Estate Benchmarking Survey

Estate Benchmarking Survey
 
Looking forward

26 September 2015, by Ian Bailey

What are the implications of Brexit?
 

 

Looking forward the key uncertainty is the implications of Brexit. However, in the short term the weak pound may bring some benefits to rural businesses.

These include:

  A more positive environment for exports and commodity prices

  Potential for substantial increase in subsidy payments in 2017

  An increase in domestic tourism as more people choose to holiday at home to avoid unfavourable currency exchange rates, which will include rural tourism

■  A boost in the number of overseas visitors to the UK, which is also likely to have a positive impact on rural tourism

In the longer term the outlook is less clear. Our analysis of agricultural profitability post Brexit is beginning to suggest that the impact of changes to trade agreements could be far more significant than changes to agricultural subsidy. We are regularly providing updates via our Brexit Briefings which can be accessed on Brexit Research.

Awareness of potential changes to Government policy can potentially have a direct effect on estate incomes. An example might be housing benefit cuts. We carried out a straw poll of around 80 estates and the results reveal that:

■  38% of estates have a policy to let to housing benefit recipients

■  The impact of the cuts to date has only affected residential income on 5% of estates

This report highlights the diverse income base potentially available to rural estates where the shift in reliance on agricultural income has already diluted the impact of future changes to support.

The key to profitability and a sustainable business in the future will be maximising the opportunities offered by the range of assets and resources often available to rural estates. To do this a full understanding of the current position, including benchmarking to challenge current performance, will be needed to provide the foundation for future strategy.

Looking forward the options, in addition to developing the core income streams, might include:

■  Investing in assets outside the core business

■  Developing additional housing stock to rent or through development land sales – our research suggests 28% of estates have plans to build new homes (including an element of affordable homes) and 40% have plans to sell land to developers

■  Liquidating capital through sales should not be ignored.

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Key Contacts

Ian Bailey

Ian Bailey

Director
Rural Research

Savills Margaret Street

+44 (0) 207 299 3099

 

Rupert Clark

Rupert Clark

Director
Estate Management

Savills Petworth

+44 (0) 1798 345 999

 

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