply is proved to be a danger to human life. If this is not complied with, it is a criminal offence carrying up to 2 years’ imprisonment, and/or a fine.
Abstraction:
Taking water from a source is known as abstraction. A licence is required from the Environment Agency where an average of over 20m3 is abstracted daily. This is unlikely to be the case for a single residential dwelling. Again, abstraction without a licence, where one is required, can be a criminal offence.
Licences are transferred with a property on a sale, but a buyer does need to contact the Environment Agency to transfer the rights under the licence.
Summary:
To summarise, a relevant person is responsible for the quality and quantity of a private water supply, with central responsibility lying with the owner of the supply. Local authorities can enforce the regulations, and it can be costly to comply with them, and it is essential that an abstraction licence is obtained where an average of over 20m3 of water is abstracted daily.
Advice from a specialist should be obtained if you are purchasing a property responsible for a private water supply or serviced by one.
Public Rights of Way: How to keep the curtains open without seeing dog walkers!
13 December 2023
News
When purchasing a property, it is important to ensure you are fully aware of any public rights of way crossing the property or near to it.
Those seeking peace and quiet in their new home will often want to ensure they are not besieged by local ramblers on the warpath.
Public rights can be divided into four categories
Footpaths (people on foot only)
Bridleways (people on foot, cyclists and horse riders)
Restricted byways (people on foot, cyclists, horse riders and any other transport without a motor)
Byways open to all traffic (people on foot, cyclists, horse riders, cars and any other transport with a motor)
There are exceptions for people in mobility scooters and powered wheelchairs.
A local authority and highways search obtained as part of the due diligence when purchasing a property should reveal any public rights of way crossing or abutting the Property. However, your solicitor should also enquire of the seller whether they are aware of any applications or pending submissions to add any public right of way to the definitive map or extend an existing public right of way which would abut and/or cross the Property.
The highways search will only reveal rights of way that are recorded as public rights of way at the date of the search result. Where a public right of way is shown on the local authority’s definitive map, that is conclusive evidence that it exists. However, definitive maps can be incomplete or not up to date which means that they are not conclusive evidence that no public right of way exists.
There are different ways in which new public rights can be created including (1) by express grant, (2) by order of a public authority, (3) dedication by the landowner and (4) presumed dedication.
Presumed dedication arises where the public at large have used a defined route for a 20 year period without permission from the landowner. Creating rights of way under presumed dedication is something that any purchaser should be mindful of when purchasing a property. Whilst the burden of proof is high for presumed dedication your solicitor should raise enquiries of the seller to determine if there has been any activity which could amount to presumed dedication.
What can you do to ensure the privacy of your home?
It is possible to:
Deposit a landowner statement under section 31(6) of the Highways Act 1980 with a map marking any ways across the property that the owner accepts are public rights of way and includes a declaration that the landowner does not intend to dedicate any new public rights of way across their property. This will “stop the clock” on the 20 year period and (unless the public can provide evidence to the contrary) any use of the property by members of the public during this period should prevent against new rights of way being established.
Apply to divert footpaths, bridleways and restricted byways provided certain requirements are met including that the diverted route is not substantially less convenient to the public. However, this can be a costly and drawn-out process especially if objections are raised. You should always get the right advice and, to avoid objections, ensure that any diversion benefits not only you but also members of the public.
Forsters can assist you with both these options and provide advice on public rights of way that currently affect your property or may affect a future property you are interested in purchasing.
Following a purchase, we always advise our clients to take active steps to ensure that no new rights of way are acquired which may include ensuring your boundaries are fenced, any gates specify that there is no public access, and you remain vigilant as to any members of the public gaining access to the Property.
“Succession planning down on the farm” Forsters Partner, Polly Montoneri quoted in the Times
16 November 2023
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Rural, Land and Business Partner, Polly Montoneri shares her insights on the rise in proprietary estoppel cases, in the Times article entitled “Succession planning down on the farm”.
Following a number of high profile proprietary estoppel cases over recent years, increasing public awareness and the rising value of farmland form part of the reason for the rise in proprietary estoppel disputes. Polly discusses diversification within farming as another significant factor alongside the disconnect between generations about how to develop a modern farming business, highlighting that it is one of the challenges in ensuring a smooth transition between generations.
“There has often been a generational tension about how farming assets are managed over the years. There is always a period where the older generation needs to hand over to the younger generation. That is an aspect that has long been very carefully managed by families, advisers and lawyers to ascertain the best way to progress.”
“If you look back over the past 30 years diversification has become increasingly important. Some farms and estates have diversified because they wanted to, others because they have had to. Over time the stakes have become higher, with the younger generation now perhaps more ambitious in terms of, for example, environmental sustainability and being a source for green energy, which is a huge part of how the rural economy is developing.”
To read the full article (behind a paywall) please click here.
Buying & Selling Farms – The Nuts & Bolts: Adam Saunby to present MBL webinar
17 October 2023
News
Rural Land and Business Senior Associate, Adam Saunby, will be running the MBL webinar ‘Buying & Selling Farms – The Nuts & Bolts’ on 24 January 2024.
This webinar will look at the fundamentals of buying and selling farms, useful tips, as well as discussing some of the nuances that acting in land transactions brings.
Whilst farming is as old as time, over the last few years there has been an increase in additional revenue streams to supplement income, which means that in addition to purchasing a farm, it is sometime necessary to consider its future use.
Adam will cover the following:
Why collaboration with other professionals is key
The basic fundamentals involved in a transactional process when selling and buying a farm
The importance of site visits
Understanding farming activities
The basics of different types of farming tenancies and licences
Contract negotiations
Other things to be aware of such as environmental schemes, employees, tax considerations
The increase in diversification on a farm e.g., renewable energy, holiday lettings
The webinar will be streamed at 12:30pm on Wednesday 24th.
A blend of features in vineyard planning – Victoria Du Croz writes for EG
16 August 2023
Views
Head of Planning, Victoria Du Croz, has written a piece for Estates Gazette on the important planning implications of the supply network involved in the UK’s wine production.
Many vineyards and wineries operate through a network of supply contracts. Grapes may be grown at one vineyard and processed on site. More commonly, grapes will be grown at a variety of locations and processed by a single winery, or a specific vineyard might contract with a winery to process their grapes. Many vineyards in the South East, for example, will grow their grapes, send them to be processed elsewhere, then bring the bottled wine back on site for tours, tastings, refreshments and sales. Furthermore, many vineyards and wineries are continuing to diversify, offering a range of experiences, including tours, tastings, overnight stays and the hosting of weddings and corporate events.
The practical realities of commercial operations of vineyards and wineries’ commercial operations means industry experience is needed to advise on the planning position and experience is critical. A vineyard with a commercial winery, tastings and tours, etc can look like a different business in each month of the year – the shape of the business will differ from season to season, much more than a traditional arable farm may do.
It is essential to understand what is actually happening on the ground when the year is viewed in the round and to map this on to the current planning framework. Many vineyards are located in designated areas of outstanding natural beauty, which have particular planning restrictions for their preservation. Most of these vineyards will be agricultural in nature, but can stray into commercial use classes if the commercial activity is not directly ancillary to the viticulture, leaving them open to enforcement action if they do not have the correct consents in place.
Full-bodied case
In a recent appeal in respect of the Cuxton Winery, in Kent, an inspector had to grapple with whether there was a material change in use at the vineyard if the grapes were taken off-site for wine production and then returned for storage and sale. Previously, Medway Council had granted a certificate of lawfulness for agricultural use that expressly permitted wine to be produced, stored and sold on site. The certificate made no express mention of the lawfulness of providing tours, tastings and refreshments, nor for selling wine produced elsewhere. The appellant sought revised wording in a certificate of lawfulness to cover these two points.
As noted by the inspector, in such applications the onus is on the applicant to provide sufficient evidence and accordingly the decision is fact-specific. However, it does raise an interesting point about what is “incidental” to the growing of grapes to produce wine, which is accepted as an agricultural activity. The inspector considered that wine production is a lengthy process to make a different product and is therefore akin to an industrial process (in contrast to simply crushing grapes). Previously, case law has held that the on-site production of wine is incidental to the primary use of that site for the growing of grapes.
The inspector considered that, based on the information before him, the appellant had failed to demonstrate that it would be ordinarily incidental and reasonably necessary to process up to 20,000 bottles of wine annually off-site as part of the primary agricultural use of the site. The inspector accepted that some off-site production could be regarded as incidental but, in this case, it appeared all the wine would be produced off site. While not entirely clear from the decision, it seems to be the return of the entirely different product from the off-site industrial process, ie the wine, for the subsequent storage and sale which meant there was a material change in use from the main agricultural use of the site.
The inspector also rejected the proposed wording in the certificate for the tours, tastings and refreshments, which did not seek to quantify the frequency and extent of such activities. The inspector considered that if the wine were to be produced on site, the scope and quantity of tours would potentially broaden, which may mean the tours, etc would cease to be incidental. Again, the inspector did not consider that the appellant had discharged the necessary burden of proof. Accordingly, the appeal was refused.
Endnote
The decision serves to highlight the importance of applicants discharging the burden of proof for certificates of lawfulness by providing sufficient evidence. It also demonstrates the potential pitfalls in seeking to diversify agricultural land against the backdrop of our historic and restrictive planning use class system.
The decision is one of many recent planning decisions affecting this industry. With WineGB reporting there are more than 940 vineyards and over 200 wineries in Britain and, as the industry is still expanding, there are likely to be more.
The matter is not helped by broader planning policy. Although the National Planning Policy Framework supports a prosperous rural economy, each local planning authority has its own local plan and it is rare for these to address diversification of vineyards and wineries adequately. Advice should be sought at the earliest opportunity on the scale and scope of any diversification plan including whether and what planning applications need to be made.
The diversification of vineyards is becoming increasingly important from a commercial standpoint and for the future-proofing of such businesses. Although seemingly welcomed in the UK, it requires careful thought and consideration from a planning perspective.
This article was originally published by EG on 15 August 2023 and can be read here in full (behind their paywall).
Case law has established that wineries are agricultural uses for the purposes of planning. However, many vineyard owners and operators include ancillary uses such as visitor centres for wine tasting and restaurants. In a recent appeal decision it was these ancillary uses that caused adverse impacts and harm meaning the appeal was dismissed and planning permission was not granted.
The appeal scheme comprised a new access road, a 107 space car park and coach park, a winery building for grape processing, storage, bottling, a restaurant, cafe and retail. Wine tasting events would be held twice daily and it was anticipated that there would be around 300 visitors per day. The site is located in the green belt and in the Kent Downs AONB and is within the setting of the Upper Bush Conservation Area.
Given the amount of floorspace identified for agricultural use, the Inspector concluded that the appeal scheme was an agricultural use. Accordingly the proposed development fell within the exceptions set out in the NPPF and so the new buildings would not be considered inappropriate development in the green belt.
Whilst there was therefore no need to consider the impact of the development on the openness of the greenbelt, the Inspector still needed to consider whether the development complied with key Local Plan policies around conserving the natural beauty, wildlife and cultural heritage of the area, the impact of the development on the nearby conservation area and whether the harm of the proposals on the AONB was outweighed by exceptional circumstances.
The Inspector found that although the new access road and car park would seek to use the existing topography of the area to reduce the impact, both would introduce a degree of urbanisation into the landscape and would cause moderate adverse effects. The seasonal nature of viticulture would be supplemented by the year round ancillary activities. The visual impact of the constant activity from the ancillary uses would significantly detract from the site’s contribution to the landscape and scenic beauty of the AONB resulting in major adverse impacts. Similar concerns were raised about the ancillary uses in respect of the noise impacts and the adverse impact on the dark skies which were acknowledged as a high value component of the AONB.
The Inspector agreed that the setting of the Conservation Area was largely determined by its relationship to the surrounding farmland and concluded that the proposed major development would introduce activities unrelated to agricultural use. He therefore concluded that the appeal scheme would cause less than substantial harm to the significance of that heritage asset.
In accordance with paragraph 177 of the NPPF, the Inspector had to consider whether there were exceptional circumstances and whether the development would be in the public interest such that it would outweigh the presumption that major development in the AONB should be refused. Accordingly the Inspector considered the need and economic case for the proposed development, the cost of development outside the AONB and any detrimental impact on the environment. Whilst the appellant produced evidence in respect of each of these areas, the Inspector considered the evidence to be insufficient or too high level for any of these arguments to be made. The Inspector noted that expansion of the wine industry is not a national priority nor is it a local priority reflected in Local Plan policies. The Inspector considered the good design of the winery building, the investment, job creation and visitor experience were not sufficiently evidenced and therefore did not outweigh the harm of the development on the AONB and the conservation area. Accordingly he dismissed the appeal.
As the English wine industry continues to grow we are likely to see an expansion in vineyards which, due to the required soil type and typography, are often located in AONBs. Given the exceptional circumstances test for major development in AONBs set out paragraph 177 of the NPPF, vineyard owners would be advised to promote local plan policies that identify the importance of viticulture during local plan reviews to assist with the “need” argument and to establish robust evidence for the remaining tests. Many vineyards will include ancillary activities but the impact of those activities needs to be carefully considered and weighed up against the adverse impacts of the proposed development.
In the wake of Brexit, Government schemes introduced as successors to the removal of EU subsidies have shifted the focus away from agricultural activities towards environmental land stewardship. However, tax in the rural economy, particularly Agricultural Property Relief (APR) under the inheritance tax (IHT) regime, has not evolved to reflect this change of emphasis. This leaves the rural sector operating in tax and subsidy frameworks with little clarity and conflicting incentives.
The consultation is broadly in two parts, the first calling for evidence on the tax treatment of environmental land management and ecosystem service markets. Part 2 then focuses on APR as a whole, with an ancillary section to consult on whether the Government should implement the Rock Review’s recommendation that APR be restricted to farm tenancies with a life span of at least eight years.
A New Rural Landscape – The Government’s Agricultural Policy Shift
Post-Brexit support for farmers and landowners is moving away from the Basic Payment Scheme to Environmental Land Management Schemes (ELMS): ‘public money for public goods’. There are three tiers of ELMS:
Sustainable Farming Incentive (SFI) will pay farmers to adopt sustainable farming practices.
Countryside Stewardship (CS) will pay for targeted environmental work, like restoring wildlife habitats.
Landscape Recovery (LR) will fund longer-term, large-scale projects (over 500 to 5,000 hectares), such as improving water quality across a river catchment area.
As well as direct Government support, landowners are being encouraged to access private sector funding through ‘ecosystem service markets’, including:
Woodland carbon units, which pay for carbon sequestration.
Biodiversity Net Gain (BNG): from November 2023 (or April 2024 for small sites), every planning permission will be required to generate at least 10% BNG. While the preference will be for BNG to be delivered onsite, it will also be possible to deliver offsite. Landowners will be able to sell BNG units to developers to meet the condition.
Nutrient Neutrality (NN): to date, Natural England has advised seventy-four local planning authorities that protected habitats within their areas are in unfavourable condition due to excess nutrients and that development should only go ahead where it will not cause additional pollution to those sites. Mitigation measures for nutrient pollution can be delivered onsite (such as wastewater treatment facilities) or offsite (such as the creation or restoration of natural wetlands). Landowners can deliver offsite
mitigation and then sell NN credits to developers.
ELMS and ecosystem services will involve moving away from intensive agriculture and (other than SFI), from focusing on food production. Landowners need to understand the implications of this policy shift for their IHT planning.
The Agricultural Property Relief Incentives at Odds with the New Rural Subsidies Schemes
Broadly speaking, APR is available where an IHT ‘transfer of value’ is attributable to the agricultural value of agricultural property. Agricultural value does not take account of any value the same property may have by virtue of other aspects, such as being a site with potential for building development. The relief may apply to lifetime transfers (broadly to trustees on trust or on a gift made by someone within seven years of death), transfers on death or when agricultural property is held on trust under the IHT ‘relevant property regime’ (which can result in a charge being levied on property transferred out of a trust or on every 10-year anniversary).
APR can apply at 50% or 100%, largely depending on who farms the land and the nature of any tenancies in place over it. To qualify for the relief, there are two main parts that have to apply, one of which relates to ownership and occupation requirements. The other, which is where the problems lie in the context of the incentives under the new environmental schemes, is that the property has to be ‘agricultural property’, which is (broadly speaking) land occupied for the purposes of agriculture, together with cottages, buildings and farmhouses which are of a character appropriate to that property.
The tension lies within this definition of agricultural property, specifically the need for it to be ‘occupied for agricultural purposes’ to qualify for the relief – which does not, on the face of it, include land used for, or to take advantage of, the environmental schemes described above.
Questions that we are regularly asked by clients include, “If I graze my sheep over a wildflower meadow a few times a year, is this enough for the land to qualify for APR?” “Will I lose APR if I rewild my land and stop farming?” Of course, the availability of APR is always fact-specific, but at the moment, the legislation raises more questions than it answers.
The problem is exemplified in upland regions of the UK where vast areas have seen a significant increase in value thanks to natural capital potential. As things stand, this uplift in value is unlikely to be covered by APR as it does not fall within the current definition of ‘agricultural value’. The consultation acknowledges this and asks how environmental land should be valued.
Clarity on the Horizon?
Tax and subsidies are key to the way the rural economy functions and the way land is managed. So long as conflicts exist within these frameworks, the rural sector will be in limbo. Forsters will be contributing to the consultation, which closes for feedback on 9 June 2023, in the hope that its outcome will lead to meaningful clarification of the Government’s agricultural policy. Aligning the tax and subsidy incentives is key to restoring the rural sector’s confidence in a robust, sustainable and thriving future.
The index recognises the highest calibre of landed estate lawyers, guiding clients with issues ranging from tax to succession planning, residential development to diversification and the overall management of an estate.
Forsters has the greatest number of advisers in the ranking in the 2023 Index, further bolstering the team’s long-standing reputation as one of the leading Rural Land and Business teams in the country. The team are also ranked in Tier 1 for Agriculture and Estates by the Legal 500 and in Band 1 for Agriculture & Rural Affairs by Chambers and Partners.
Having private outdoor space is now seen as a necessity by many more people living in an urban environment, where once it was only within reach of those city dwellers fortunate enough to afford spacious surroundings.
This has resulted in many cases to the much-publicised move to the countryside. It may well mean for many that they are now, for the first time, the custodians of a property of special architectural or historical interest: a listed building.
Owning a listed building is not for the faint hearted, but it can also be a source of much joy and fulfilment. Here are five crucial things to know for those thinking of purchasing, or already owning, a listed building:
1. Special attention needs to be paid when considering any repairs, maintenance or alterations.
It is an offence to extend, demolish or carry out internal or external alterations which would affect the character of the property without Listed Building Consent, whether or not the owner is aware of that being the case. Replacing windows, fitting a new kitchen and even painting the exterior of the property could all require Listed Building Consent.
2. The listing does not just include the building itself.
It includes any item or structure fixed to it and any item or structure within the curtilage, provided the latter has formed part of the land since before July 1948. This might include anything from an outbuilding to a boundary wall, a fountain or, in some cases, statues.
3. Failure to obtain Listed Building Consent has consequences.
If consent has not been correctly obtained for works which require it the person carrying out the works will face a possible maximum penalty of two years’ imprisonment and an unlimited fine.
4. A new owner may inherit works carried out without Listed Building Consent.
It is not uncommon for works to have been carried out by a previous owner which required Listed Building Consent, but for which no Consent was obtained, or that the works were not carried out in strict adherence to the approved plans or the conditions of the Consent.
In these situations, the current owner has not committed an offence by simply owning the property. However, the local planning authority may issue an enforcement notice requiring the building to be restored to its former state or for further works to be undertaken to alleviate the effect of the works carried out without Listed Building Consent. Should the owner of the building fail to comply with the enforcement notice they will then commit an offence, for which the maximum penalty is an unlimited fine that will take into account any financial gain.
5. Seek professional advice.
It is crucial when considering purchasing a listed building, and throughout one’s ownership of it, that professional advice is sought from solicitors, architects, agents, surveyors and builders who specialise in listed buildings to ensure that potentially costly mistakes are avoided and the heritage asset of which you are a custodian can continue to be appreciated in the future.
Victoria Salter-Galbraith is Counsel in our Landed Estates team and has a passion for listed and historic buildings. She has been instructed in relation to Grade I, Grade II* and Grade II listed buildings, some with secret rooms, follies and one with a carving dating from around the time of Christ.
Powering the UK: Renewables and rural affairs – Polly Reeve writes for EG
6 October 2022
Views
Rural landowners would not admit it publicly, but many of them lie awake at night thinking about rows of wind turbines or fields of solar panels.
Renewables appear lucrative and easy compared to the hard slog that is agriculture. They are the Massey Ferguson combine harvester to agriculture’s hand scythe.
First and foremost, the returns on renewables are enormous. Annual rent for a solar farm is around £1,000 per acre, three or four times what the most efficient farmer might generate from the best land. Secondly, they require virtually no looking after, since typically the energy company manages them day to day. Thirdly, everyone involved can hold their head high in the knowledge that they are doing their bit to protect the planet’s future.
Alas, the reality is not always as exciting as the idea. Renewables have their drawbacks, as well as advantages.
Short-term cost
We hear that around 10% of proposals lead to an operational solar farm. The high failure rate is partly due to speculative developers who approach multiple landowners without really considering whether their land is actually suitable.
Partly it is also a reflection of the complicated regulatory landscape. Securing a grid connection and planning consent is hard. Even for the successful minority, from proposal to working wind farm takes years, not months.
Successful or not, landowners need to invest considerable resources – in agents, lawyers, consultants, their own time – in a process that leads to disappointment more often than not. The developer will cover some of these costs, but rarely all of them.
The big money does not come until the turbines are turning or the sun is shining on the panels. In the preparatory stages, where a developer is seeking planning consent and a grid connection, landowners will receive a smaller option fee – perhaps £5,000 for 100 acres – in exchange for quite severe restrictions on the land. The landowner generally cannot negotiate with other energy companies and the chosen developer has wide discretion to enter onto the land to carry out tests and preparatory works and keep equipment on the land. If the land is mortgaged, lender consent is needed and, if the land is let, the farm tenant has to be on board.
There is always an element of trust and a successful project will rely on a good working relationship between a landowner, farm tenants and a developer.
Long-term cost
Where a renewables project actually happens, the term is typically somewhere between 25 and 60 years. Once concrete panels and turbines are in the ground, agreements are legally and logistically hard to back out of. Landowners should know that they are committing their land in the long term and there is an opportunity cost.
While your field is full of solar panels you cannot do much else with it. If you negotiate hard, you might be able to graze a few sheep, but you certainly cannot plant any serious crops because harvesting becomes impossible. You can forget about shooting and may be limiting yourself in terms of environmental land management schemes. The energy company will build roads, fences, chop down trees, erect substations and excavate soil. Some of these rights will extend to your land outside the solar farm too.
While it may seem attractive now, relinquishing land that has always been used for producing food and, in tandem, delivering environmental benefit, could carry with it risk. This kind of land use change currently carries significant economic, social and political support, but landowners are, to some degree, reliant on this continuing to be the case.
The options and leases through which renewables projects are structured are complicated, sophisticated and commercial agreements. Legally, they have much more in common with industrial, urban developments than most rural agreements. Landowners need someone on their side who understands what the developers actually need and what they will concede.
Net zero, biodiversity net gain and food security might all fall in the green category, but they are often mutually exclusive. Policy ebbs and flows with successive governments and we live in what feel like peculiarly unstable political times. Yet landowners are being asked to make changes that will last generations.
Governments, left or right, need to be consistent and support renewables schemes in the long run. If not, they risk messy U-turns as landowners put their property to other uses.
Changing land use takes time (years) and it needs proper consideration for habitats, river and watercourse management and consequent flooding and pollution risks. Land returning to food production also requires careful regeneration. Correct removal of energy generation equipment and infrastructure is critical to mitigate environmental damage. Political U-turns could do great damage not only to the prosperity of landowners, but also to the British countryside that is one of the nation’s great assets.
Decommissioning cost
A 2020 government study suggests that it will cost £60,000 to decommission a single wind turbine at the end of its life. Few renewables projects have reached that stage yet, but everyone agrees that decommissioning will be expensive. Lawyers are alive to this and draft tight covenants in the agreements to ensure that the energy companies tidy up after themselves. The trouble is that energy companies create special purpose vehicles – without any other assets – to enter into the agreements and manage the site. Plus, they like to assign the benefits to other group companies or third parties. Decommissioning bonds – where the energy company pays into a ring-fenced fund – and insurance are other means by which landowners seek to protect themselves against the future liability of a field full of rusty solar panels securely fixed to the ground.
You cannot be certain of enforcing the energy company’s obligations so far in the future. Decommissioning is perhaps the most important point to negotiate.
Tax cost
If you stop growing barley and start growing wind turbines, income will increase substantially, which is a good thing. But inevitably there are tax implications.
Many landowners carefully arrange their affairs to maximise agricultural property relief (APR) and business property relief (BPR), thereby reducing their inheritance tax liability. Replacing sunflowers with solar panels will clearly make that field ineligible for APR. It can upset the overall balance of an estate or farm. Income needs to be 50% trading, as opposed to investment, to qualify for BPR, as set out in Commissioners for HM Revenue and Customs v Brander (as executor of the will of the late fourth Earl of Balfour) [2010] UKUT 300 (TCC).
Although it has not been tested in court, taking rent from renewables will likely count as investment rather than trading income, and harm your Balfour balance. If landowners manage the renewables themselves – which is virtually unheard of – then it might count as trading income. And the 50% figure is likely to increase to 80% soon.
Millions of pounds can rest on these reliefs, so it is vital that these are factored into decision making. Sometimes it also makes sense for the landowner to set up new companies, trusts or partnerships to manage the income or own the land.
Localised cost
Nothing can unite a community like opposition to wind turbines or solar panels. Neighbours will do their best to create a hostile environment.
The physical environment can suffer too. The wider national and global need for renewable energy is clear, but the localised damage it can cause is often overlooked. Sinking tons of steel and concrete into the ground is clearly harmful and, as mentioned above, leaves future liabilities.
Land around turbines and solar panels is hard to farm and cultivate, so it often degenerates to scrub and ragwort, unless properly managed. What constitutes sustainable land use is a contentious subject. Even growing and generating energy from biomass can upset the local eco-systems since the digestate produced and used as fertiliser is still too ammonia-rich and leads to a host of environmental issues.
Great care must be given to land management once the installation is in and the developer has moved on to the next project. This is where the landowner can play a key role and, we believe, there is great scope for renewables and biodiversity to make friends. As the structure of natural capital agreements, environmental grants and biodiversity net gain requirements becomes clearer and with continued support for scientific research and development, more can be done to mitigate the environmental impact of renewable energy generation, while enabling landowners to continue to own and manage their land sustainably.
Tread carefully
The point of this article is not to deny the transformative and positive opportunities renewables present for many landowners and for government net zero targets. Nor is it to question the global importance of generating power in an environmentally sensitive way. Rather, it is to highlight the practical, local considerations that landowners and governments must consider when pressing for the delivery of green energy in rural areas. It should be done with eyes wide open, a full appreciation of the pros and cons and government commitment to renewable energy in the long run.
This article was originally published in EG (5 July 2022) and is also available to read here behind their paywall.
Powering the UK: Renewables, Peaks and Troughs, and the Retrofit Revolution – Victoria Du Croz, Polly Montoneri (née Reeve) and Laura Haworth write for EG
The UK’s energy supply is headline news on a daily basis. The climate crisis, coupled with a cost-of-living crisis and Russia’s invasion of Ukraine, has put energy cost and energy creation under ever closer scrutiny. While the UK has moved away from coal-generated power over the past 40 years, it continues to rely on oil and gas for a considerable amount of energy creation. Our households are largely run on gas boilers. According to EDF, around 78% of the energy used to heat our buildings comes from gas and, while the government has brought in legislation to ban gas boilers by 2025, this will only apply to new homes. Even our national grid relies on burning gas to generate power and this is likely to continue in the short-to-medium term.
The UK has historically imported a portion of its gas needs from across the sea through several interconnectors that run from the British coast to France, the Netherlands and Ireland. In eight of the past 10 years, the UK has been a net importer of gas, but so far in 2022 the UK has been a net exporter to Europe as our European neighbours look to replace Russian supply.
The challenge is how the UK weans itself off its reliance on gas, meets its net-zero targets and becomes more self-sufficient in the long term, while remaining environmentally sustainable and improving biodiversity.
Renew the call for renewables
Over the past 30 years the percentage of energy generated via renewable sources – wind, solar and tidal – has increased, accounting for 43% of electricity generation in 2020 and making it the main source of the UK’s electricity over the year. While the statistics in 2020 were promising, the UK generated 14% less electricity from wind in 2021. This is a core issue with wind power generation – the amount that will be generated at any time is hard to predict, and our fallback is gas and nuclear. Prime minister Boris Johnson has asserted that all of the UK’s energy will be from “clean sources” by 2035. To meet this goal, offshore and onshore wind capacity would need to quadruple and double respectively.
A similar story stands for solar; the unpredictability of UK weather means energy supply from solar fluctuates year to year. It is, however, growing, with a combination of commercial and residential rooftop and ground mounts accounting for 4-5% of UK energy supply.
The reality is that 2035 isn’t that many years away and, while the government talks a lot about its green agenda, securing a grid connection and planning consent is hard. Even for the successful minority, moving from proposal to working wind farm takes years, not months.
The big question is: how do we go from renewable sources supporting a small percentage of the UK’s energy creation to 100%? There are several significant challenges to overcome to meet net-zero targets and deliver clean energy. The obvious answer is to build more solar farms and more wind farms, but this is no easy feat and, over a series of three articles, we will be exploring tensions within the planning system, conflicts between local and national policymaking, environmental sustainability and the challenging decisions for landowners.
Peaks and troughs
One of the fundamental challenges with increasing our reliance on renewable energy sources is peaks and troughs in supply. How do we capture surplus energy and store it for the future when the sun isn’t shining and the wind has stopped blowing?
In order to ensure sufficient year-round supply, the UK needs to massively increase its ability to store energy. Battery storage is essential to enabling increased reliance on renewable energy and will be pivotal in facilitating a transition to green energy. Whereas currently fossil fuels are used as back-up to provide a reliable, steady supply of energy, this will no longer be possible due to net-zero targets.
While it has been anticipated that battery storage systems could save the UK energy system £40bn by 2050, ultimately reducing energy bills, battery storage facilities can be contentious. During the planning process, resident groups and the local community object to battery facilities for myriad reasons, including wildlife concerns, visual impact and the requirement for supporting infrastructure.
Permission for battery storage used to be granted through the Nationally Significant Infrastructure Project process, but now permission can be granted under the Town and Country Planning Act 1990. While this makes it slightly easier (and quicker) to navigate, it increases the potential to come up against local opposition.
Another common concern associated with battery storage is safety. As the number of battery storage facilities increase, driven by demand for solutions to deal with intermittent energy creation from renewables, fires have broken out across the world. In addition, these batteries have a limited lifespan and the production of them (and processing of them once they have come to the end of their useful lives) will have its own environmental impact. The lithium used in these batteries is, after all, a finite resource and the technology involved in producing batteries for different purposes is still developing.
The other safety concern is disposal, due to the potential for leaks and contamination – if the chemical contents escape from battery casements this can cause damage to the local environment. While there may be concerns about potential liability for contamination under the Environmental Protection Act 1990, action taken by local authorities under this legislation is relatively rare. By far a greater risk is a claim for private and/or public nuisance by neighbouring landowners due to migrating contamination. The damage can be widespread (especially if nearby waterways are affected), expensive to remedy and can also be a criminal offence. Contamination could also affect the landowner’s use of their own remaining land.
Building storage facilities raises the issue of competing pressure on finite land. Locally, communities want new (normally affordable) homes, while nationally there is a drive for renewable energy creation. This tension is something we will explore in more detail over the coming weeks.
Upgrade the grid
The other challenge is the capacity of the national grid. The grid requires significant upgrades and improved infrastructure to cater to the additional demand that will be placed on it due to our move to increased electricity use – especially in rural areas. It also needs to be adapted to cater for the peaks and troughs associated with renewable energy, the required storage and the new ways that electricity will move though the grid.
Electric vehicles are a clear example of increasing our reliance on electricity. As we transition to EVs, the supporting infrastructure is vital; it is anticipated that, unless the national grid is strengthened, the charging needs from millions of new EVs could result in blackouts across the country.
Retrofit revolution
Moving towards a reality where all of the UK’s energy is provided by renewable sources is laudable, and necessary to meet net-zero targets. However, generating clean energy can only take us so far if the commercial and residential buildings using this energy are wasting it through buildings that are not energy efficient.
Eighty percent of the buildings that exist now will be in place in 2050 when the UK has committed to be net zero. To ensure our commercial buildings and housing stock are operating efficiently it requires a retrofit revolution, but the onus has been placed on consumers and landlords. In many cases, the cost to the private sector is not proportionate to the energy efficiency improvements that are achievable. Some incentives have been offered to encourage upgrades, including zero rating certain energy saving materials in domestic buildings, but this incentive is time bound and will only go so far given it isn’t applicable to commercial buildings.
Currently, legislation prohibits the new letting of buildings with an F or G energy performance certificate rating (including renewals of existing tenancies) unless an exemption applies. The continued letting of residential property is also prohibited if such property has an EPC rating below an E. From 1 April 2023, landlords will also no longer be able to continue to let commercial properties with an EPC rating below an E. Proposed legislation was put forward in a 2020 white paper to change the minimum standard for commercial property to a C rating in 2027 and a B rating in 2030. The suitability of the EPC rating system is a topic for another day, but the proposed legislation highlights the impression that a lot of work needs to be done to get the UK’s current building stock up to scratch.
Around 500,000 buildings in England are protected by statutory listing, while hundreds of thousands more are in conservation areas. Without changing the policy guidance to enable energy efficient upgrades to be made more easily to these buildings, it is an incredibly costly and drawn-out process.
This is the issue; policy is inconsistent and inconsistently applied. This means that, while net-zero ambitions are to be commended, we have a long way to go before they are a reality.
This article was originally published in EG (21 June 2022) and is also available to read here behind their paywall.
The index highlights the best landed estates lawyers for high net worth individuals who excel in advising on issues ranging from tax to succession planning, residential development to diversification, as well as the overall management of an estate.
With seven listed lawyers, Forsters is the firm with the greatest number of advisers ranked in the 2022 Index. The recognition consolidates Forsters’ long-standing reputation as one of the leading Rural Land and Business teams in the country. The team are also ranked in Tier 1 for Agriculture and Estates by the Legal 500 and in Band 1 for Agriculture & Rural Affairs by Chambers and Partners.
Making wine is expensive. You need the land, the labour and specialist plant and machinery plus long-term capital to support expansion and maintenance. It takes five to ten years for a new vineyard to start selling wine so sufficient capital will be needed in the early years.
Where that money comes from is important. Are you borrowing it? From whom? What is the loan secured on? A range of assets can be used for security, not just land itself; some require more bespoke financing than others. The right finance can make a huge difference to the amount you can borrow, the interest you pay and how much flexibility you have over the operation of the business.
Generally, land is the easiest asset to secure and, in recent years, money has been reasonably cheap. However, high street lenders will not usually lend against agricultural property, meaning you need to approach the handful of specialist lenders in this area. Larger and more established vineyards with a trading history meanwhile are increasingly using asset-based lending, which is borrowing against receivables generated by the business as well as land, plant and machinery. This often provides more flexible working capital than vanilla loans secured against just the land.
As with any financing, it is often helpful to approach a specialist broker who can find the right lender for your business and its borrowing needs.
You will need a solicitor to act on your behalf. Lending terms can be onerous and it is important to take legal advice to understand them in the context of running the business day to day. A good lawyer will explain potential defects in your security to your lender and give solutions, rather than simply identifying problems.
Lenders will look at assets in the round and demand adequate security for the debt, like (in the case of companies) a debenture creating fixed and floating charges over all assets or a share charge from the shareholders over the borrowing entity.
Buying plant and machinery on hire purchase terms can make sense from a balance sheet point of view. Sophisticated creditors provide overdraft facilities (secured and unsecured), and legal charges can be left in place for short notice lending too. Collateral can also come from outside the business. Personal guarantees from beneficial owners or from trustees can be especially helpful for young businesses. Remember that trustees’ guarantees should be limited to trust assets and personal guarantees should be capped. Parent company guarantees can have implications for the wider group.
Ultimately a vineyard is a collection of assets and approaching it as a straightforward land purchase is not always the answer. Forsters’ Banking & Finance team knows about complicated real estate finance and asset-based lending. They will work closely with you and the Rural Land and Business team to understand the wider project. Combining these two elements allows us to advise on and structure the most suitable form of finance for you.
Expert Insights
“With rising temperatures, improved technology, and increasing demand for wine and land suitable for vines, there is a real sense that vineyards in the UK are now, for some, a viable option. C. Hoare & Co. has funded both acquisitions and serious investment in existing businesses. As a 12th-generation family business, we take a long-term view well beyond the usual rolling five-year strategy, and with the cost of capital at a near-historic low, the timing couldn’t be better. We recognise, however, that vineyards need the right team on the ground, as well as favourable soil, aspect and climate conditions – we all know it only needs one unexpected frost to wipe out an entire season. This places winemaking some way up the risk spectrum, and it won’t be for everyone, but we have been on journeys with a number of well-advised customers and feel we offer a flexible approach.”
Simon Collins – Head of Landed Estates Group, C. Hoare & Co.
A great bottle of wine is a wonderfully elegant, simple thing. But the process of making it is complicated. Small variables in soil, climate, management and markets can make the difference between a great year and an average one.
What a corker! We take a look at Sussex wine’s PDO status
20 June 2022
News
Still and sparkling wines produced in East and West Sussex are the latest UK product to win Protected Designation of Origin (PDO) status.
The announcement, made on Wednesday 15 June 2022 by the Department for Environment, Food and Rural Affairs (DEFRA), affects some of the most prominent labels in the English wine market. Though not without its critics, the move has been heralded by many as a boost for the industry. But what does it actually mean?
What is a PDO?
PDO stands for ‘Protected Designation of Origin’, and is essentially the post-Brexit equivalent of the EU DOC. Products with PDO status have been produced, processed and prepared within a specified region. They must meet quality standards set by DEFRA, and have characteristics specific to their area of origin.
Products that meet these characteristics are free to display the PDO symbol on their packaging, and other producers of the same product will not be able to use the region’s name to describe the product. For example, the Sussex wine PDO prevents wine produced in other areas from calling themselves “Sussex” wines. The PDO distinguishes Sussex wines from wine produced elsewhere due to more than just their area of origin: it also recognises the area’s soil, climate and local winemaking expertise.
There are 32 registered food and drink names with PDO status in the UK, four of them being for wine: England, Wales, Darnibole and now Sussex. Though no other wine areas in the UK currently have an active PDO application, Sussex’s new status might encourage winemakers in other regions to apply.
I own a Sussex vineyard – what does this mean for my business?
Owning a vineyard in Sussex does not automatically grant you the right to use the PDO symbol on the wine you produce. In addition to the grapes being grown in Sussex, the wine must also be processed and produced in the region. The PDO also has further requirements that limit grape variety and place maximum harvest yields on vineyards. There are also restrictions on methods and the ABV of the wine. Further regulations are yet to be confirmed, and a consultation document will also be circulated throughout the Sussex wine industry, which will allow producers to comment before the requirements are confirmed by DEFRA.
So far, the PDO sets the following requirements, among others:
It limits the grape varieties that can be used to make either still or sparkling Sussex wines to predominantly Chardonnay, Pinot Noir and Pinot Meunier (though Arbanne, Pinot Gris, Pinot Blanc, Petit Meslier and Pinot Noir Précoce may be used).
The grapes must be hand-harvested, with a maximum harvest yield of 12 tonnes per hectare (14 in exceptional circumstances). Detailed records must be kept and made available for inspection.
Sussex sparkling wine must be made in the traditional method and from classic sparkling wine grape varieties such as Chardonnay.
The ABV and chemical makeup of each wine will be subject to an organoleptic test and approved by Wine Standards.
At least 85% of the grapes used to make Sussex sparkling wine must be of the vintage year.
Single variety wines must contain a minimum of 90% of the named grape.
If the wine your vineyard produces does not meet the PDO’s requirements – if it is non-alcoholic, for example – you will be unable to call your product “Sussex” wine, even if the product is produced, processed and prepared in the region. If you wish to use the PDO status, you may need to consider the cost implications: changes to your grape supply or processing facilities could be required.
Land in Sussex is already attractive due to the reputation and proven track record of the area’s wine production; many vineyards and farms change hands off market for significant premiums. It will be interesting to see whether PDO will impact land values further.
I’m looking to buy a Sussex vineyard – what does this mean?
Assuming you are buying a vineyard or winery (or both) that is claiming PDO status and you want to continue to do so:
Checking that the PDO requirements are being met will be important. Having a good consultant or land agent on side early in the process will be helpful, as they can review records and compliance on the ground, in much the same way as a good land agent can assist with BPS payments on a purchase. Management information will be vital, and the contract should provide for reasonable access between exchange and completion and a handover on completion. Depending on the importance for the brand and the seller’s involvement, it might also be prudent to consider asking the seller to assist with enquiries or inspections that arise after completion – though this may be difficult to enforce in practice. Having an experienced agent on side to maintain good relations between buyer and seller can be just as important as a well-drafted contract.
Where there is a meaningful period between exchange and completion, the contract ought to address compliance in the interim. It would be sensible to seek a warranty that the seller has complied with the PDO requirements and will continue to comply until completion.
Employees or consultants will become even more important: retaining key personnel responsible for compliance will be critical where the buyer is not already an experienced vintner or bringing in their own team. If TUPE applies, as it will for the purchase of most commercial vineyards and wineries, employees will transfer automatically to the buyer; consultants will not. A sensible buyer would ask for contractual provisions designed to ensure the smooth handover of the personnel, business and knowhow.
The business element may be a larger part of the transaction than you think. While it remains to be seen whether PDO status will guide consumer choice and impact values, acquiring a label with PDO status could entail purchasing goodwill, IP, stock and other assets more commonly seen in corporate M&A than in farm purchases. It is vital that the professional team has specialist corporate support to cover the purchase of the business as well as the land and buildings.
If you are interested in purchasing a Sussex vineyard, or if you have any other questions for the Forsters Vineyards & Wineries team, please get in touch with Henry Cecil.
A great bottle of wine is a wonderfully elegant, simple thing. But the process of making it is complicated. Small variables in soil, climate, management and markets can make the difference between a great year and an average one.
Buying a vineyard or a winery involves acquiring a bundle of assets. Land is at the heart of the transaction, but you may also be buying crops, buildings, subsidies, goodwill, and intellectual property. Overlaid with that is how you are buying them – trading businesses may be sold as corporate transactions or “share sales” rather than a direct purchase of the underlying assets.
This article focuses on the assets you are acquiring and what terms your purchase contract might need to address.
Land
First and foremost, when buying either bare land to plant vines or an existing vineyard, you are buying land. Whether the soil is good for growing grapes is only one factor in determining the whether the land is right. Land is a complicated asset and when purchasing it for a vineyard you need to consider questions like:
Are there restrictions that could stop you growing vines on it? For instance, does it have the right planning consents for its current or proposed use? Can you sell the wine as well as make it, or host wine tastings and weddings?
Are there any third party rights that could affect operations? For example, is there a public footpath through the middle of the vineyard, or are there historic footpaths that could be registered in future?
Are you inadvertently taking on other liabilities you were not expecting, such as claims from the seller’s employees or environmental contamination?
What is planned in the area? For instance, is it next to a proposed new housing estate, or is HS2 or a new bypass going to plough through it?
Where does the water come from? If you have abstraction licences or a private water supply, are you able to use those for the business, and what obligations are you taking on?
Is there proper access to the public highway?
How much tax are you going to pay on the acquisition – what are the rates of SDLT and VAT?
Due diligence by your solicitor will answer these questions and more. Armed with this knowledge you can adjust the price, if necessary, and negotiate sensible provisions into the contract to protect you against the risks.
Expert Insights
“The purchase of a vineyard is a new opportunity for clients to find a real connection with land and a chance to create a legacy investment. The best sites are hard to find, hard to acquire and the journey is often full of headaches and heartaches – you have to be resilient. Vines are a long time in the ground, therefore it is important to take site selection and preparation very seriously!”
Rupert Coles – Director, Rupert Coles Ltd
Buildings and equipment
Turning to production, wineries need premises to lay down bottles, keep expensive kit, house people on site and, increasingly, entertain visitors and customers. From bats to asbestos, there are nuances with bricks and mortar. A good surveyor is important if you want to understand the potential liabilities and costs of upkeep or conversion of the farm buildings.
Complying with the planning regime is critical. Three areas come up most: use, development, and listed buildings. Whether or not the site has the right consents in place for your proposed use must be checked by your solicitor – the planning rules are not straightforward, and many wineries will require specific consents for retail and leisure.
Around 400,000 buildings in England are listed, including a surprising number of old agricultural barns. Carrying out unauthorised works to a listed building without consent is a criminal offence so cannot be taken lightly, and there is no limitation period for enforcement action, so you could have to put right unauthorised works carried out by the seller. In the most serious scenarios, you may decide that the seller has to apply for consent for unauthorised works themselves before completion, and you might keep back some of the sale price as a retention to deal with the risk.
Less severe but more common in draughty, old buildings are missing building regulations certificates and potential failure to comply with the Minimum Energy Efficiency Standards (MEES), where Energy Performance Certificate ratings of F or G render a building unlettable. Again, you need to understand how this will affect your use of the site prior to exchange.
Viticulture also requires specialist equipment, much of which is valuable and hard to remove. If it is included in the sale, a key point to check is whether the seller is able to sell you everything you think you are buying – nemo dat quod non habet, literally meaning “no one can give what they do not have”, is a long-established principle but one that can easily be overlooked where equipment is held on hire purchase terms. Assuming it is owned and included, there may be accountancy elements to address in the contract such as capital allowances elections, and having an experienced accountant to work with your lawyer is essential.
Crops
Most vineyards will be brought to the market in early spring and contracts are often exchanged in early summer – a quick sale where efficient solicitors have a sales pack ready can exchange in under a week, though most more substantial sales will take six to ten weeks. Most sales will then complete within a few months, either before or after the harvest.
If completion takes place before harvest, then the contract ought to deal with the grapes. Growing crops form part of the land and will be included in the sale by default; if they are, the seller may well require you to pay for them and any other items of what is known as “tenant right” based on a valuation at completion, particularly if completion is close to harvest.
It is more common for the seller to want to keep the current crop. They will then need holdover rights to harvest and store the grapes. A good contract will set out costs, liability and insurance in that period, together with a provision allowing you to keep or sell the grapes if the seller fails to remove them – otherwise you are left as an “involuntary bailee” and will have to follow a notice procedure before you can do anything with the grapes.
Many vineyards will be situated within a larger farm and not all the land will be under vine. The remainder, and indeed the field margins, will often be used for grazing or for more conventional arable crops. While the crops may be dealt with alongside the grapes, it is not unusual to purchase cattle or sheep with a farm and an ingoing valuation or price adjustment may be required for livestock and deadstock.
Growing grapes is still agriculture and the land is, therefore, eligible for agricultural subsidies. These can be lucrative but complicated, particularly as the Common Agricultural Policy fades away post-Brexit in favour of Environmental Land Management Schemes. If buying, you need to decide whether to take the entitlements to the subsidies, in which case the documents need to make provision for the transfer process and set out an agreed price.
The brand
Judging a book by its cover may be frowned upon, but judging a wine by its label is often wise. Name, logo, recipe and method are vital so they need to be properly registered, protected and enforced so no one else can steal or benefit from your intellectual property. You should also consider licensing your name and brand overseas. In the digital wild west the opportunities and pitfalls are bigger than ever.
The contract can cover whether any intellectual property is included, both in the strict sense of copyright in label design and registered trademarks, but also in the looser sense of farm names. It is not uncommon to ask a seller to stop using a farm name in future and to transfer website names and social media handles to you at the point of completion.
Finally, where you are buying the business, you also need to consider the goodwill and, potentially, any book debts. This angle is where it becomes important to use lawyers and agents with corporate experience, as the transaction will become more akin to a merger or acquisition than a single asset purchase.
Expert Insights
“The wine industry in the UK continues to grow and the demand for English wine and consequently vineyards continues to outstrip supply in key areas. A high profile product more often produced in well-established and attractive settings means there is increasing interest in the concept of wine tourism. Wine trails and tasting sessions alongside local, seasonal produce are becoming more mainstream options for tourists in the UK enabling well-advised and forward thinking operators to capitalise on this.”
Andrew Chandler – Head of Rural Agency, Carter Jonas
In summary
It will hopefully have become clear that there is no “standard” purchase – every acquisition will have terms unique to the property and business – and, as a result, you need a lawyer who can pre-empt each potential issue and offer you a solution. If you are interested in buying a vineyard or winery, please do get in touch.
A great bottle of wine is a wonderfully elegant, simple thing. But the process of making it is complicated. Small variables in soil, climate, management and markets can make the difference between a great year and an average one.
Forsters are delighted to be launching our Vineyards & Wineries practice. The cross-departmental team draws upon our strengths from across the firm, a combination of expertise that is rare if not unique in the market. The increasing number of vineyards we look after complements our exceptional book of landed estates, and is testament to our ability to look after landowning clients, whatever their business and whatever challenges they face.
The Green Unknown: might Conservation Covenants transform the English countryside?
16 May 2022
News
Conservation Covenants (“CCs”) will allow landowners and developers to deliver “public money for public goods” through large-scale Environmental Land Management Schemes, tap into emerging private natural capital markets and discharge Biodiversity Net Gain obligations. If they are really to take off, the Government needs to align the tax regime with these environmental incentives.
CCs are a quietly radical innovation with the potential to revolutionize the way English and Welsh land is owned and managed. Introduced in the recent Environment Act and inspired by similar concepts in other countries, CCs will allow landowners to contract voluntarily with a “Responsible Body” to commit their land to “conservation”. They will be new “statutory burdens on land”, a unique and interesting mixture of new and existing legal instruments.
Tying up land long-term, perhaps even indefinitely, in such a specific way is a dramatic step and we will see how popular they become. Rural landowners will be expected to provide land for conservation and to meet Biodiversity Net Gain (“BNG”) and other targets, so CCs will be particularly relevant to them. Moreover, sustainability is now so embedded in the national consciousness that, soon, every development will have a conservation element, even if only to offset or outsource its obligations, and particularly to provide the BNG required for planning permissions.
In this article, we try and answer the following questions:
What are CCs?;
How will CCs work?; and
Why would a landowner want to enter into a CC?
1. What are CCs?
1.1 Context
CCs have been part of the conservation conversation for some time. The Law Commission published a report in 2014 and the Government carried out a consultation in 2019. They also exist, in various forms, in other jurisdictions including Scotland, New Zealand, USA and Australia. England and Wales formally introduced them in the Environment Act, which received royal assent on 9 November 2021. CCs will come into being on 30 September 2022.
1.2 The legislation
Part 7 of the Environment Act is the Big Bang for CCs in England and Wales. There are two main elements. A landowner must contract:
with a “Responsible Body”; and
to use the land for a “conservation purpose”.
1.3 What is a Responsible Body (“RB”)?
RBs must be approved by the Government and have some kind of conservation purpose. They will be responsible for enforcing the landowner’s obligations, but it can be either the RB or the landowner who actually carries out the conservation work. Both the landowner and the RB can enforce against one another like parties in a conventional contract (RBs will not be arms of the state).
It seems likely that RBs will principally be large, national charities like the National Trust or the RSPB, but they could also be local (even community) bodies set up specifically for small-scale projects. They will not receive any public funding for administering CCs. At this stage, various questions arise:
Will RBs be mainly existing bodies or new ones set up specifically to enter CCs?
Will RBs be primarily national or local? (Even specific to particular CCs?)
Will RBs be primarily mass-membership organisations like the National Trust, or private bodies like charitable trusts established by landowners?
Where will RBs find the resources to carry out their obligations under CCs?
Will RBs want public access to land within CCs (including to pay for them)?
1.4 What is a “conservation purpose”?
A conservation purpose must be intended to be for the public good and:
to conserve the natural environment of land or the natural resources of land; or
to conserve land as a place of archaeological, architectural, artistic, cultural or historic interest; or
to conserve the setting of land with a natural environment or natural resources or which is a place of archaeological, architectural, artistic, cultural or historic interest.
It is so widely drawn that, arguably, pretty much any land might have a conservation purpose. The Government and Law Commission emphasize that the “public good” should be interpreted in the widest sense. It will be interesting to see how creatively this is interpreted. Ultimately, if challenged, the courts will decide whether a CC is valid or not, although sensible agreements will contain dispute resolution provisions.
1.5 CC legal foundations
CCs combine elements of:
ordinary covenants, requiring the landowner to do or not do certain things on the land;
special National Trust and Forestry Commission covenants, as RBs will be able to enforce them without owning adjoining land; and
section 106 planning agreements, as CCs will appear on the Land Charges Register rather than the property’s title.
The really novel feature is that CCs can impose positive (as well as negative) obligations on a landowner’s successors.
2. How will CCs work?
Only when they come into force will we see how CCs work in practice. Meanwhile, the Environment Act give a sense of their shape:
2.1 Tenants
Whether a tenant can enter a CC without landlord’s consent is a grey area. Consequently, it will be in both parties’ interests for a tenant to seek landlord’s approval before entering into a CC.
The Government is keen for tenants to enter into CCs; there is no landlord consent requirement in the legislation. However, if the CC involves the tenant significantly altering their holding or farming practice, consent could be required.
Several commercial points flow from a tenant entering a CC. It could affect the rent review by enhancing or diminishing the land value. Who will own / have the benefit of any enhancement to the land arising from the CC? The tenant might seek compensation for any improvement to the value of the land. The landlord might argue that the CC has diminished the value of the land and seek damages. If a tenant CC prevents the landlord from developing the land then the diminution in value could be substantial. As with consent for alterations, the licence for consent should provide explicitly for these issues to avoid dispute later. In new leases, landlords should include a requirement for such a licence if a tenant wants to enter into a CC.
The legislation says anyone who owns land freehold or has a lease of more than seven years (no matter how much has expired) can enter into a CC. This poses problems for Agricultural Holdings Act (“AHA“) tenants. Although AHA tenants have high security of tenure and are long-term occupiers, AHA tenancies run year to year. Unless the Government clarifies or changes the legislation, AHA tenants may be excluded from CCs on this ground.
2.2 Duration
As noted above, CCs will bind the landowner’s successors in title. CCs can be indefinite but sensible landowners will agree a specific period with the RB . They will need to last for at least 30 years to secure Biodiversity Net Gain, which we cover below. For tenants, they will last until the end of the term. Significantly, if a tenancy is terminated early, (one year into a hundred-year term, for example) the CC would carry on for the remaining years and bind the landlord – another reason for landlords to insist the tenant seek their consent. Licences for consent should include protection against losses flowing from a tenant’s default, such as security over a deposit account.
2.3 Enforcement
Punishments for breaching CCs are the usual suspects: orders for specific performance of obligations; injunctions; damages; orders for payment of amounts due. The court will consider the public interest in choosing a remedy and could award exemplary / punitive damages against a landowner in excess of actual damage caused. The limitation period will be six years from the date of the breach, although as most breaches will be ongoing this could be elastic. Landowners will be able to use factors beyond their control and emergencies as defences. As CCs are private, contractual agreements there will be no criminal sanctions.
2.4 Discharge or modification
The landowner and RB can agree to modify or discharge a CC, though any modifications will still need to meet the “conservation purpose” criteria. Either party can also apply to the Upper Tribunal to modify or discharge CCs where reasonable, but the Upper Tribunal will not be able to take account of a change in a party’s circumstances making a CC unaffordable for that person, so long term cashflow will obviously need to be considered when entering a CC.
In practice, ongoing dialogue between a landowner and RB will be important, particularly in the early days. Parties should also agree a timeframe for reviewing a CC formally, say every two years.
3. Why would a landowner want to enter into a CC?
Time will tell how popular CCs are. The starting point is that CCs will restrict a landowner’s agency over their land and, therefore, devalue it, potentially substantially, depending on the opportunity cost. What’s more, there is no direct public funding so CCs will need to align with other revenue schemes.
3.1 Altruism / environmental reasons
The environmental movement is now so strong that many people are keen to do and be seen to do “the right thing” for the planet. CCs are one way of achieving this. As discussed, CCs’ “conservation purpose” is broad and could have wide appeal to protect specific things that people or companies want to preserve or enhance, whether in their lifetime or as a legacy. The point when land is transacted – whether sold, leased, or left or gifted to a family member – is a logical moment to enter into a CC. Even if environmental conscience is not the sole reason it will often be a factor in decision making alongside other considerations.
3.2 BNG
Every development requiring planning consent will need to show 10% BNG), another Environment Act innovation. So there is going to be a lot of BNG around; CCs will be one way of providing it as developers and builders will have the choice between CCs and planning obligations (typically delivered under section 106 agreements with local authorities). There will be a register of land on which BNG requirements are secured by CCs or planning obligations, but we do not yet know how detailed it will be. The main difference between CCs and section 106 agreements is enforcement; the latter will be enforced by the local authority whereas the former will be subject to an RB. Initially, developers will likely stick with the devil they know (section 106 agreements), but they could switch to CCs if they perceive them to be more flexible, more bespoke, more straightforward to agree and cheaper than section 106 agreements. Cynically, you might expect RBs (because of the uncertainty of their resources) to be less rigorous enforcers than local authorities.
3.3 Natural Capital Agreements
Natural capital agreements are where a landowner contracts with a third party to provide an environmental service, like carbon sequestration or tree planting. They are relatively new but likely to become popular as governments, companies and individuals take steps to reduce their carbon footprint and environmental impact. Currently, they take the form of leases or service contracts. CCs could be a way to secure and enforce the environmental obligations within natural capital agreements, like a charge or a restriction on a property’s title to protect an overage agreement or other obligation. They could also tie into the Environmental Land Management Schemes (“ELMS”) we cover below.
3.4 Tax incentives
Tax is the elephant in the forest here. At the moment there are no tax incentives for CCs – the Government wants CCs (and indeed all natural capital arrangements) to be primarily private sector funded. But that could change if it wants to promote them and join up incentives for landowners. In other countries there seems to have been major take up only where there is a tax incentive (the USA is world-leader here, with federal income tax deductions and state tax credits). Agricultural subsidy reform may push landowners towards more sustainable management, but this does not align with the tax regime yet; notably inheritance tax with its traditional definitions of agriculture for Agricultural Property Relief and business for Business Property Relief. Without a change in the law, entering land into environmental schemes and pursuing less conventional farming will jeopardize both reliefs. This is a key policy focus in the rural world.
3.5 Environmental Land Management Schemes (ELMS)
CCs are well-suited to Landscape Recovery Schemes (“LR Schemes”). LR Schemes are the largest, most ambitious ELMS component, intended for landowners who (according to DEFRA) want to “take a more radical and large-scale approach to producing environmental and climate goods on their land”, they will operate over 500 to 5,000 hectares and are expected to last for at least 20 years. Most LR Schemes will require co-operation by groups of landowners, which is where CCs come in. DEFRA suggests CCs could be used to secure agreement between landowners and secure the LR Schemes, as with natural capital agreements.
Applications for pilot LR Schemes opened on 1 February 2022 and up to fifteen will be chosen in the summer of 2022. Like CCs, LR Schemes are yet to come into force. This is a space worth watching. We do not know how much money will be available for LR Schemes. Each will be bespoke, and the Government says they must secure private as well as public funding. Indeed, LR Schemes are intended to help landowners access the growing market for natural capital services like carbon sequestration and to develop standards and rules for those markets.
While some landowners will go the full Knepp and rewild, most will want to ensure that land in LR Schemes can still be farmed commercially (including to qualify for inheritance tax reliefs). Therefore, those negotiating and drafting CCs should take care that they are not too restrictive of farming and other activities. And, as suggested above, well-drafted CCs will include a review mechanism. On the ground, this will be complex, particularly as LR Schemes will probably involve several landowners.
Conclusion
Farming and landowning in the UK are in a period of regulatory and economic uncertainty. If the Government wants farmers to deliver public goods (as well as food security), it needs to ensure ELMS provides sufficient public money. It also needs to reform tax reliefs to reward conservation. CCs are potentially a good means by which landowners can deliver conservation – especially on a large scale with ELMS – but on their own they are not enough.
