Wednesday, 23 December 2015

Farming debt has risen

It is sobering to learn that farming debt in the UK has risen annually by approximately £1bn for the past five years and in the 12 months to September 2015 it rose by a staggering £1.45bn - bringing total debt to £17.5bn.

This is not all doom and gloom because some of this debt has increased because many farmers have made good profits since 2007 and used some of these profits for much needed investment in fixed equipment and land. However, the tide has certainly turned and in the last 18 months or so additional debt has been taken on to finance losses.

In this context Andersons, the farm business consultants, predict that farm debt is likely to rise between £1 and 2bn by autumn 2016.  Securing these funds will be challenging because banks have become increasingly demanding in their requirements.

But with interest rates still at historically low levels, businesses are currently being cushioned from the worst effects of these rising levels of debt although now US interest rates are increasing, the prediction is that Bank of England rates will follow this upward trend in the next year or 18 months. Rates are not expected to rise dramatically, but now may be a good moment for businesses to consider fixing the interest rate on least some of their long term borrowing.

However, if additional debt is to be taken on, the importance of preparing good business plans, budgets and cashflows cannot be overestimated, particularly if it is predicted that losses will be made in the short term.  

Banks will need to be confident that any farmer wishing to borrow more will have the ability to service that debt. It is no longer sufficient to rely on capital value of land and property as the security.

Farmers who cannot convince the banks that they have a firm grasp of the finances of their own business will struggle to secure further debt. This is the moment when such individuals must be careful not to fall into the grips of unscrupulous lenders who may offer finance but at crippling rates which will often end in tears.  

But for those who can secure debt based on realistic short-term budgets and longer term optimism that commodity prices will rise once again to more sustainable levels, there is reason for hope in 2016 and beyond. 

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381

Tuesday, 22 December 2015

Compass points enterprise zones towards 2016

In the recent round of identification and designation of new Enterprise Zones (EZ) – announced by Chancellor Osborne at the end of the last month -  there are no fewer than 15 locations in Cambridgeshire, Suffolk and Norfolk. One of which, Haverhill Research Park, is claimed by Cambridge but is actually in Suffolk. All of which, to varying degrees, property agents in the patch have substantial interests either directly as an appointed advisor to the development or an occupier seeking premises or, indirectly, in working for the owners or current or potential occupiers on nearby sites, estates or Parks in the pipeline or already established.

The LEPs in this region – the Greater Cambridge Greater Peterborough Enterprise Partnership which delivered the 5 sites which comprise the Cambridge Compass Enterprise Zone area and the New Anglia Local Enterprise Partnership which succeeded in not only making the case for creating 10 new EZs in Suffolk and Norfolk under the Space to Innovate banner, but also in the extension of the current Great Yarmouth & Lowestoft (New Anglia) Enterprise Zone – have done more than a fine job in achieving these zones in the region.

Coming together in partnership with business and other local interests, these LEPs have successfully navigated the labyrinthian corridors of Whitehall to make the regional and local business cases to the national civil servants and government advisors who hold the purse strings when it comes to the creation of EZs and other sources of central funding.  

Anyone who has ever tendered for projects involving public money – whether professionally, many agents have dedicated teams to work in public sector projects and those which have to access public funds, or in a more civic or social role – can have nothing but praise for what the LEPs have pulled off for the eastern region.

But the plaudits shouldn’t stop there. Because while each LEP’s remit and accountability extends to its own area, technically, collectively the emphasis of each of the new EZs in playing to the attributes of each locale forms a chain of EZs which gives a complete picture of our region.

For instance, two new EZ locations in rural north Norfolk will have energy and the low carbon sectors in their sights. Whereas, one in King’s Lynn has agri-tech and food production at its core.  Equally, some of the new EZs in Suffolk play to the strengths of the ports and the A14 in positioning logistics and the supply-chain sectors. 

The Cambridge Compass Enterprise Zones gives 5 former fringe locations a chance to capitalise on the ‘Cambridge effect’ in terms of employment opportunities with 2 – Cambourne Business Park and Northstowe Phase 1 pointing the way forward in co-locating homes and jobs.

These new EZs come in to effect in spring next year (2016) and while I am no archetype Pollyanna, I welcome the way these will help point a way forward for this region which is far from inward looking in having Felixstowe port as the gateway to the rest of the world.

Will Mooney MRICS

Commercial, Cambridge

Life’s an adventure – and it’s never too late!

One of the best things about an estate agent’s job has got to be all the wonderful houses we get to see throughout the year – in all shapes, sizes and locations.  Added to this, are all the different personalities we come across - I truly believe there is no such thing as an uninteresting person; if you engage with someone for long enough you will always discover something unique and fabulous about them.

Yet some people really stand out from the crowd - they capture your imagination and inspire you.

One such couple, whose house we have recently sold, made a special impression on me.  As estate agents, when we carry out an initial market appraisal, not only are we looking at what the property is worth and how best it should be marketed but we are also developing a bigger picture of our clients - this includes discovering their reasons for moving.

This particular couple had both just retired from prestigious careers and could easily have followed the more usual and very comfortable route of looking forward to grandchildren, spending time on the golf course and more regular holidays.  

But this was not for them.

Having spent so much time on their careers and bringing up their children, they, literally, had no plan whatsoever – or, indeed, perhaps the best plan ever – to sell up and go on a gap year!  Not having taken a gap year prior to their careers it’s the perfect time to catch up.  They can now discover where life is going to entice them.

The down-sizing move (or right-sizing as it is now called) following retirement is often the most difficult move anyone makes in a lifetime.

There is so much to consider, especially if moving from a much-loved family home to something smaller and more practical.

Many people have thoughts beyond retirement of life going downhill – a potential slow-down and living life, vicariously, through children and grandchildren.  But it doesn’t have to be so…

What excited me most about this amazing couple was that a slow-down was not on the agenda - the adventure was just beginning.  They were going to pack up their dogs and some luggage and hop in their car to France and see where life took them for the year ahead.

Without the constraints of responsibilities they can, gradually, take stock of their lives and allow the decision-making process to happen organically.  On a practical note their children are wholly supportive, plus a very small cottage has been purchased in a Suffolk village to ensure they don’t lose their foothold in the UK property market.

It is really refreshing to think that moving house doesn’t always have to dovetail between selling one house with the certainty of buying another perfect replacement. 

What a great idea to take a breather and to remember that there is no set path, just follow your heart.  And, most importantly, it is never too late.

Caroline Edwards
Residential Sales, Long Melford

T: 01787 888622

Friday, 18 December 2015

Christmas has come early

Christmas has come early for tens of thousands of farmers as the Rural Payments Agency has surpassed the expectations of many industry commentators by starting to make Basic Payment Scheme payments on time.

I was relieved and surprised to receive notification from the RPA at the end of November that a number of clients were to receive their Basic Payment Scheme payments on December 1.  This was the first day of the payment window and the RPA must be congratulated on getting at least some of them out so promptly.

The RPA has confirmed that more than 33,000 farmers in England were paid their 2015 BPS claim on December 1 and they have committed to paying at least 44,000 claimants (50 per cent of the total) by the end of December. This is in addition to having made £21 million of EU dairy support payments to almost 11,000 dairy farmers in England, Scotland, Wales and Northern Ireland as I reported previously.

NFU vice-president Guy Smith said: “When the RPA starts talking about a percentage, we want to see value as well as volume going out. We do not want to see one million £10 cheques. We want to see a good cross-section of payment claims going out.

“A significant amount of money has gone out – and we have to congratulate the RPA for that. But the fact they have only paid just over one-third of applicants increases the anxiety among the have-nots.”

It is clear to me from those payments I am aware of that those which have been made are for small and relatively simple claims. So there is concern that some of the larger, more complex claims may remain unpaid for some time to come.  This worry has been raised with the RPA by industry leaders and as a result the RPA has written to all complex cases, which they do not expect to pay by the end of January. 

The official payment window runs from December 1, 2015 to June 30, 2016, so some farmers could still be in for a long wait and I urge banks to help with the cash flow crisis that will be caused by these delays.

But, at this stage all we can hope is that the RPA continues to surprise us with good news and even the most complex of claims will be made early in the New Year.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381

Tuesday, 15 December 2015

Right to Rent is closer than you think

Right to Rent has been widely publicised as the need to check on a tenant’s immigration status with regard to occupying residential property in England.

But in reality it is much more; status checks need to be completed on every adult occupier aged 18 or over for all English tenancies starting on or after 1 February 2016.

The effective date from which to begin undertaking checks is January 3, 2016, the start of the 28 day period leading up to February 1 because all checks must be completed in the 28 day period before the tenancy comes into effect.

Whereas in the past a landlord or letting agent might meet the lead tenant and only hear about the others who would be occupying the property, the landlord or letting agent now needs to see every adult occupant who will occupy the property even if they are not named on the tenancy agreement while simultaneously checking immigration status and documentation.

There is no need to check an occupier’s children, but the landlord or letting agent should satisfy themselves that they are under the age of 18 at the time the tenancy begins and keep evidence of this. Further checks on a child will not be needed if the child turns 18 during the tenancy, unless and until the tenancy is renegotiated, or a repeat Right to Rent check is required.

There is no requirement to create a written tenancy agreement listing all those who will live in the property, but Home Office guidance suggests that landlords, agents and householders may find it advisable to do so. If the tenancy agreement is oral or implied, the checks should still be made on all adults living at the property. If there is evidence a landlord, agent or householder was aware of a person living in the property but did not check them, they may be liable to a civil penalty, regardless of whether the agreement is written, oral or implied.

It is advisable to record the following:

The full name and date of birth of all adults who will live in the property;
The names and dates of birth of all children under 18 who will be living with them in the property;
Whether each of the adults named has current permission to be in the UK.

The requirements were enacted in the Immigration Act 2014, which also lists some exemptions I have highlighted below:

landlords and agents do not have to check the Right to Rent of existing occupiers who moved in before the requirements are introduced;
where the start of a tenancy pre-dates the requirements, and is renewed between the same parties at the same property without a break, then there is no requirement to conduct checks;
holiday lets (but the Home Office advises that landlords letting holiday accommodation should consider how a person will be using the property to decide whether Right to Rent checks are necessary. A letting of three months or more, or extending time-limited lettings, would be circumstances where checks would be advisable.);
agreements to which the Mobile Home Acts 1983 applies, that is an agreement under which a person is entitled to station a mobile home on a site and use it as their only or main home, are exempt. However, should a mobile home owner decide to let their mobile home for use by another adult, this residential tenancy agreement will be subject to the Scheme.
A residential tenancy agreement that grants a right of occupation in accommodation provided by an employer to an employee, or by a body providing training to an individual in connection with that training, is exempt from the Scheme.
All halls of residence (whether the landlord is an educational institution or private accommodation provider) are exempt from the Scheme, as is any accommodation provided for students directly by a higher or further educational institution.
Leases which grant a right of occupation for a term of seven years or more are exempt. An agreement will not grant a right of occupation for a term of seven years or more if the agreement can be terminated at the option of a party before the end of seven years from the start of the term.

The following two groups of people have unlimited right to rent: British citizens, EEA and Swiss nationals.

A landlord will need to see evidence of any adult occupier’s identity (over 18 years) and citizenship e.g. passport or biometric residence permit and compare the original document with the individual face to face. Copies of the documents should be taken and retained for one year after the tenancy ends. The Home Office has published a landlord's guide to checking immigration documents, which may be useful for landlords click here. 

If it is not possible to check the documents before entering into the tenancy agreement (e.g. if the potential tenant is overseas), the landlord/ agent may enter into a conditional tenancy agreement – conditional on production of evidence of Right to Rent before moving in. 
The Act makes it an offence to let premises to someone (either the tenant or any adult occupying the property with them) who the landlord knows or has reasonable cause to believe does not have the Right to Rent.

Given the potential for discrimination, the Government’s code of practice advises that documents should be requested from all potential applicants. Refusing a tenant because they have limited right to remain may amount to indirect discrimination.

When Right to Rent was first mooted, there were concerns that people born in the UK might not hold a passport and therefore find it difficult to prove their residence entitlement. However, a combination of documents such as a birth certificate and driving licence (the guidance states with or without a counterpart, although counterparts have been invalid since June, 2015), are acceptable proof.

A landlord should know or have reasonable cause to believe a tenant does not have the Right to Rent if:

It failed to check the documents in the first place.
The tenant had a time limited or discretionary Right to Rent and that period has now ended. This means the landlord must monitor and make sure an occupier’s right to occupy does not lapse.
The Home Office has served notice that the occupant has no Right to Rent. 

If a person sub-lets a property, they will have responsibility for making the checks, although this responsibility can be passed up to the landlord by agreement. It is recommended that the agreement as to allocation of responsibility for checks is in writing. Likewise, anyone who takes in a lodger should check they have a Right to Rent before allowing them to move in.

It is worth bearing in mind that in his March, 2015, Budget statement the Chancellor included under the section about a sharing society measures to amend its model agreement for an assured shorthold tenancy by summer 2015, to provide that tenants in private rented accommodation can request their landlord’s permission to sub-let or otherwise share space, on a short-term basis. 

The Immigration Act 2014 provides for a “civil penalty scheme” whereby landlords and their agents could face fines of up to £3,000 per tenant. If the Immigration Bill 2015 is approved in its current form, criminal sanctions may apply in situations where a landlord or its agent knows or has reasonable cause to believe that a person does not have a Right to Rent. Criminalising the sanction means that imprisonment may become an applicable punishment.

At Carter Jonas we are taking advice from the Association of Residential Letting Agents (ARLA) and Pain Smith Solicitors putting in place procedures ahead of the legislation taking effect in February in the areas in which we operate.  Where we do not manage our clients’ properties they will need to put in place their own procedures to check the tenant’s right to rent.

The landlords Code of Practice gives very helpful guidance and I recommend that everyone involved in residential lettings studies it. This link connects:

A landlords’ guide to checking immigration documents can be found at:

Lisa Simon, 
Partner Head of Residential Lettings
T: 020 7518 3234 

Wednesday, 9 December 2015

Farm enterprises and renewable initiatives

Farm enterprises that have taken up renewable initiatives, such as anaerobic digestion plants which also supply heating to tenanted properties need to be aware of rule changes that come into effect by the end of this month.

The Heat Network (Metering and Billing) Regulations 2014 are bringing a change of legislation that will affect how tenants of buildings with communal heating systems will be invoiced for their use of heating, cooling and hot water to ensure that end-users of heat are only charged for the heating they use.

Obligations imposed by the regulations on any supplier of central heating systems are wider than previous legislation and include landlords and owners of buildings where heating is supplied from a central source to more than one tenant, for example shared offices, within the definition of a “supplier”.

As well as landlords who invoice directly for heating charges, buildings where heating is included within rent or service charge payments are also included.

By December 31, 2015, each supplier must send a notification to the Secretary of State for Business, Innovation and Skills via the National Measurement and Regulation Office providing estimates of the yearly heat capacity, heat generated, and heat supplied applying to the heat source in question. 

The Secretary of State must also be supplied with practical information about the location of the heat supply, the type of building in which it is contained, and the type of customer supplied. Following the initial notification this information will need to be updated with the minister every four years.

By December 31, 2016, the supplier must install meters in its building which measure the individual consumption by the end-user in all cases unless it is not cost-effective or not technically feasible to do so. The regulations contain a test for whether or not it is cost-effective for meters to be installed. 

Where it is not cost-effective, this must be considered again every four years and meters installed upon any substantial reconstruction of, or installation of new services in, the building.

By December 31, 2016 heating for each end-user will be separately metered where possible based on actual consumption. 

Non compliance by a supplier is a criminal offence and punishable with a fine of up to £5,000 per offence plus daily penalties of £500 until the breach is remedied.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381