Partners in progress: How we are helping rural clients build resilience

Our Rural team is helping clients to improve the short- and long-term resilience and prosperity of their businesses in myriad ways. Here is a selection of case studies from across the country:

UNLOCKING COMMERCIAL OPPORTUNITIES

The owners of a rural estate in the South East of England asked us to assist them develop a new long-term estate strategy. The business is one with many of the traditional estate enterprises, but has tended to take a conservative approach to pursuing other opportunities.

We went through a detailed estate strategy exercise, exploring in depth what the family’s objectives were and what achieving them might look like in practice. This identified that a key goal is to ensure that when the current owners hand the estate to the next generation, within 10 years, it is more sustainable and financially resilient.

After detailed research into the options available, we are now looking at a structural reorganisation of how they own the property assets to drive greater financial efficiencies and the possible conversion of one range of redundant farm buildings into a high-end hospitality venue. By partnering with an established operator in the sector, this is anticipated to generate a significant rental income over 30 years. On another similar site on the estate, we are embarking on the creation of a mix of office and storage space, creating a further diversified income stream.

In addition, we are also in discussions with property developers about a promotion agreement for a significant area of strategic land for residential development. We have also identified part of the estate suitable for a large-scale solar farm and battery energy storage scheme and negotiations are ongoing with a solar developer.

The estate is now at the start of an exciting journey. The strategy exercise has given the owners clarity about their goals and the confidence to embrace commercial projects which have the potential to transform the revenues of the estate now and for future generations.

Tom McLaughlin,

Land Management, St Albans

NATURAL CAPITAL POTENTIAL

Landholdings with natural capital potential have increased significantly in value in recent

years, with several high-profile, high-value transactions taking place, particularly in Scotland.

Our Natural Capital team in Inverness have this year worked collaboratively with our Estates & Farm Agency Department on the purchase or sale of natural capital investment opportunities covering more than 34,000ha.

Our clients have asked us to draw up reports which highlight and rationalise the natural capital opportunities of a property. This allowed our colleagues in the agency department to market properties to the widest possible pool of potential buyers, allowing us to achieve the best possible price for our clients.

The reports, which offered a high-level overview of the natural capital opportunities, along with highlighting any risks and existing obligations, enabled the buyers to quickly establish that the property they were considering fitted with their strategic objectives.

Rebecca Burton,

Natural Capital, Inverness

IMPROVED INCOME FROM LET PROPERTY

A client in the East of England approached us for help to manage their residential let

property portfolio.

They were keen to minimise costly void periods and to ensure they were fully compliant with all the legal requirements that now apply when letting homes.

We made sure the client was following best practice in terms of managing the properties. This meant when there was a fire in one of the houses, we were able to quickly demonstrate that all the required electrical checks, boiler servicing and inspections had been carried out and so the insurer paid out quickly. While refurbishing, we also advised the client on how to incorporate measures which will increase the energy efficiency of the property.

To give tenants greater clarity, we introduced a timetable of regular inspections and changed to annual rent reviews. Previously, rent increases had been intermittent, which meant that tenants had sometimes faced a significant increase in one go, causing them financial stress and worry. This approach, supported by a more transparent policy for tenants if they are late paying their rent, has reduced arrears from 11% to under 3%.

Sarah Roberts,

Land Management, Chelmsford

MACHINERY COSTS IN FOCUS

Falling arable margins mean machinery costs and replacement strategies are coming under ever-closer scrutiny.

Our Farming team in Salisbury was contacted by a client who asked for advice on whether they should enter a long-term hire agreement on a tractor, buy a new one outright or purchase one second-hand. They were also after guidance on how it might impact their operating costs.

We developed a set of spreadsheets which enabled us to look at existing machinery repair costs, pulling these through into a page which includes all other associated costs and produces the cost per hectare and per hour of each piece of machinery.

It produced numbers that allowed a direct comparison between the running costs of a range of different machines and implements, compared to the farmer’s existing machinery. It also allowed them to test out different scenarios, in terms of exploring the impact of keeping machines longer than they traditionally have in the past or purchasing second-hand with a view to selling sooner, to lessen the effects of depreciation and repair costs.

Scott Combes,

Farming, Salisbury

ENHANCING LONG-TERM SUSTAINABILITY

An estate in Surrey has instructed us to carry out a strategic review of its holding, to identify opportunities which will enhance its economic, environmental and social value. The client has asked us to identify new opportunities and projects for the next 10-20 years which will help it improve its financial sustainability, while meeting its targets on climate change, community engagement and innovation.

The project, which is ongoing, involves a multidisciplinary team of experts who are assessing the current assets on the estate and then advising on future development planning, agricultural land use, heritage conservation, options for renewable energy and environmental enhancements.

It is an exciting initiative and innovative solutions to the sustainability challenges faced by the estate are already emerging, along with new ideas for revenue generation.

Hannah Bloxham,

Land Management, Cirencester

PROACTIVE ESTATE MANAGEMENT

One of the first questions that prospective residential tenants always ask us when they look at a house to rent is: ‘what is the broadband speed like?’

We were conscious that our client with an estate in the South West of England had a number of properties that were located in a broadband ‘not spot’ and where mobile phone reception was also very poor. The houses are not in a particularly remote area, but connectivity has been problematic as they sit in a steep-sided valley.

We identified a broadband provider which was rolling out full fibre connections in certain rural postcodes within the region, with the costs fully subsidised by government funding. We contacted the provider and it confirmed it would be willing to install a FTTP (Fibre to the Premises) superfast connection which will connect seven properties owned by the estate to their network.

The duct for the cabling will be laid using a mole plough, crossing three different farms and a number of gardens. Although access would normally be negotiated by the provider, we took on this role to help facilitate the process and ensure it could happen as quickly as possible.

The work should be completed shortly and means that the properties – many of which are let on Assured Shorthold Tenancies (ASTs) – will no longer be reliant on expensive satellite technology to connect to the internet and will remain lettable for the future.

Peter Thomas,

Land Management, Exeter

IMPROVED LOAN DEAL

We recently advised a client who found themselves at a critical crossroads – they

had a £34m borrowing facility which was maturing. The bank was looking for an increased rate and margin – plus a fee for re-drawing the loan. Our role was to highlight the value of ‘going back to the market’ using our financial brokerage service.

We approached 12 other banks and lenders with a credit application. Of the ten that quoted, eight were at rates lower than the incumbent bank’s initial offer. This put the client in a strong negotiating position and their bank subsequently made a preferential offer which the client decided to accept. It has enabled a saving of over 0.40% for five years on the £34m (a total of £850,000) plus the arrangement fee was reduced and the client avoided the worry and hassle of moving banks and developing a new relationship.

Our role went beyond ‘renegotiation’ and became a strategic exploration of alternative options. It highlighted the importance of being prepared to think laterally, be proactive, and the importance of being willing to step away from existing relationships if they are unfavourable.

Karl McConville,

Head of Strutt & Parker Financial Brokerage

SELLING DEVELOPMENT LAND

Generational ‘land release’ can be an effective strategy for landowners looking to raise capital for investment, without fundamentally changing the character of an estate. By choosing to sell a smaller parcel of land every 20-30 years – perhaps to build 15 homes at the end of a village or 150 close to a town – the process of obtaining planning permission tends to be smoother and take less time and money than for large-scale developments of 2,000 homes or more.

We recently worked with the owners of an estate which 30 years ago sold land to a developer on which it built 15 houses – a project which everyone within the community agreed had been a success. With a good working relationship established, the same developer was then approached to suggest further schemes for the estate and eventually they identified an area suitable for 350 homes which are currently being built.

Identifying the right site took time, but focusing on a smaller – but still significant – development means that planning permission was achieved without a major battle. Strutt & Parker handled the original planning application and was responsible for securing the local plan allocation for the larger scheme, as well as settling the contractual relationship with the developer.

The capital raised by the sale is having a transformative effect on the estate, funding investment in new land management practices and a range of diversification projects which should help to future-proof it. The estate has also been using funding from the development to support some initiatives for the local community (including a community farm), boosting its social contribution.

Craig Noel,

Development & Planning, Lewes

This article first appeared in our latest issue of Land Business. For more download the Autumn/Winter 24 edition of Land Business.