Thursday, 31 March 2016

The question of BREXIT - British Farming

BREXIT – this is a debate with a very simple question but an extremely difficult answer as the same evidence can be interpreted by both sides to come to a seemingly credible and yet totally opposite conclusion.

This is because no one has ever taken such a leap in the dark, and with all such leaps you cannot tell whether there is a feather bed or a heap of jagged rocks awaiting our landing.

For agriculture you would have thought the debate is relatively simple. UK farmers receive more than £3bn of support payments a year from the EU, more than 60 per cent of our agricultural exports go to EU countries and increasingly farmers rely on foreign workers to staff their farms.  So you would have thought that of any cohort of the UK population, farmers would want to stay in the EU.

I am surprised that farmers are not more positive about staying, despite these significant benefits.  At a farmers’ meeting I chaired at the Bath and West Showground I asked how many of them had made up their minds one way or another and less than a third put up their hands.

The main reason I think farmers are undecided is that although they benefit from support payments and open access to the largest single market in the world, they also perceive that their costs are hugely increased by the regulation and red tape they must comply with to receive these benefits.

There is absolutely no doubt that the EU does create a huge amount of pointless red tape – I appreciate this only too well having to deal with the Rural Payments Agency on a daily basis.

However I caution those who think all such red tape will miraculously disappear if we leave the EU.  First there will be a prolonged period of adjustment of our own laws as we extricate ourselves from all the EU regulations which have become embedded in UK law and we may discover our bureaucrats are equally good at creating red tape as their European equivalents.

For example, it is not the EU that has protected badgers, which in the eyes of many farmers has contributed to the devastating rise in TB in cattle in our country. This is an entirely home grown law.

So although I am sure the UK would survive the leap in the dark, we would break a few bones on the way.  The big question is how long we would have to convalesce before we can walk again, or if all goes well, break into a gentle jog.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381

Thursday, 17 March 2016

The gap between exchange and completion

There are many steps in the process of buying and selling - the final one being completion.  Most people understand that a sale becomes legally binding upon exchange of contracts and, at this stage, the completion date is written into the contract. On exchange a purchaser will pay a deposit of between 5-10%, and the remainder of the funds are paid on completion ie the day that you finally own your new home - lock, stock and barrel.

In the past, many sales had a gap of 4-6 weeks between exchange and completion but these days we often see this reduced to 2 weeks - sometimes (and for the brave only!) we even have simultaneous exchanges and completions.  But the gap is there to leave a welcome breathing space in which to organise the practicalities and detail.  Also, some mortgage lenders generally like a 7-day period within which to draw down funds.

And here is how to fill the gap:

Pack as soon as possible after exchange.  

Prior to exchange receive quotes from removals companies but don’t commit (ie pay the deposit) until your solicitor is confident of exchange.  This is especially difficult in busy periods such as Easter or Christmas -  and remember a lot can happen between ‘nearly’ and ‘actually’ exchanging.

If you’re packing and moving yourself on a DIY basis - give yourself plenty of time.  You can be sued under contract if you’re running well behind time on the day, thereby incurring your buyer additional removal costs.

Inform relevant utilities and services eg: gas, electric, water, phone, satellite, cable suppliers, TV licence, post office, bank, DVLA, your doctor and insurance companies etc.  Take meter readings on the day you leave.

The buyer will have been provided with the supply details on the Property Information Form filled in by the vendor - so the buyer knows who to contact to continue or change supplier.

The buyer MUST insure their new home from the day of exchange as you are now committed to buying it even if it burns down.

A few days prior to completion the estate agent will make arrangements in respect of the key handover. Generally this means we will collect a spare set from our seller and then meet the purchasers at the property with the key to the door.  It is important to note that we can only release keys once the seller’s solicitor has confirmed that the completion monies have been received.

Finally, emotions can run high prior to an exchange when the estate agent and solicitors are trying their best to dovetail an ideal completion date between seller and buyer.  This can get even more protracted when a lengthy chain is involved: holidays, school terms, bereavements, sheer practical and physical logistics can all create stumbling blocks. 

But, as with all things, don’t forget the bigger picture - compromise: it’s better to bend a little than break the sale.

Caroline Edwards
Residential Sales, Long Melford

T: 01787 888622

Monday, 14 March 2016

Supermarket contracts

I came away from the Andersons farm business consultants’ annual seminar on the outlook for UK agriculture with the gloomy message that things are very difficult for most sectors but most worrying is the plight of our dairy farmers.

Andersons predict little prospect of improvement for at least another year as milk prices continue to fall at an alarming rate for the 80 per cent of dairy farmers not on “supermarket-aligned contracts”.  

Some of these farmers are lucky that for one reason or another they have been able to secure one of the supermarket contracts where they are effectively paid a milk price related to the cost of production rather than one based on the market price.  

As a consequence the supermarket contracts are offering about 30p per litre but the other 80 per cent of farmers are receiving between 20 and 24p. The milk price being paid to these farmers is influenced by world milk commodity markets where supply exceeds demand.  

Of course the market will one day right itself but not before the fundamentals have rebalanced and that will inevitably mean yet more dairy farmers having to leave the industry.

This depressing picture was reinforced by a leading dairy analyst, Chris Walkland at an NFU conference in Birmingham where he warned of a “spring tsunami of milk bringing more price pain” and said: “It is going to be pretty horrendous over the next three months.”

Walkland went on to predict the spot price for milk is likely to drop to around 10p per litre later this spring/early summer and as a result the total income for milk in April, May and June this year is predicted to be down by approaching 40 per cent on the peak seen only two years ago.

So why would anyone want to continue dairy farming at all? The answer is that some farmers are still making money, particularly those on the supermarket contracts and if you look back over say five years most dairy farmers will have seen good profits at times. 

And this is perhaps how dairy farmers need to budget, looking at five years rather than just one year but at the same time recognising that the current crisis has to be survived.  If that is not possible, then difficult decisions need to be made sooner rather than later because milk prices are unlikely to fundamentally improve for at least a year.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381

Monday, 7 March 2016

Our lettings team shortlisted for Best Letting Agency Group in ESTAS Awards 2016

I have pleasure in announcing that our national lettings team has reached the final stages of the ESTAS Awards 2016, having been shortlisted for the Best Letting Agency Group. 

In the ESTAS regional categories, the Carter Jonas Barnes, Bath, Cambridge, Newbury, Wandsworth Common and Winchester offices have also been shortlisted. The ESTAS are one of the largest and longest running awards in the UK property industry and winners are decided purely on ratings provided by a firm’s clients. This year, the shortlist was announced based on the biggest-ever number of customer surveys. 

To be shortlisted for these awards is a real honour for our national lettings team and is testament to the hard work that we put in to ensure our clients receive the best possible service.  We’re extremely proud to be rated so highly by our clients and thank them for this. 
Since we began our lettings service to operate alongside our residential sales offering, it has been our aim from the outset to be included among the best national lettings agents, and so we are delighted to be recognised in this way. 

The winners of all categories will be announced at the annual ESTAS Ceremony held in April at the Grosvenor House Hotel in London. 

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

Thursday, 3 March 2016

Challenging times for farmers

In today’s challenging times farmers can feel locked in a very lonely place.  As the losses mount there may seem to be no obvious route out of the situation and discussing this with close family or friends might not be easy.

But it is often worth discussing your worries with someone you trust who also has an understanding of the farming industry.  Whether that is your accountant, farm consultant or land agent doesn’t really matter. The important thing is to get a fresh perspective on your business because the answers may be staring you in the face but for one reason or other are difficult to address.

Probably the first thing you need is to get a clear understanding of your fixed and variable costs so you can start to benchmark yourself against industry standards and this may help to identify where the issues lie.  

You might for example identify that you have high machinery costs which may indicate you need to consider running the farm in a different way, perhaps selling some machinery and employing contractors to carry out work you have traditionally done yourself.  This could also lead to the possibility of reducing your labour requirements which could either release family labour to earn money off the farm or simply cut your employed labour.

Or you may identify high finance costs are a problem and restructuring your debt may be a possibility.  If this is the case don’t be afraid of speaking to your bank manager.  Most of them are pleased to hear from borrowers looking to take proactive action to address difficult times.  Extending the length of a loan to reduce the level of capital repayments or paying interest only for a couple of years may help the farm through a short term cash flow problem.

These are just a few examples of things that you may identify if you take the time to look at your business closely and it often needs a trusted third party to ask you those difficult questions that will make a difference.  

The easiest thing to do is nothing, but if you want your business to prosper in the long term, carrying on doing the same as you have done for decades is rarely the answer. 

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381