The Savills Portfolio

Landscope

25 April 2019

The agricultural tenancy reform proposals for England and Wales, expected in January, have been published recently.

The significant package of reforms includes measures to permit the assignment of Agricultural Holdings Act tenancies, widen the pool of potential successors and alter the tests against which succession applications are assessed. Meanwhile in Wales the Government intends to expand public access rights; should this qualify occupiers for payments under the public money for public goods concept? And finally, over 150 estates have pledged oak trees to help restore Notre Dame.

FOOD & FARMING

World Health Organisation (WHO) withdraws support for EAT-Lancet diet
Italy’s ambassador to the WHO has applied enough pressure for the organisation to withdraw its support for the EAT-Lancet diet. Gian Lorenzo Cornado questioned the validity of the highly controversial planetary health diet, saying “a standard diet for the whole planet… has no scientific justification at all”. He also warned a global move towards the diet could sacrifice millions of jobs, destroy traditional diets and risked “the total elimination of consumers’ freedom of choice”. As a result of his efforts, the WHO did not sponsor the diet’s launch event in Geneva.

Farming uncertainty post-Brexit
An AHDB model predicts that both a free-trade agreement with the EU and a no-deal Brexit leading to WTO tariffs, would have serious negative financial implications for English farmers. The Horizon Brexit impact assessment research predicts that rising labour costs, cheap imports and increased fixed costs will all erode farm business incomes (FBI) after 2022. On average FBI is predicted to fall by 24% if we leave the EU and sign a free-trade agreement with the bloc; if we leave the EU with no-deal and then trade under WTO rules the impact is worse with average FBI predicted to fall by 39%. Livestock industries would be hit the hardest, with pork producers predicted to experience the largest difference in severity between the two scenarios. Under a free-trade agreement the modelling suggests their FBI would fall by 42% and in the event of a no-deal by 130%.

A separate study by the Centre for Economics and Business Research (CEBR) paints a more positive picture for the wider rural economy. With a revised withdrawal agreement in place, CEBR predicts that gross value added in the countryside would outpace urban growth (1.7% vs 1.6%). Traditionally, urban economies grow faster than rural ones. CEBR agrees that a no-deal Brexit would significantly affect the agricultural sector and says responding to challenges and diversifying is crucial to survival.

Ban for ‘meaty’ terms on vegan food labels?
Proposals to ban use of words like “burger”, “steak” or “sausage” on vegan food packaging have received the support of MEPs on the EU's agriculture committee. The proposals will be voted on by the EU Parliament in May. French MEP Éric Andrieu was keen to point out “the meat lobby is not involved” and that the proposals are “common sense”. The bloc is trying to ensure consumers are not confused by labelling and echoes a 2017 EU Court of Justice ruling which established that plant based products could not be marketed using terms such as “milk”, “yogurt” and “cheese”.

POLICY

Agricultural tenancy reform proposals emerge
Defra’s plans to modernise and update agricultural tenancy legislation in England and Wales have been published. The Government hopes they will improve security for tenanted farmers, help boost productivity by removing barriers to investment and encouraging structural change in the sector. Headline proposals include:

•A right for Agricultural Holdings Act 1986 (AHA) tenants to assign a 25 year AHA tenancy to a third party, subject to a right of pre-emption in favour of their landlord. The assigned tenancy would have an open market rent

•Removing the minimum age of 65 for when succession on retirement applications can be made under the AHA

•Removing AHA succession rights once the tenant reaches five years past the state pension age to encourage earlier succession

•Removing the Commercial Unit Test which prevents succession to an AHA tenancy if the successor already occupies another commercial unit

•Replacing the current ‘Suitability Test’ used in AHA succession applications with a new ‘Business Competence Test’

•Widening the pool of eligible successors to an AHA to include those treated as children by the tenant in relation to cohabitation, nieces, nephews and grandchildren

•Introducing a provision into the AHA which would allow referral to dispute resolution if the parties cannot agree regarding the variation of a restrictive tenancy clause

•Removing barriers to investment in AHA holdings

•Introducing short notices to quit for new Farm Business Tenancies of ten years or more, to incentivise their creation

In drafting its proposals the Government has tried to balance the interests of both parties. A number have phase in periods so that both landlords and tenants can plan accordingly, whilst in some scenarios where tenants’ rights would be increased, a switch from an AHA to open market rental basis has been included. The consultation will run for 12 weeks across both countries until the 2 July. Robert Goodwill, Farming Minister, said the measures will “breathe new life into the sector and step up farm productivity”. The CLA cautiously welcomed the proposals but questioned the timing, saying there is still “vital work still to be completed” in other areas.

Wales: Public access reform proposals cause concern
Following consultation last year which received over 16,000 responses, the Welsh Government has announced how it intends to reform public access to land and water, in order to encourage activities such as organised games, camping, hang-gliding and para-gliding. A key change will be an assumption of non-motorised multi-use on access land and the public rights of way network, i.e. footpaths will be opened up to horse riders and cyclists. Restrictions on open access land will be reduced so that hang-gliding and para-gliding, bathing or using a vessel or sailboard on natural bodies of water will be possible. An independent Access Reform Group is being formed to recommend how these more significant changes to access rights should be implemented. Whilst minor amendments such as removing the anomaly that prevents organised cycling events on bridleways, and enforcement of placing dogs on a short fixed length lead in the vicinity of livestock at all times of year, will be progressed as soon as a suitable legislative vehicle can be identified. NFU Cymru Rural Affairs Board Chairman, Hedd Pugh, expressed reservations. He said “We want the public to enjoy access to the great outdoors, but this must be managed in a manner that is safe for the custodians of the land and access users”.

ENVIRONMENT & NATURAL CAPITAL

Environmental bodies resign from pesticide groups
The RSPB, Wildlife and Countryside Link and Pesticide Action Network UK have resigned from the Pesticides Forum and Voluntary Initiative saying that the voluntary groups have “failed to take meaningful or significant action to reduce pesticide-related harms” whilst meanwhile the area of UK land being treated with pesticides has risen by more than half (this is based on the total active substance treated area; on the other hand the weight of active ingredient applied over the last 20 years has halved). In their resignation letter the bodies call for the Government to replace the groups with mandatory measures to discourage pesticide use and support farmers to adopt non-chemical alternatives. They propose increased support for Integrated Pest Management (IPM), a pesticide reduction target and a pesticide tax to discourage use.

‘Green water’ abundance in Wales
Meat production in Wales uses mainly ‘green water’ to irrigate its pastures, i.e. rainfall which is used where it falls. Reports that highlight how water intensive raising livestock is, have not considered water use in context according to the Farmers’ Union of Wales. “In a temperate, wet climate such as Wales, grassland water requirements are adequately met by this green water from rainfall” said Policy Officer Charlotte Priddy. Studies have shown that across the border in England, up to 84% and 97% of water used to produce beef and lamb is green water. Ms Priddy added “By eating local, seasonal produce wherever possible and following the full story of the foods you eat, you can have peace of mind about water use and also reduce carbon emissions”.

Savills GWCT Game and Conservation Benchmarking survey launches
Our industry leading game and conservation benchmarking can help shoots increase profitability, or manage the costs of private/family run shoots. It includes information such as environmental performance, costs per bird put down, gamekeepers’ salaries and prices charged per bird. Participants receive a detailed benchmarking report which compares their shoot's vital statistics to averages for similar sized shoots. It contains exclusive statistics and trends which are not published elsewhere. Participation is confidential and free; click here for more details and to access the e-survey.

Natural England revokes three important general licences
As of Thursday 25 April, Natural England has revoked three general licences which are used for controlling 16 species of birds including several members of the crow family, Canada goose, some gulls and pigeons. The licences are relied upon in England for pest control purposes by farmers, gamekeepers and those managing urban areas too. Natural England’s decision to revoke the licences is linked to a legal challenge, because the licences were issued without it being lawfully satisfied about the absence of other satisfactory control solutions. Natural England intends to start issuing new licences online from week commencing 29 April, it says these will support lethal control of certain birds in defined situations, such as to prevent serious damage to livestock from carrion crow and to preserve public health and safety from the impacts of feral pigeons. In the interim period anyone who needs to control these species will need to apply for an individual licence, using a simplified process which will be available on gov.uk from 25 April. Until a replacement licence is obtained, any pest control activity relying on these licences will need to cease. The CLA have prepared an advice note which is available here.

 

 

PROPERTY & DEVELOPMENT

England: Open-ended residential tenancies to be created
The Government plans to overhaul residential tenancies in England so that private landlords will no longer be able to evict tenants from their homes at short notice and without good reason. A consultation will cover plans to abolish section 21 notices which can be used to bring an assured shorthold tenancy to an end after its fixed-term with 8 weeks’ notice. The move to end ‘no-fault’ evictions would effectively create open-ended tenancies. However, the impact upon landlords will very much depend upon the detail of the implementation; it is proposed that court processes will be expedited and the section 8 eviction process improved. Landlords will be able to bring tenancies to an end by providing a concrete, evidenced reason which is specified in law. Due to need for further consultation and pressure on parliamentary time due to Brexit, it could be a year or more before the new arrangements come into effect. Similar changes were introduced in Scotland on 1 December 2017, and provide 18 grounds under which possession can be regained. The new rules were not applied retrospectively in Scotland; it is not known at this stage whether or not the changes in England would apply to existing agreements too.

BUSINESS & ECONOMY

Application of the Electronic Communications Code
A recent Upper Tribunal (Lands Chamber) case Cornerstone Telecommunications Infrastructure Ltd (CTIL) v Compton Beauchamp Estates Limited considered the granting of rights under the Electronic Communications Code and made some observations on the consideration and compensation provisions in the Code. CTIL’s application for the grant of code rights failed as it was the operator of the site; it was deemed that Vodafone was in fact in occupation. In relation to compensation the Tribunal criticised the valuation approaches put forward by both the operator and landowner. CTIL’s approach valued the land at £26 for a 10-year term, based on an arable land rent, whilst the landowner’s approach of discounting old code rents by 35% was also dismissed. The Tribunal did not dismiss other elements of the landowner’s proposals, which were based upon comparables agreed under the new code and rights granted for non-telecom purposes such as weather stations and air traffic control stations.

OTHER RURAL NEWS

And finally…
Estates pledge trees to help rebuild Notre Dame
Oaks planted centuries ago on some of the most famous British estates have been offered as a gift to help rebuild Notre Dame cathedral. More than 150 members of Historic Houses have volunteered after the Duke of Rutland, owner of Belvoir Castle, suggested the idea. He said “anyone who lives in an old building knows there’s something special about the way it was built and the materials used” and added “we’ll replant every tree we fell”. The roof structure used trees from between 1160 and 1170, and was estimated to contain the timber from 1,300 mature oaks.