Diversify to maximise the performance of assets

Owners of rural land and property are advised to diversify to maximise the performance of their assets.

This is highlighted in Carter Jonas’ latest Model Estate report which since 2010 has tracked the annual performance of a notional agricultural estate against seven other asset classes, including residential property, commercial property, classic cars, fine wine, equities, antiques and gold.

The Model Estate showed a 4.7 per cent increase in value during 2015 which means the estate’s rank slipped to fourth place in the eight asset classes.

The let farms element of the Model Estate produced a return of just 4.2 per cent in 2015 compared with 24.3 per cent in the previous year. Growth in 2015 was driven by capital rather than rental values, although even this slowed as the agricultural land market began to cool over the course of the year.

Tim Jones, national head of the rural division at Carter Jonas said: “Net incomes, profitability and the serviceability of debt continue to be squeezed, and farmers are increasingly cautious about paying premium rental prices.

“While demand remains for tenanted large blocks of land, we have seen market rents plateau over the last 12 months, in part due to falling commodity prices. These combined factors have caused the decrease in 2015 total returns for the let farms element of the estate, when compared with the previous year.”

The Model Estate’s residential portfolio recorded a 20.7 per cent increase in value which was boosted by one-off capital gains rather than just house price or rent increases. This gain is largely attributed to the decision to convert a commercial property to residential by taking advantage of the new permitted development rights. 

This supports the notion that in order to maximise the value of rural property, landowners need to be alert to any opportunities that may arise and in recent times exploiting the relaxation of planning laws has certainly been something to keep an eye on. The potential to convert offices and farm buildings to residential use are very often the obvious diversification opportunities to consider.

Of the eight asset classes the Model Estate is analysed against, classic cars once again produced the highest return in 2015, of 16.6 per cent. This was followed by the UK’s residential sector which produced a total return of 9.5 per cent and then the commercial, recording a 7.2 per cent return.

As head of Carter Jonas’ rural team in the South West I can confirm these research findings are reflected in real life as owners of farms and rural estates look to generate alternative sources of income to augment their traditional income generated from let and in-hand farmland.    

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

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 

E: lisa.simon@carterjonas.co.uk

Don’t panic! There’s more to investment than Stamp Duty penalties

The property press and wider media have been full of the 3% Stamp Duty levy that comes into effect on buy-to-let and second home purchases from April 1.

The Government has finished a consultation exercise on these legislative changes but one thing that hasn’t ended is the rush from buyers who want to beat that deadline.

Investment decisions should be based on much stronger grounds than whether or not you can get ahead of a deadline to beat a hike in Stamp Duty. Frankly, it only takes investors roughly back to where they were before Chancellor George Osborne altered the way Stamp Duty was levied at a stroke during his 2014 Autumn Statement. Everyone was happy to ride with the tax before that, now they all appear to be jumping off the buy-to-let bus because the temporary respite is evaporating.

It’s doubtful now whether many conveyancers will be able to complete their task by March 31, even with superhuman effort. The week running up to the deadline also contains the Easter weekend with two Bank Holidays on top of the regular two day break.

It’s better to take a long-term view and survey how the property market has performed where you want to make your investment. There are other things to consider, too, such as affordability and the way write-down will affect offsetting some charges for things like furnishings.

In London, I have a couple of good examples of properties in Fulham, both in the same apartment block, that illustrate buy-to-let should still be worthwhile.

The sale of one flat has just completed for £855,000 - it sold for £550,000 in November 2010 so illustrates a compound growth of 9.3% year on year. Working from that base, at the same growth rate it would be worth £1.33m in another five years and even at a modest forecast of 3% compound it would achieve £991,000 over the same period.

As well as that healthy capital growth, it would let for £550-£600 per week, a valuable return of 3.34% on top of the value growth. With such uncertainty in equities, residential property makes a better home for savings than any ISA, some of which are barely making 1.5% and all of which have low investment limits, even allowing for tax on the interest. Ignoring the income, the capital growth projection at 3% equals more than five times the extra Stamp Duty, which may well be offset against future capital gains. 

A second flat, on the market now at £750,000, lets for £465pw and would have been worth circa £500,000-£525,000 five years ago. With compound 5% growth it would be worth £957,000 in five years (£869,000 at 3% compound). Again the sums of yield and capital growth more than add up.

If you believe the London market distorts the view, or just because you live elsewhere, there are other examples that illustrate the point.

For example, let’s move to the old Terrys chocolate factory in York which is being converted into apartments; the developers limited the number of buy-to-let sales so there will always be a good mix of owner occupiers and tenants. They believe it will improve the look and feel of the site as well as limiting competition for tenants and, at the same time, avoid pushing down incomes for investors.

Prices range from £180,000 to £1 million so the smaller-priced opportunities open big doors for investors.

From a buy-to-let perspective, the smaller apartments represent a very good investment – a purchase price of £180,000 will return a monthly rental of around £750 and a yield of 5% but added to that the capital growth is likely to be 3-5% per year until the development is completed. At that point, there is often a sudden jump in values as the supply of properties dries up and the site finally looks its best. In previous cases this jump has been anywhere from 5-10% as the site comes to look its best and all facilities are installed.

It’s clear that a 3% one-off panic by some investors is masking a much larger percentage opportunity. The MPC at the Bank of England has just given us a Manchester United away score line of 9-0 against raising Base Rate and some pundits are predicting it may actually fall below its historic low of 0.5% during the last seven years and won’t see a rise before 2018.

The warning here has to be that buy-to-let is a long term investment, so build into the equation the effects of an eventual rate rise when you decide on affordability. It is a business decision, even though it may be your pension driving your thoughts, and should be approached with a definite appreciation of profit and loss possibilities.

But my advice is to talk to your nearest Carter Jonas office.

Use our Stamp Duty Calculator to determine the amount of tax you would pay on a second home by clicking here.

Lisa Simon, 

Partner Head of Residential Lettings

T: 020 7518 3234 

E: lisa.simon@carterjonas.co.uk

Maintain your property – and meticulous records. Detail holds the key to success with Section 21

Plenty of focus has been placed on Section 21 notices, their detail, and the need to serve any notice in the correct format in order to be effective.

In fact the detail is so fine that the first draft of the official notice was erroneous and needed correction as the deadline passed for its introduction on October 1.

Possibly more important than the detail is the devilish part – keeping on top of paperwork in relation to maintenance as well as the maintenance itself.

Much of the change was brought about through the Deregulation Bill passed into law at the last possible moment before the General Election.

At the same time as the Bill received Royal Assent, the run-up to the election was also bringing a great deal of talk about retaliatory evictions. Campaigners were concerned that landlords were able to evict tenants under existing law without giving explanation and could easily do so if the tenant complained about the conditions of the property they rent.

As a result, once a tenant has made a complaint the landlord is prevented from retaliatory eviction under section 33 of the Deregulation Act 2015. This makes it imperative that landlords stay on top of their legal obligations for maintenance and that they attend to repairs before the tenant can head for the local authority’s office and seek the serving of an Improvement Notice.

There is no room for complacency in this respect and any tenant who is beginning to appear problematic for other reasons should not be given the key to remaining in their tenancy through a slack approach to maintenance.

Whenever you receive a complaint in writing from a tenant regarding the condition of the property you must within 14 days give an “adequate” response in writing. If you default, a Section 21 notice cannot be served. The legislation refers to the complaint being in writing but possibly all complaints, no matter how minor, should be clearly logged and receive a response.

The section also provides that if the tenant is unhappy with your response he can complain to the local authority who may then serve a notice requiring works to be undertaken. If such notice is served then no valid section 21 notice may be served for 6 months from the date of that notice.

All the provisions provide that Section 21 notices cannot be served after the actual complaint either by the tenant or service of the notice by the local authority. This should not affect earlier Section 21 notices or situations where the tenant has complained to the local authority but they have not inspected either by the time of the service of the notice or the court proceedings.

Private landlords have limited protection. If the tenant can be shown as the cause of the poor condition, either from positively damaging the property or omission, there may be protection but the burden of proof is on the landlord. If it can be genuinely shown the property is on the market for sale there is also an exemption.

Good processes regarding complaints handling, and a clear understanding by tenants as to who is responsible for accepting complaints, is now more important than ever in residential lettings property management.

As a reminder, the law also stipulates that at the start of the tenancy, the landlord or letting agent must give the tenant details of where and how the deposit is held and copies of both the EPC and, where applicable, the gas safety certificate and the Government’s eight page booklet “How to Rent: the checklist for renting in England” which is only available electronically and has to be printed at the landlord’s expense to be handed over each time. It is important to keep evidence of the serving of this paperwork.

Details of what must be served are contained in the The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 which can be found by clicking here.

Good practice will no doubt dictate that at the time of serving the correct Section 21 notice the rest of the documentation should be re-served so that there can be no question of the tenant having received it.

Lisa Simon, 

Partner Head of Residential Lettings

T: 020 7518 3234 

E: lisa.simon@carterjonas.co.uk

Keeping it real about AI

So much focus in the news on artificial intelligence is far from droning on, believes Will Mooney, Carter Jonas partner and head of commercial in the eastern region

It is incumbent upon any professional adviser to have an understanding of their clients’ business. Those with clients in the technology sector, acknowledge that the speed of change means they are always going to be learning something new. 

The latest technology to intrigue me is Artificial Intelligence (AI).Like many, I do get the basic concept but what’s more tricky is understanding its wordly application and how, in the not too distant future, this might affect my working, domestic and social world.

I could say that understanding AI is above my pay grade, so to speak, but perhaps, one day, an AI-primed robot my be on my pay grade instead of me. Time will tell. But surely all of us with enquiring minds, operating on any pay grade, must be wondering about the the impact that AI is having -  and will have -  on the working world within our life times.

Like most technological developments, AI and its attendent world of robotics once sat in a comfortable package with drone technology in having their roots in governments’ defence spending before coming in to civil use.  As did the first usable prototype of the Internet and look how far down business civvy street that had travelled from the mid-1960s by the mid-1990s.

With drone-eye views of large properties, sites and country estates fast becoming the ‘must-have’ tool in the property agents’ marketing armoury, I can’t help but wonder what mundane but essential jobs in my industry could be happily handed over to an office robot.

It’s been suggested that in the legal world, robots could take on the job of legal executives in checking all is in order on page after page or screen after screen of contracts and agreements.  Whither the legal exec then?

The consensus appears to be that it is jobs in the creative industries which are at least threat from being undermined by AI technology. However, do bear in mind that the people relaying this message are in the media – one of those creative industries.

Far from being a threat to jobs, there are those involved in the world of AI who see their work as freeing up people to do what humans really are good at: being creative and, well, being human. Taking this line, it’s easy to follow the argument that industrialisation has shackled us humans and made machines and drones of us. We do more than be.

In a delicious and ironic twist, perhaps the robots we make and the intelligence we equip them with will free us up to re-discover what the essence of being human is?  This latter point was made with alacrity in a recent interview by Eric Horvitz who is the Director of Microsoft Research’s Redmond laboratory in Seattle.  

The more cynical members of the human race than this esteemed scientist and scholar can’t help but wonder if discovering the essence of our species isn’t a more threatening thought than that of having our jobs done by robots...

It may be that, one day, my job can and will be done by a robot.  But no matter how advanced its intelligence develops to replicate or exceed my own, I do wonder if it will ever share a gut instinct about a deal or the visceral delight and sense of achievement when the deal is sealed.  There’s definitely nothing artificial about those feelings.

Will Mooney MRICS
Partner
Commercial, Cambridge

Suffolk: Our village love affair

Some years ago the search requirements of London buyers were highly predictable: a Georgian rectory or impressive farmhouse with a long drive and about 10 acres, all within a 10 mile radius of a mainline station for the City. Seclusion and no neighbours were significant search criteria. But fashions are changing. These days we are just as likely to find London buyers specifically requesting houses in a village or on the edge-of.

Whilst many of us would be thrilled to own the ultimate trophy country house, we are seeing more buyers wishing to be part of a community and part of the action. When you’re used to the busy lifestyle and buzz of London, as well as having everthing at your fingertips in terms of restaurants, gyms, theatres and cinemas etc, it can be an unexpected shock to the system when a rural setting can lead to a sense of isolation and setting up an account with your local taxi firm.

The pretty and vibrant villages of Suffolk make ours a very special county indeed. When these villages also provide a shop/s, pub, restaurant and primary school we are reaching a recession-proof area of the market. Certainly village houses have been the strongest sector of our market for the past couple of years and the tide is not going to change.

In the price range of about £600,000 - £1,250,000 the demand is exceptional. The wide buyer spectrum is made up of families, professionals, London buyers and – most strongly – the retirement market looking to downsize and be within walking distance of amenities. We have had a number of examples in the recent past where good houses in popular villages, such as Nayland, have brought about competitive bidding owing to this diverse demand.

Whilst this is positive news for the vendors, it can be somewhat frustrating for the buyers. We often see scenarios where cash buyers can swoop in to purchase. This creates a dilemma for those wishing to downsize from their well-loved long-term country house to such a village. These buyers are often very reluctant to sell before they find a house to move to but, the reality is, the village house is the biggest love affair in the market. Just as a faint heart never won a fair maiden, fortune (or the best village house) favours the bold.

Caroline Edwards
Partner
Residential Sales, Long Melford
T: 01787 888622
E: caroline.edwards@carterjonas.co.uk

Milk prices... why so low?

I was sad to learn that Mark Oliver, the chairman of the NFU’s South West dairy board has announced he is selling his herd and quitting agriculture.

Mr Oliver explained he could not see a future in the industry having seen his milk price drop from 33-34 pence per litre a year ago to 25 pence today with further cuts in prospect.

I suspect Mr Oliver will not be alone in making this decision in the coming months. With milk currently trading on the spot market at prices as low as 12 pence per litre, the future does not look great except for those on the most lucrative supermarket contracts where the annual average milk price is still in excess of 30 pence per litre.

The current crisis in the dairy sector is accentuating the huge breadth of performance in the industry. For example, the Milk Price League Table for April published by the Agriculture and Horticulture Development Board (AHDB) shows the top annual milk price is offered under the Muller Wiseman Dairies Tesco contract at 31.88 pence per litre while the lowest price under the First Milk Liquid A contract at 19.56 pence per litre.

Similarly there is a huge gap in performance between the best and the worst farms. Again figures published by AHDB show the full economic cost of production for the top 25 per cent of farmers is around 26.5 pence per litre with the bottom 25 per cent being around 36.2 pence.

Therefore, even on the very best milk contract, the worst performing dairy farmers will be losing more than four pence per litre and if they were on the worst contract they would be losing nearly 17 pence on every litre of milk they produce. There can be no long term future for such businesses.

In contrast farmers in the top 25 per cent will still be making money on the best milk contracts, although in most cases even these farmers will struggle to break even.

So, more than ever, dairy farmers need to keep a very close eye on their production costs and where possible get on to the best milk supply contracts. But sadly there will be no future for the bottom 25 per cent of dairy farmers unless they can seriously improve their technical performance.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

The 7 deadly sins & 7 heavenly virtues of buying and selling

In all parts of life there are things that can raise the blood pressure; likewise there are the lovely things which smooth the ride, put the spring in one’s step and, basically, bring out the best in everyone.

The seven deadly sins are listed as lust, gluttony, greed, sloth, wrath, envy and pride. And the seven contrary virtues are chastity, temperance, charity, diligence, patience, kindness and humility.

In estate agency, we see the good and the bad highlighted on an almost daily basis and we might adapt The Old Testament sins and virtues as follows:

THE SINS

The pursuit of perfection: The ideal house has never been built and never will be. Look at properties with an open mind, heart and soul. You can make it into your perfect home with a little bit of imagination.

Refusing advice: Agents help people buy and sell houses on a daily basis; good agents know their market and have a constant finger on the pulse. Just as you would listen to your doctor’s advice, it’s a good idea to listen to your property professional. However, we do acknowledge this is likely to conflict with some armchair and dinner party experts.

Disloyalty: Disloyal buyers are on a par with disloyal sellers. Some sellers think that by changing their agent a whole new crop of buyers will miraculously appear. That rarely happens. If a house isn’t selling, it’s probably the price. So don’t be seduced by the touts. If your agent doesn’t return calls, advise on the price or put in the hard work required however – it’s a good decision to move on.

Greed: Cheeky bids are as unhelpful as unrealistic expectations on price.

Untidiness: People love to buy a lifestyle – they like to see tidy lifestyles even though they might not lead one themselves!

Poor planning: Squeezing 10 viewings into one day and wholly relying on SatNav – maps may be old fashioned but they work in Suffolk!

Rudeness: Estate agents are humans too. We’re here to sell your house as best we can and to find you the loveliest house we can. We do our job because we like people and want the best for them. People can forget this.

THE VIRTUES

The virtues are simple and straightforward and, as obvious counterpoints to the sins, require no elaboration:

Trusting your agent; possessing an open and imaginative mind; realistic expectations; loyalty; patience; tidiness; appreciation.

And remember our business is minding other peoples’ – choose an agent with integrity. Buying and selling is as much to do with people as it is to do with houses.

Caroline Edwards
Partner
Residential Sales, Long Melford
T: 01787 888622
E: caroline.edwards@carterjonas.co.uk

Cambridge granted 100% control of business rates

“The Cambridgeshire business community is delighted with George Osborne’s announcement that the county can now claim 100% control of its business rates. This will allow the local councils to realise their ambitions and further invest in much needed infrastructure for the county’s burgeoning population due to the influx and expansion of major global firms in the area such as AstraZeneca and ARM Holdings.

Cambridge’s GVA forecasts highlight the city will out-perform the UK national annual figure for each of the next ten years. The city’s rate of GVA growth is also predicted to steadily increase over this period, highlighting the continued out-performance of the Cambridge economy when compared to the national level.

With biotech, education and Information & Communications Technology (ICT) sectors conglomerating in and around the city, we praise the Chancellor’s decision to grant this opportunity for Cambridge to continue to reinforce its position as an economic powerhouse.”

Will Mooney MRICS
Partner
Commercial, Cambridge

Osborne's Help to Buy ISA

With just six weeks to go until the General Election, we were not expecting anything drastic from Mr Osborne’s sixth budget . Interestingly, the Chancellor announced a new Help-to-Buy ISA to assist first time buyers saving mortgage deposits whereby the Government will top-up every £200 saved by the individual with an additional £50. Mr Osborne commented that it will “tackle two of the biggest challenges facing first-time buyers — the low interest rates when you build up your savings, and the high deposits required by the banks.”

Our research analyst, Lee Layton, believes that; “The proposed scheme will (like the Help-to-Buy equity loan & mortgage guarantee schemes) undoubtedly boost demand for starter homes, but unlike Help-to-Buy, this demand should be better distributed as participants save and enter the market at different times, preventing a possible super-charging at the lower end of the market.”

This initiative will not however alleviate the severe shortage of stock affordable to first time buyers; it will essentially create more demand. We were anticipating that this year’s Budget would address the escalating lack of supply and focus more on incentivising institutional investment in the Private Rented Sector, which would offer a bridge or transition for many people between the current levels of unaffordability of buying property and a longer-term rebalancing of the house price/ affordability ratio. However we await the revelation of the 20 ‘new housing zones’ with great expectations.”

Lisa Simon, 

Partner Head of Residential Lettings

T: 020 7518 3234 

E: lisa.simon@carterjonas.co.uk

Mendip Farmers’ Point to Point

In my part of Somerset our version of the Cheltenham Festival is the Mendip Farmers’ Point to Point held at Ston Easton. Well, it’s not quite that standard but to the amateur observer like me it is just as much fun.

The first of six races starts at 12.30pm and these are followed by two pony races for younger riders aged between nine and 15.

These pony races are a relatively recent innovation at point to points which provide interest and excitement for families and are a firm favourite with the crowds, rounding off the day’s racing in an informal, yet competitive and thoroughly enjoyable manner.

However, what astounds me about all point to points - the Mendip Farmers’ event is no exception - is the huge amount of work put in to make this one-day event such a great success.

There is so much to be organised, ranging from the health and safety involving doctors, ambulances and paramedics to making sure the appropriate bar licences have been secured. And that is before the course has been built, marquees erected, hospitality sorted, stewards and car parking arranged, tickets printed, trade stands set up, etc.

The list of tasks seems endless and without the generous support of many local businesses and individuals who sponsor aspects of the event, and of course all the time given freely by the committee, it would simply not be affordable.

But the racing is what it is all about and over the years the Mendip community has had its successes both locally and nationally.

For instance during the 1970s, Max Churches produced top horses, such as Rich Rose and Panmure, both of which won hunterchases, while in 1988, Mendip girl Jenny Litson, daughter of successful point to point owner Bill Gooden, achieved her goal of becoming Champion Ladies Jockey.

In recent years, more success has been seen with horses such as Double Silk, Earthmover and Double Thriller. All three set course records at the Mendip Farmers’ Point to Point, reached the top of the hunterchasing field and progressed to the higher reaches of National Hunt racing.

So, why not come along on Sunday and join the fun? There will be good quality horse racing, bookies, the Tote, bars, trade stands and a great atmosphere for the whole family to enjoy and all at a very reasonable cost for a family day’s entertainment.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

The ESTAS 2016

We pride ourselves on the customer service we provide to all our clients and for this reason we have entered our lettings teams into “The ESTAS 2016”, the most prestigious award scheme in the UK property industry.

The ESTAS is a completely independent award scheme which highlights Estate & Letting agents providing high quality service based on research conducted with sellers, buyers, tenants and landlords in the UK. Voting has commenced and we would therefore appreciate it if you could spend just a few moments to complete a questionnaire on line via a link which your local branch can provide. You can find out your local branch by clicking here.

Please note your responses are anonymous and we do appreciate your honest feedback!

Lisa Simon, 

Partner Head of Residential Lettings

T: 020 7518 3234 

E: lisa.simon@carterjonas.co.uk

Pulse & plus points of the early 2015 market

Once again, early year market activity has not disappointed. This is the fifth January in-a-row where the residential sales market has hit the ground running as soon as we returned to our desks.

To recap, 2014 was a year of two halves.The first six months saw strong activity right across price ranges – quite frankly, the starting gates flew open. But just as we were about to loosen the reins and push on into a full gallop, the Bank of England halted the momentum with its cautionary suggestion of an earlier increase in interest rates than predicted. Greater mortgage regulation helped slow the pace even more.

A long-term comfort to our market, however, is that Mark Carney so clearly adapts to market reactions. Latest predictions now expect the ‘new normal’ level for rates to sit at around 2-3% and, also, that the incremental increases may not start until Q4 2015 but, in all likelihood, in 2016. With low inflation, the crude oil price meltdown and weak wage growth, it looks like 0.5% may be banked upon for this present year.

The 2014 Autumn Statement announcement of stamp duty reforms was a surprise but it’s proving a good thing for the greater bulk of the market in that house purchases less than £937,500 will now face lower stamp duty charges. Above this threshold, the market is already beginning to absorb the changes and the higher cost of moving is now being consistently raised in our sales negotiations between purchasers and vendors.

The Christmas holidays are always an important decision-making time for both buyers and sellers. And, such is the pace of modern consumer demand, people seek immediacy as soon as the decision has been made to move. Hence we now advise vendors to launch to market as early as possible in the new year to, quite frankly, embrace and satisfy the “I want it now” mentality.

Marketing in the first three months of 2015 is more important than ever this year with the General Election bearing down on us on 7 May, as we anticipate a nervous pre-election lull in April. The mansion tax, or variations of it, favoured by both the Labour Party and Liberal Democrats is already having an unsettling impact on the prime markets both in and outside London. Should I put my money on it, I cannot visualise these pre-election manifesto proposals becoming post-election policies but who’s to say?...

So, the year has started with strong apres-Christmas pent-up demand, a renewed confidence in interest rates staying at 0.5% and continuing confidence in property as a non-volatile asset (unlike the recent performances of the stock market, currencies and commodities, not to mention oil). Average UK house prices are anticipated to rise by 3.5% in 2015 with ‘steady-as-she-goes’ growth over the next 5 years – some suggesting by 18%.

With the coalition government ‘consciously uncoupling’ itself into distinct blue and yellow rosette stances when it comes to views on housing market intervention, it is unlikely that the Spring Budget will see any significant policy initiatives which will have a direct impact on the housing market, such as Help to Buy or further SDLT reforms.

The only certainty about the General Election when it comes to the housing market is the date itself. So if you’re in the market for a move, we’re saying best make it now.

Caroline Edwards
Partner
Residential Sales, Long Melford
T: 01787 888622
E: caroline.edwards@carterjonas.co.uk

Farmers to be allocated entitlements

Farmers should be aware of one unexpected consequence of the introduction of the new Basic Payment Scheme (BPS) which seems inherently unfair and is as a consequence of a “one off” rule that will be implemented this year only.

Under the new scheme farmers will be allocated “entitlements” which they need to use to claim against their land. One entitlement will need to be matched against one hectare of qualifying land in order to make an effective claim. The new BPS entitlements will be derived from the old Single Payment Scheme (SPS) entitlements that a farmer already holds.

Under the old scheme, farmers were able to hold more entitlements than land; they could not claim on the spare entitlements but provided they used them every other year they could hold on to them. However in the first year of the BPS any “spare” entitlements will be confiscated without compensation which for most farmers will not have a significant impact.

For those farmers who take on extra land in 2016 this may be a problem if they are not able to acquire the matching number of entitlements from the outgoing farmer because the supply of spare entitlements will be restricted to those farmers who can no longer claim on all some of their own land next year. This may be because they have built a solar park on their land or sold land for development for example.

But, there is one group of farmers where the new rule will have an unexpected consequence and that is farmers whose land may be affected by an infrastructure project in 2015. Such projects are often temporary in nature and may involve a water company installing a new sewer or water pipe for example. Here land will be temporarily taken out of production along the route of the pipe and where contractor’s compounds or pipe stores are required.

In such instances farmers will generally not be allowed to claim on the affected land because it will not comply with the myriad of “cross compliance” rules which are a feature of the both the old SPS and BPS. However, if this land cannot be claimed on in 2015, the farmer will permanently lose the matching entitlements even though the loss of land has only been temporary and has been at the behest of a third party out of the farmer’s control.

I have enquired whether these circumstances could be considered as “force majeure” thereby exempting a farmer from losing entitlements but I am informed this is not permitted. Therefore farmers affected by schemes that will result in a temporary loss of land this year will incur a permanent loss of the equivalent number of entitlements. This will not happen in future years because the ongoing rules allow entitlements to be used every other year.

Therefore if any farmers are likely to be affected by such a scheme please do to contact me and for free advice on this subject.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk