Q. What will be the residue of economic scarring on asset values for the next 3 years?

Q. What will the impact be on asset values and the availability of borrowing?

Q. Based on previous experience of sharp economic shocks (and noting that past performance isn't a guide) when do you think the consequences of the pandemic will start to become apparent in the rural economy, particularly if there is any impact on asset values? Is it a question of waiting and seeing how the UK employment situations shakes down once we are through this?

A. Although we are hopefully nearing the end of lockdown, the full implications of the pandemic are not yet clear as we do not know what the new normal might look like. It is also likely that future events have yet to appear, that could have a significant effect on psyche such as the ease or difficulty of finding a vaccine, the ability of governments to fund the costs of the pandemic and global warming post lockdown recovery. The full effects are unlikely to become clear until the mid to late Summer, once we know what the new normal is as well as the government’s intentions for funding the crisis through either tax or austerity.

Having said this, from our work with investors, in terms of the rural sector, there are two main early themes developing:

1. There is likely to be an increased focus on income and in particular true diversification and resilience with more emphasis by farmers on understanding where their products are sold and how reliant they are on one or more retailers.

The more difficult element will be for tourism and leisure activities. In the past these have been seen as an important source of higher income. However this income is not without its risks and there is a limit to how much contingency can be planned for such disruption. Nevertheless, tourism and leisure are still going to be an important part of the rural sector especially when combined with environmental objectives.

2. We see that the pandemic will accelerate bringing forward technology changes. This could see an increase for automation and may result in some significant investments. There are also likely to be further reforms of the food supply chains, much of this would already be needed for the post Brexit economy.

In terms of the general rural sector, although we have seen falling land prices for a number of years now, these have been gradual rather than sharp. Banks have been increasingly focusing their borrowing decisions on income and it is likely this will have increased focus. It is also worth noting in terms of lifting the RICS Market Uncertainty clause, that the rural sector was one of the first under consideration, although it has remained for now. At present bank activity is still down as they focus on pressing short term business needs. A few banks are still active, but there is limited new business. There is an expectation this might start to change in June, once a more normal economy resumes and the government’s action plan is clearer.

For more information, please contact Gerald Fitzgerald.

Q. Does the panel think this virus pandemic is going to strongly influence the diversification decisions that rural businesses make in the future?

Q. What opportunities will there be for diversified rural estates post Covid-19?

Q. Obviously Covid-19 has had a dramatic impact on agri-tourism enterprises in 2020, but with the anticipated increase in the cost of flying can we expect a further increase in the public choosing to holiday in the UK? Is now the time to think about diversifying, if a farming business has the opportunity to do so?

Q. What alternative farm enterprises will likely benefit from change in consumer behaviour, work from home trends and corporate business model adjustments on the back of the pandemic?

Q. Where, in the panels considered opinion, do rural businesses go to diversify their income portfolio to compensate for the absence of foreign visitors for the next 24-36 months. Do the panel agree energy and net zero carbon agenda may become the areas of opportunity? 

Q. What is the likely impact on farmers/landowners diversifying?

A. Whilst uncertainty around enterprises such as weddings and visitor attractions will continue at least in the short term (as social distancing is more difficult), new opportunities will also arise. For example, we predict a growth in the UK holiday accommodation market as consumers seek somewhere rural to go on holiday. Winning consumer confidence will remain a challenge and operators will need to ensure that they have taken all necessary hygiene and social distancing measures and heavily promote that they have done so. Whilst the staycation phenomenon is likely to grow it is important to remember that there is likely to be a significant decrease in international visitors to the UK in the short to medium term.

Change in consumer behaviour has largely focused on buying local (e.g farm shops and vending machines which have typically seen a 200-300% increase in demand) so those farms supplying local retail outlets with a focus on local/seasonal produce will continue to benefit for the foreseeable future, hopefully continuing as a long term trend. Work from home trends (or more specifically not commuting to large city offices) may see an uptick in demand for flexible rural workspace e.g serviced offices/meeting facilities. From a corporate perspective companies may look for office/business facilities that do not require the use of public transport (rural/edge of town) and offer health/well being benefits such as access to lots of green space.

Also see Leisure and Policy and supply chains answers.

For more information, please contact Simon Foster.

Q. What is the long term outlook for electricity prices and consequential prospects for renewable energy project funding?

Q. How has Covid-19 impacted upon the energy sector on the rural landscape - have the number of enquiries changed at all and has it impacted on development plans - timings etc.?

Q. The current circumstances are bringing to the fore the benefits of a mixed enterprise. What are the prime opportunities of the moment? Particularly in farming and energy. 

A. Even before Covid-19 took hold in March, there was a glut of oil and gas globally, caused by a warm winter in Europe and the price war between Russia and Saudi Arabia. Covid-19 was then added to the mix, driving energy demand to record lows pushing prices lower. Forward prices for generators for Winter 2020 and Summer 2021 were already low but they now stand about 16% lower.

Prices will certainly bounce back but when and for how long, no-one truly knows.

None of this is helpful for those trying to get projects out of the ground and sustained low prices will certainly delay the through flow of new projects but at the moment we aren’t seeing any loss of appetite from developers.

Again the volatility of the electricity price highlights the importance of your offtake strategy – who are you selling to, for how long and at what price? It also highlights the importance of the reintroduction of solar and onshore wind to the Contracts for Difference support mechanism.

Low carbon infrastructure will likely form a key pillar of the governments post Covid-19 growth strategy and will inevitably present opportunities for rural businesses.

For more information, please see our latest briefing note or contact Nick Green.

Q. What are the likely short and longer term effects on the already precarious incomes of small dairy farmers?

Q. Some dairy farmers are reported to be 'throwing away' milk down the drain. Can you explain what you believe are the reasons for this, especially as my house hold are using more milk than usual?

Q. The closure of coffee shops etc. has shown how dependent liquid milk is on these outlets. Do you really think, with a limited return to city centres and many office workers continuing to work at home for the foreseeable, we’ll see this segment of the market come back in full in the medium term? We just don’t make lattes and cappuccinos in the same way at home..

A. The lockdown resulted in the closure of most of the food service sector which created an immediate reduction in demand for milk and an oversupply of about one million litres per day, or 3% of production. This led to the dumping of some milk estimated at 5% of all producers. The market very quickly adapted, partly due to the creation of new markets, increased production of UHT, SMP and cheese but also due to some farmers cutting back production. The market has now stabilised and all milk being produced has a market. Currently it is difficult to predict what the market will look like in the future as we don’t know whether demand from the food service sector will get back to pre-lockdown levels; if there is a longer term oversupply farm gate prices could fall by as much as 10%, until demand and supply are in balance.

For more information, please contact Adrian Matthews. 

Q. Which farming sector is likely to be hit the hardest? How long is the impact likely to last for? Is extra borrowing the correct solution?

Q. What do you think the value of livestock and grain prices will be going forwards; with the problems of Covid-19 and the trade talks that I assume are continuing in the background now we have left the EU. What do you think are the prospects for the game shooting season 2020-21?

Q. What will the effect be on arable crops prices?

Q. Which do you think will have the greater impact on farm incomes and values: Covid-19 or Brexit? And why?

Q. What is the medium-term impact of Covid-19 on the cost of production? What components of costs will experience inflationary or deflationary pressures?

A. Pricing on agricultural commodities has been affected directly by the virus primarily as a result of the very abrupt shut down of most food service outlets, regardless of the on-going demand from consumers.

How prices fare will depend in most sectors on the speed of recovery of the broad supply chain and consumer demand being maintained, but also in the reaction of producers’ attitudes to risk and view on planned production. Looking at the overall business environment the main medium term influences will continue to be weather, currency and the trading environment all of which were existing prior to Covid-19. For both sales of produce and purchase of inputs, rather than aiming to guess where markets are going it is greater focus on risk management, where markets allow, looking at contract price arrangements, and forward purchasing of inputs against a reasoned budget.

For more information, please contact Andrew Wraith. 

Q. Where's the good news? Which technologies can / will materially reduce the cost of production of combinable crops in the next three years? How do we make the best of ELMS? Where is the carbon capture market - is it worth any investment in? What worthwhile opportunities exist as a result of the extension of the RHI regime? 

Q. How have farmers adapted to meet the challenges of the lockdown?

Q. How can we "build back better" in food and farming once all this is over? If you were writing a recovery plan for food and farming what would your top three items be and why?

A. In recognition of the widespread response from local communities and consumers, a fundamental pillar for recovery must incorporate the creation of a more sustainable, flexible and diverse food supply chain. The fragility of supply has been exposed by the crisis and demands shifted leaving sophisticated supply chains distribution networks struggling to adjust. The oligopoly of food retailers must be addressed in order to allow diverse local producers and retailers to build on the foothold that they have established during lockdown.

Policy makers should be adapting the core principles of the pre Covid-19 debate to recognise that food and its security should be pivotal to any future policy direction for agriculture and the environment. The production of good home produced food is not mutually exclusive to a targeted environmental policy. Protectionist measures in a post Brexit world are not required if the population understands and recognises the benefits of the truly British brand. Fair and clear labelling must be a part of the new world.

Generational and structural change within the farming community needs to continue to evolve. The landlord and tenant sector also needs to adapt to changing land use opportunities and diversification of rural business. Entrepreneurship needs to be encouraged and nurtured. The tax system needs to recognise this and encourage diversified rural business investment that can support generational change and adaptation away from just food production. Rural tourism and a re-engagement of the public post Covid-19 with the countryside must be a target area for land managers. 

Also see Policy and supply chain answers.

For more information, please contact Simon Blandford. 

Q. Looking at the forestry land market are there any recurring issues that are being seen coming from the main lenders when approached for finance?

Q. Based on the "Scotland's Forestry Strategy 2019-2029" first 10 years objective by among others to create 3000-5000 ha new native woodland per year. Are this strategy changed in relation to Brexit? Are the political findings for this strategy in place and/or have they changed? How easy for rural estates to get permission/grants to develop new woodland areas on their existing land?

A. Forestry is primarily a cash purchase with very few buyers borrowing to purchase. Where lending does occur the lack of regular income to service debt can be an issue so LTV tends to be at a low percentage.

One of the objectives of the "Scotland's Forestry Strategy 2019-2029" is to create 3000-5000 hectares of new native woodland per year. There have been no changes to policy due to Brexit and funding for it is in place. Scotland has an annual budget of £46M for woodland planting grants and there is no evidence of this being reviewed, and indeed we expect it may increase.

For rural estates looking to achieve planning permission and receive grant funding for the development of new woodland areas on their existing land there is a grant application process in place. This looks at all matters relating to the proposals including land quality, conservation designations, existing flora and fauna, tree species suitability and landscape. All this information is combined to form a grant application which once approved becomes the contract between the government and the landowner. If the land and proposals are suitable there is unlikely to be a problem getting permission, but it is complicated and can take 12 – 24 months.

For more information, please contact James Adamson.

Q. Are the government's Covid-19 policies of offering financial assistance to individuals and companies actually reaching the rented sector?

Q. Do we know if there will be a fourth round of the RDPE Growth Programme - rural tourism infrastructure?

Q. Eligibility criteria for the Dairy Hardship Fund of £10,000 for loss of income during April and May, and any other additional support on the horizon.

Q. Will there be any government funding for the rural economy post Covid-19 debt?

Q. Given the huge levels of government spending in recent months, does the panel consider that there will be implications to future capital grants for funding woodland creation, and as a consequence will there be a knock on affect to the value of marginal and hill land?

A. We have seen a strong uptake for ‘The Small Business Grant Scheme’ and the cash grants for businesses with a rateable value of up to £51,000, both within the rented sector and for owner-occupiers. The application process has been relatively simple, with local authorities contacting eligible businesses directly and payments being made to successful applicants in a short time frame. We are, however, aware of a number of cases where businesses have not responded to correspondence and are therefore not receiving support for which they are eligible.

Business rate holidays are being automatically applied to eligible businesses by local authorities, which has, and will, provide further support for larger businesses in the relevant sectors.

There are a number of businesses within the rural sector that have had business rates applied to them in recent years (for example those with solar panels or livery yards) that are eligible for the Small Business Grant Scheme. This has in some instances provided support to the wider business and eligibility here should be considered.

We are not aware of any forthcoming grant support for the rural economy through programmes such as the RDPE Growth Programme. Landowners and managers should explore existing opportunities through Countryside Stewardship to bring in additional revenue streams to rural businesses, with perhaps a stronger case for entering these now in some instances.

The future for government support payments for the rural sector was outlined in the 2019 Agriculture Bill, with natural capital and ecosystem services underpinning the Bill. Coupled with the UK’s commitment to net zero carbon emissions by 2050, we do not currently foresee any changes to the funding mechanisms behind this Bill and therefore future grant support for the rural sector.

For more information, please contact Stuart Nicholls. 

Q. What are the rule on taking people out of furlough and then putting them back in?

Q. A family dairy herd may rely on their own family members and one outside employee. There is a risk of that employee visiting with Covid-19 and then all having to go on isolation. What then - can they still work together if all isolated on the farm? Can the milk still be sold? Timescales? Options?

Q. What are your opinions regarding site visits in the current situation and what are the general client's opinions?

Q. Following the PM update, and if the R rating is sustained below 1, what will be the plan to bring furloughed staff back to work?

A. Site visits for professionals are now allowed in England under updated government guidance provided they can be done within social distancing stipulations, the individual visiting is not suffering symptoms, self-isolating or shielding. Public transport should also be avoided for travel. Guidance in Scotland, Wales and Northern Ireland still does not allow site visits. Savills is now mobilising its workforce to do essential visits within the parameters above in England, but wherever possible staff are being encouraged to work from home.

In the event that a farm employee becomes infected with Covid-19 then they should immediately follow government guidance re self-isolation and take the necessary steps regarding treatment. This would prevent them attending work again until cleared to do so. If the remaining staff are all in one household then it may be possible to continue working but self-isolation and social distancing are recommended to prevent spreading the infection further. Such cases would be dependent on the particular and individual circumstances and it is strongly recommended medical advice is sought to aid in the decision making process, including whether, for example, milk can be sold from a farm where there has been an infection.

The Furlough Scheme allows companies to rotate staff on furlough, provided each period of rotation is no less than three weeks. It is also possible to end furlough early provided the terms agreed with the furloughed employee allow for this. Furloughed staff retain all their employment rights whilst on furlough so any decisions taken regarding recall to work need to be consistent with the Furlough Scheme rules, employment law and the agreement made with the furloughed employees. All of these will need to be considered before a final decision is made.

For more information, please contact Brian Gargett.

Q. How do you see the progress of ongoing consultation with estate and property owners for large scale construction projects-A9 between Perth and Inverness?

A. In terms of infrastructure projects and specifically the planning and delivery of them through the compulsory purchase (CPO) process, we have not seen a slowdown in progress to date whether that be road schemes or electricity projects. In terms of the A9 dualling, construction works and some environmental surveys have temporarily been stopped under the current lockdown restrictions but it is hoped these will commence again shortly. However as for the planning and delivery of the project through the CPO process, this is very much still happening with meetings and consultations with affected parties taking place virtually or by conference calls where possible. Public Exhibitions are not currently happening in Scotland and going forward how these take place will need to be addressed in the context of social distancing requirements. Like most sectors the compulsory purchase process and delivery of infrastructure projects across the country is having to adjust to new methods of communication and delivery.

For more information, please contact Merle Boyd.

Q. Across the commercial, residential, agricultural and forestry property sectors, which would you say are likely to be most affected in terms of sale values?

Q. Do Savills believe demand for rural residential property will be weaker or stronger 3 months on from post lockdown measures being largely lifted?

Q. How do you think Covid-19 will affect land prices long term as well as green energy and general diversification opportunities?

Q. Are there any indications that more 21st Century estates will come to the sales market in 2020 -2021, with utility/sporting assets in the £2million + price?

Q. What is Savills opinion on the post-virus supply of agricultural land and woodland, and the likely effect on values?

Q. Is it a good time to buy or good time to sell?

Q. What are the implications for farm and estate land values of 1) the proposals for APR and BPR of the all parliamentary group for Intergenerational tax fairness 2) Brexit + 3) Covid-19?

Q. What does the panel expect will be the impact on supply/demand for land sales/purchases and also how land values in general might be expected to change from pre-Covid levels when taking new valuation instructions from banks?

Q. What effect do you expect the pandemic will have on rural residential property values?

Q. Are you expecting to see a surge in country house buyers? Will farmland price increase and if so what will be the drivers. Do you anticipate SDLT changes in any property sector? What will (if any) be the lasting effects of Covid-19 on the property market?

Q. Do you expect to see more dairy farms come on the market as a result of increased financial pressure on dairy farmers who have lost their wholesaler customer base?

Q. Do you anticipate an increase in demand for houses in the country? Do you anticipate a change in agricultural land values over the next 12 to 24 months?

Q. Do you think the popularity of small diversified farms (or those with good diversification potential) offering lifestyle business opportunities is going to grow and draw new entrants to rural business?

Q. Many people are hoping that pent up demand in the housing market, will help the residential sector recover after restrictions are lifted. How important do you think this factor will be in the recovery of our housing markets?

Q. Will those farmers approaching retirement with no obvious succession, who had perhaps been considering an exit strategy from the industry in advance of Brexit driven changes to subsidy regime in the UK, accelerate or delay their property disposal decisions in light of current Covid-19 impact? Is 2020 likely to be one of the quietest years on record for land transactions in UK?

A. Unsurprisingly the subject of farmland values was popular as was how farmland would be valued in the future in a sector that is reliant on comparable sales evidence.

In terms of how values might be affected history provides a useful indicator. Its low price volatility and resistance to financial cycles make it a classic long term defensive investment especially in times of economic turmoil. At the end of last year we created three potential scenarios for the land market all of which presented a relatively benign outcome in five years’ time.

Anecdotally, while transaction levels have been low, sales have continued to be both agreed and completed over the last few months, despite the Covid-19 crisis and its restrictions, and there has been no demonstrable evidence of any change in values.

As the fundamental dynamics of the market remain in place (a broad range of buyer types/motives competing for restricted supply), it seems unlikely that price trends will change significantly. However, given the unprecedented circumstances, it is too early to tell what unforeseen events may occur to materially affect or alter supply and demand dynamics and consequently values into the future. The hugely important role agriculture plays in the UK economy and society may once again be recognised and appreciated. The most efficient and dynamic farming businesses will thrive and the best farms and land will always be a prized commodity

There is also undoubtedly a very real interest in the environmental agenda. Natural capital and carbon management are well and truly in the limelight. The rise in more ethical and conscientious investing is a fascinating new dynamic for our market – that may well provide a lifeline to otherwise less desirable, poorer quality land into the future as well as introducing a new type of buyer into the marketplace.

Evidence of actual sales and supply trends combined with buyer and seller sentiment, will continue to be used to form our opinion and commentary on future market predictions.

Supply

Only 14,000 acres have come to the market across the whole of the UK in the first 4 months of the year. To put this into context. the five year average for a full year is around 150,000 acres of publicly marketed land. We expect now lockdown measures have been slightly softened more farms and land will come to the market during the next few months and thereafter, the performance of the market and indeed the economy is likely to dictate how much more land is marketed.

Demand

Our research suggests a number of households may review their current location. An observation from our recent client survey highlighted a growing interest in villages and the countryside. Of the clients surveyed, 39% were now more attracted to village locations and 41% to countryside locations. And this is even greater for buyers with school aged children. Read the full results of the survey here.

Looking specifically at the farms and estates market a shortage of quality supply before the crisis saw eager buyers becoming frustrated. Our new applicant registrations and web traffic are growing and a number of buyers have been desperate to get out and look at properties. In addition to myriad existing reasons for looking to buy land, the growing interest in natural capital and carbon management, is adding a whole new profile of buyer types to an already crowded market.

Residential sector

In the residential market, we expect to see a downward pressure on prices in the short term, likely between -5% and -10%, but any greater falls are tempered by the support from government for the furlough scheme and competitive mortgage rates.

Longer term we expect to see more positive price growth return over the next five years, particularly in prime markets which were already looking good value and a net overall increase of around 15% is anticipated by 2025.

Diversification / Natural Capital 

Buyers have been attracted by the diverse basket of assets many farms and estates offer. This can include alternative assets such as residential and commercial let property, leisure and sporting attributes from which an income over and above that from agriculture and forestry can be derived. Properties with a diversified revenue stream are seen to spread volatility risk and as such continue to be in demand. With climate change now at the top of many agendas we are also seeing buyers who are most motivated by the environmental attributes of a farm or estate and its natural capital.

SDLT

We know that the RICS have been campaigning for a stamp duty holiday to give the market some momentum as we come out of lockdown, however there has been no indication from government to suggest they are receptive to this proposal. We do not expect any other major changes to stamp duty, given the extent of reforms over the past five and a half years and the desire of the Treasury to protect tax revenues. 

For more information, please contact Louise Harrison.

Q. Given that an effective Covid-19 vaccine, at least for the most vulnerable in society is unlikely to be readily available until the spring of 2022, what social distancing will be in force in summer of 2021 and how will it impact on the hospitality industry and larger sporting and social events? Given the impact of Covid-19 virus, should our withdrawal from the EU be delayed until Dec 2021?

Q. What advice would you give to those diversified rural businesses that are heavily reliant on visitors for income?

Q. When will caravans, leisure parks and farm shops reopen? What will be the impact on residential property prices?

Q. In the UK government's lockdown road map exit, when is the earliest we can expect to see domestic tourism opened up, i.e. staycation visitors?

A. Given the resilience and ingenuity of the leisure markets generally we suspect that businesses will adapt where possible to remain open, albeit with reduced capacity and rigorous hygiene/social distancing measures in place. For example in Amsterdam, we are seeing specially adapted greenhouses installed in outdoor restaurant spaces so that customers can eat safely. The larger sporting and social events will be more difficult, but operators are already planning how they will accommodate smaller weddings for example and this may become a trend until a vaccine is available.

It is hard for attractions where there are limited outdoor spaces/gardens which other historic houses are planning to open in time for the school holidays. It will be important to continue engaging with visitors through virtual tours, and social media activity so that the profile remains high until restrictions are eased. Consider expansion of the holiday cottage business, where we expect to see a significant growth in the staycation phenomenon.

It is currently hoped that caravan, leisure parks and self-catering holiday accommodation will be able to re-open from 4 July but clearly this will depend on government. If this happens we predict a growth in the UK holiday accommodation market as domestic consumers seek somewhere rural to holiday. Winning consumer confidence will remain a challenge and operators will need to ensure that they have taken all necessary hygiene and social distancing measures and heavily promote that they have done so. Whilst the staycation phenomenon is likely to grow it is important to remember that there is also likely to be a significant decrease in international visitors to the UK in the short to medium term.

Also see Diversification answers.

For more information, please contact Simon Foster.

Q. With remote working going to be the new norm, do we see new planning opportunities emerging in terms of live-to-work? If so, what would these look like?

Q. How does the panel see the planning system responding to the Covid-19 and consequently how should estates be acting, now and in the future?

Q. What are the implications for strategic land and planning permission? Where do the panel believe the market for agricultural land will go?

Q. What economic future for rural market towns? And how could the planning system encourage a return to economic vitality in those places?

Q. Do you think there could be blanket extensions to planning permissions to compensate for lost time during lockdown?

A. If there is a cultural shift towards remote working then yes we would also expect to see a policy shift to support this in the form of more rural development with an emphasis on live/work spaces. However, office based work does not need a workshop so a live/work consent isn’t needed, this is just for more industrial or process driven work such as catering or wood work for example.

Estates should be looking for opportunities to harness domestic tourism as a result of an inevitable increase in holidaying in the UK, including lodge developments. There may be more opportunities for additional housing development in due course if there is a shift towards rural need.

Market towns will need to refocus away from retail and on to cultural attractions and becoming destinations for more than just shopping. This was already a general trend due to the rise in online shopping. There might also be a move towards locally grown produce that isn’t available online as people think about the environmental benefits of reduced food miles and supporting local business. This could result in the need for outside market spaces.

During the credit crunch you could apply to extend your consent without ‘resubmitting’ the whole application; something similar is likely in the short term following Covid-19.

For more information, please contact Peter Grubb.

Q. How do you think the impact of Covid-19 on an accelerated demise of secondary retail centre should direct new policy making on retail development?

Q. Is this the end of globalisation as we know it? What are the impacts for the rural economy likely to be if so?

Q. Trade talks are not progressing. How do you see the future for the non-supported food sector in 2021?

Q. What the chances are now, of an extension to the EU negotiations or a no deal Brexit are and the implications of either scenario for British agriculture?

Q. Do you think the BPS payments are still likely to be tapered off commencing next year?

Q. Will the UK restructuring of agricultural support mechanisms be accelerated or delayed by Coronavirus?

Q. What are the long term impacts - food security / self-sufficiency and how this will affect the move towards natural capital; where, when and how do biodiversity benefits outweigh production?

Q. How do you see the pandemic, lockdown and transport limitations affecting agri-imports and exports? Particularly livestock and crops. Once we exit the EU, what shape do you see a post-CAP regime taking? What will be the impact on farmers' finances?

Q. Do you think this Pandemic will have a direct influence how our government will negotiate the new farming trade deals post Brexit and if so how?

Q. Ideas of UK-administration about the replacement of area-payments (EU).

Q. Is there a risk that now all (media/political) attention is on Covid19, 'bad news' (for the rural sector) will be 'buried' (Brexit, trade deals, ELMS)?

Q. What does this mean to the end user the consumer, guessing we'll see a spike in our shopping bills before the economy starts to recover?

Q. Will domestic food supply really go up the political agenda as the farming sector seem to hope?

Q. Whilst UK producers, processors and retailers have managed to 'keep things going' over the last month or so vulnerabilities have been apparent. What lessons can be learnt from the experience to ensure our domestic food supply chain is robust enough to expose the same vulnerabilities in the event of another similar pandemic?

Q. How will Covid-19 effect the volume of fresh produce imported to UK?

Q. Supply chain issues in UK, flour ran out but oranges didn't? Commodity prices S/T, how to estimate supply and more importantly demand post CV with politics and economies [money] entwined. Where does ELMS now belong?

Q. Can you see a long term benefit to farming in the UK from this tragic crisis, from both the UK Government perspective (how much feeding people matters right now) and the UK consumer, as it has reinforced the benefit of 'local' and short, robust supply chains from end to end being all in the UK. Might it change the content of the replacement scheme for the SFP for example?

Q. Why do fellow farmers stick with commodity production, when the scope for products is £millions instead of £thousands? With the UK only doing under half its own market, there's opportunity.

Q. How become more self-sufficient in food production as the most densely populated major economy in Europe and growing, at the same time as 1. potentially increasing our tree cover significantly (where £ frankly better spent on buying rain forest for proper biodiversity and carbon locking outcome needed) 2. accommodating continued loss of land to infrastructure and housing 3. Not sacrificing arguably the best quality agricultural land in the world. 4. reducing the carbon output from each unit of production by farmers no longer false signalled with fuel tax subsidy, and assuming the worst case scenario for climate change plays out ie major weather variability, pests and disease impacting production, and billions to invest in keeping Sea at bay from the Washlands especially now otherwise at threat.

Q. What will the impact of current circumstances be on: - sharing good practice events / monitor farms for land managers and practitioners; - local food supply chains / farm shops potential to become more popular and - promoting grow / pick your own potential?

Q. Following reports of both shortages (basic foods and toilet roll etc. on the supermarket shelves) and oversupply of produce (e.g. reports of milk being poured down drains) in the earlier stages of Lockdown; do you think there will be any lasting consideration given by consumers or others to supply chains - i.e. thinking about where their food or other goods come from and the work put in by others before they are able to enjoy goods, to the extent that they may change their purchasing habits?

Q. One of the reasons our produce such as flour has not been making the supermarkets is because the packaging is imported. Do you foresee that the UK will start to rectify this with eco-friendly packaging, not relying on imports as greatly? There is a potential market to increase the sales of UK produce in supermarkets and locally at the present time, such as UK lamb and UK Beef, why is it we are still importing Polish Beef and New Zealand Lamb?

Q. How does the panel anticipate global supply chain issues and/or the potential for trade friction/barriers caused or exacerbated by Covid-19 will impact UK prices in the agri-sector including combinables, horticultural produce and the livestock sector?

Q. Many food producers have stepped directly into local supply chains and markets, with milk deliveries, food boxes etc. Do you think that one outcome of the pandemic may be that the public ultimately will seek to rely less on imports and may be more inclined to want home-grown, local produce and to "buy British"? Without being crass, does this present an opportunity to farmers and growers to re-establish a strong British market?

Q. Is there a new-found appreciation of domestic food production in the UK since the coronavirus pandemic?

Q. Are there signs the government will take food security in the UK more seriously as a result of Covid-19?

A. Covid-19 has placed pressure on just-in-time food supply chains, whilst at the same time rendering many food service industry supply chains redundant. This has exposed the fragility of certain systems, highlighting dependencies on travel and labour. However, in many cases, the sector has responded with innovation and collaboration - local deliveries, food networks and product repurposing to name a few. Behavioural change from consumers has supported these initiatives. It is likely that some positives of these changes will have a lasting impact. In the long term, the main driver in the future of supply chains remains the structure of our post-Brexit trade relationships and the government support available to farmers through the Agriculture Bill.

Covid-19 will have undoubtedly accelerated vacancy rates in secondary retail locations, with most retailers now looking at where they can shed weight in terms of under-performing stores. There’s a tipping point whereby repurposing largely vacant centres will become the most viable option. However it is a subjective issue depending on the site, making top-down policy change unlikely. However, future planning policy may enable a quicker change of use to ensure new retail development has a wider mix of use, and greater resilience.

Since the pandemic was confirmed, Defra has stated that it remains committed to starting the transition towards a new system of agricultural support in 2021. This will move agriculture away from land-based payments and reward farmers for delivering goods valued by the public, whilst producing healthy sustainable food. To introduce this, the Agriculture Bill needs to become law within the next few months. The government allocated parliamentary time to the Bill, making it the first bill to pass through the House of Commons using electronic voting. This signals their intent to ensure it progresses with little delay due to Covid-19. The government has committed to maintain the same level of agricultural funding for the next five years, however the change in the direction of policy means farmers who are currently reliant on direct payments must adapt to remain financially viable.

In light of Covid-19 affecting progress, there is debate over the likelihood of the future relationship negotiations with the EU being extended. Despite its potential benefits, an extension is doubtful. This increases the likelihood of trading with the EU on WTO terms, however the government has previously used the ‘cliff edge’ negotiating tactic successfully. It is more likely that the negative economic and political consequences of a hard Brexit will be subsumed within the Covid-19 economic recovery plan. There is a risk that the political focus on coronavirus means that future plans for agricultural and environmental support do not receive the normal level of scrutiny.

The future of agricultural trade is now dependent on the skills of our trade deal negotiators and political commitment of our government. It is unlikely that coronavirus will have a direct impact on international trade deals. However, the disruption that Covid-19 has caused to food supply chains has created a vivid counterpoint to the current direction of agricultural policy. It has highlighted the need to strengthen national food security, increasing the importance of the Food Security Report required under the Agriculture Bill and the forthcoming findings of Henry Dimbleby’s National Food Strategy. Support for domestic food production has become a live issue, and the foundation of the debate has widened beyond agricultural protectionism.

The long term implications of Covid-19 clearly depend on the speed and shape of recovery. The heightened awareness of food production, and subsequent food chain collaboration and innovation, combined with reinvigorated customer support may well have a lasting positive impact post-Covid-19. Balancing this re-focus on food with the growing net zero and environmental gain agenda will be key to unlocking future opportunities.

For more information, please contact Molly Biddell. 

Q. What is the likely impact on rental and capital values in short and longer term?

Q. What is the impact on farm rents and the long term trends? What is the impact on re-letting houses and farms?

Q. Covid-19 rent holiday/reduction requests: commercial, residential, leisure, etc. Earlier in the crisis, I asked a Scottish Government Cabinet Secretary about the subject above and notifications from tenants that they would not, or could not, pay rent. The Cab Sec's reply, without hesitation, was that the 'rule of law applies' and 'support is available to individuals and businesses to ensure the economy continues'. Other authorities, including the Competitions and Markets Authority have more recently compromised this firm stance causing unnecessary confusion and arming those seeking an excuse not to pay rent even though the CMA have qualified their initial statement.

Q. What do you expect to happen to property values, rental values and holiday lets?

Q. What do you think the effect of Covid-19 will have on commercial rent values moving forward?

A. The majority of farmers have not been impacted by Covid-19 to a significant extent. Although there are exceptions including groups of farmers in the dairy and potato sectors who were contracted to supply processers that focused on the food service sector. We have received very few rent hardship applications from agricultural businesses and do not anticipate this changing.

Residential tenants have been more directly affected, a hardship request has been submitted in relation to 2% of the residential tenancies managed by our rural business. Measures such as the Coronavirus Job Retention Scheme and Self-Employed Income Support Scheme have supported incomes and reduced the impact of Covid-19 on rents. For this to remain the case the phase out of these schemes will need to be dovetailed with the economy strengthening. We already know that the job retention scheme will be made more flexible from August to help with this. Longer term, there are positive indications for rural property because increased home working may well lead to more households moving to rural areas where gardens tend to be larger and there is greater access to open space.

The government has now allowed the housing market to resume, but all activity must take place in accordance with government guidance.

The impact of Covid-19 on rural commercial tenancies varies according to the use of the premises. A rent hardship application has been made in connection with 5% of the commercial tenancies managed by our rural business. Applications are most likely to be made by tenants of licensed premises / restaurants / hotels, shops, tourism enterprises and sports facilities / clubs. For businesses in the leisure sector a key priority is to work out how their trading activities can be adapted to comply with Covid-secure guidelines for employees and social distancing rules for consumers, in preparation for when they are allowed to re-open. It is likely that there will be a rise in domestic tourism and staycations in the next few years which could benefit many of these businesses.

For more information, please contact Andrew Teanby.

Q. Given the widely held view that the way we work will change, especially working from home, what impact might this have on rural commercial property lettings, especially office-based businesses? What are the opportunities for landlords? Will the combination of Covid-19, the new Agriculture Bill and public money for public goods be a good thing for UK landowners and operators? Who will be the winners?

Q. Has Covid-19 made it more or less likely that rural industry will digitise to become more resilient?

Q. Covid-19 has undoubtedly opened all our eyes to new ways of working. Jess Staly of Barclays is quoted as saying expensive city offices "may be a thing of the past". What does the future hold for rural office space and should landlords be concerned?

Q. Potentially, post-Covid-19, a greater number of people may be working remotely in rural areas rather than travelling to urban areas to work - does the panel think this will have any effect (positively or negatively) on local rural economies or communities?

Q. Do you think there will be increasing "ruralisation" as people leave the big cities post Covid-19 and look to set up working from home? And if this is the case do you envisage a North/South split?

Q. With people using the countryside in unprecedented numbers for their daily exercise, do you see there being more pressure in the future on rights of access, potentially following the Scottish model of access to the countryside?

Q. Now that the social experiment has demonstrated that so many workers (especially those in the service sectors) do not necessarily need to attend the office in town, from "9-5", 5 days a week, do you believe that more people will work from rural hubs and make less frequent trips to major conurbations? Also, having now recognised the value of local food supplies, do you think "we" will recognise that value post lock-down and social distancing?

Q. Do you think there will be an even bigger push for wider (and faster) internet connectivity in rural communities post Covid-19? What (other) fundamental changes do you see occurring to the rural sector post Covid-19?

Q. Is the aftermath of Covid-19 'back to usual', or does the team think there will be more fundamental change? If so, what direction is it likely to take and will it be an opportunity, a threat or both?

A. The enforced period of working from home may well have caused an accelerated evolution of remote working practices. It seems likely that there will be an increased demand for rural residential property, assuming good connectivity is available. Particularly those homes which can provide a dedicated office space. The previous geographic constraints of the “commuter belt” may disappear. The biggest area of change may be a move away from large office blocks, but will we see these workspaces replaced by more regional, rurally located flexible meeting spaces? Small businesses who survive may well continue to occupy rural commercial units, but we might also see an emerging demand for well-presented meeting areas and temporary ‘pay as you go’ office facilities to complement the increase in home working.

For more information, please contact Alice Rawdon-Mogg.

Q. Do Savills have analysis on their client’s plans for the forthcoming shooting season? For instance, are shoots holding back on buying in stock on the basis social distancing may make shooting (group gatherings) difficult or impossible to manage?

Q. As it would be relatively easy to carry out field sports practicing safe distancing would the government consider relaxation on travelling restrictions for re-opening the countryside and urban waterways soon to allow angling to re-commence?

Q. What impact has Covid-19 had on the planning for commercial shoots? What should shoots be considering as part of their planning?

Q. What are the next opportunities for rural estates both short, medium and long term?

A.The uncertainty in relation to people mixing and interacting in light of Covid-19 has impacted considerably on a number of country sporting operations. Dependent upon the specific circumstances, the decisions taken have varied, although we have seen a number of shooting operations mothball, make staff redundant, either maintain scale or scale down their operations; so there is no one-size fits all.

Our recent survey of 60 shoots showed that only 12% had decided not to release any birds, 42% had scaled things back and 46% were unchanged. The British Game Association survey found that only 12% had cancelled, 18% were undecided and 70% were proceeding, albeit only a quarter of those were intending to be at the same level of operation. The commitment to releasing birds for the forthcoming season was required in March to ensure the eggs, chicks and poults were available and generally the difficult decisions on whether to proceed and on what scale have now been taken. We remain hopeful that all country sports will be able to proceed whilst maintaining social distancing although transporting participants and staff will need careful consideration.

Fishing and stalking can be undertaken whilst social distancing and we are pleased to see fishing back on the list of approved activities. Grouse shooting starting on the 12 August looks like being the first pinch point and the start of this season may be delayed.

From a business perspective, the securing of bookings and sourcing deposits is more difficult with the international and corporate market effectively out of the game for the forthcoming season. The reduced supply and demand may well align and we hope that the sporting seasons can proceed whilst ensuring everyone’s safety.

For more information, please see our latest briefing note or contact Matthew Watson.

Q. Will the Chancellor look to IHT to raise funds and revisit APR and BPR? Will agriculture be lower down the funding list post lockdown? Will the British public look to UK sourced food or will price be the major driver?

Q. Do the panel think the changes mooted re IHT and the removal of reliefs will be delayed as a result of Covid-19?

Q. Given the massive debt that the government will accumulate there will inevitably be an increase in tax burdens. What adjustments to tax does the panel think are likely?

Q. Covid-19 has demonstrated society's reliance upon key workers, many of whom are in the lower income brackets. Post lockdown, does the panel believe that the government will be brave enough to undertake a complete overhaul of UK tax regime to ensure those with wealth (assets / income) do their bit to claw back the losses, and "kick start" the economy?

Q. How you are approaching valuations for inheritance tax purposes in relation to events which occurred during lockdown, and particularly whether you are aware of HMRC possibly agreeing say a percentage reduction against ‘normal’ market value during the periods of most stringent restrictions given that MV at those times would in reality be greatly suppressed.

Q. Given they are easy targets post Covid-19 for much-needed increases in taxation, e.g. moving the business percentage from 51% to (say) 80% for IHT Farmer/Balfour cases, what mid-term to long-term future does the panel envisage for traditional landed estates?

A.

SDLT

We know that the RICS has been campaigning for a stamp duty holiday to give the market some momentum as we come out of lockdown, however there has been no indication from government to suggest they are receptive to this proposal.

We do not expect any other major changes to stamp duty, given the extent of reforms over the past five and a half years and the desire of the Treasury to protect tax revenues.

APR/BPR/IHT

Since the introduction of APR in 1995 there has been a constant fear over its reform or removal, no doubt fuelled by the realisation that on let land, APR represents a generous concession from IHT. The IHT review by the Office of Tax Simplification and the All-Party Parliamentary Group proposal paper on IHT, has brought the reality of reform back on the agenda. Combine this with the Covid-19 crisis and the government’s need for tax income, we now suspect that this makes this agenda item number one?

As to what changes, who knows what but there are sufficient “witch’s warnings” that we should be encouraging strategies towards trading type structures and greater reliance/focus on BPR. Those who continue to rely on APR for protection are perhaps being a little bit brave?

Having said all of that, being pessimistic about the survival of APR for the last 25 years, perhaps now we will be proved right?

For those of you thinking that gifting during the Covid-19 crisis will result in low values over uncertainty, please think carefully.

Valuations

We have not heard of the HMRC agreeing percentage reductions to valuations due to the pandemic, mainly since most submissions will not have come in front of them, given the application time delays and processing. Undoubtedly there is going to be much more debate about values, but it will be very sector specific and date dependant. There are some wide variations in sentiment and surveys, which may result in an increase use made of the IHT38 loss relief on the sale of land or IHT 38 loss on the sale of certain shares.

At present we are continuing to submit valuations, although inspections have been curtailed. Our approach to values is specific to the assets, reflecting the evidence and effect on income, rather than putting too much weight on a opinions to where pricing might go. Due to limited market evidence, we have tended to take in a much wider body of evidence, and in the early parts of the lockdown, delay reports until some of the effects where clearer.

For more information, please contact Clive Beer.