The sale of the 28,300-acre Auch and Invermearan Estate in Argyll and Perthshire earlier this year for £11m might suggest that all is well with the rural land market in Scotland.
Estate sales
This was the second £10m-plus sale that Knight Frank had handled in a period of 18 months. Both estates had been sold to investors from outside Scotland after attracting international interest.
Ran Morgan of Knight Frank was reported in The Times, as saying that there is a “real appetite for Scottish land holdings from investors, especially from overseas. They are particularly interested in estates that can produce significant income in the form of renewable energy”.
Auch and Invermearan is already yielding a gross income of £245,000 from its first hydro-electric scheme. Another three sites on the estate have consent, with the potential for a further 11 schemes. The rest of the package consisted of a six-bedroom lodge, seven cottages, a flock of 8,200 Scotch blackface sheep and salmon runs from both west and east.
The Kinpurnie Estate, on offer through Savills, offers another insight. The longstanding family owners had hoped the estate would sell as a whole. However, the good-quality land on the estate has sold readily to local farmers, reflecting, according to Charlie Paton of Savills, strong local farming interest in good land when it does rarely come to the market.
Paton is of the view that the head has become as important as the heart in larger-scale estate purchases both north and south of the border. Other commentators take the view that the dividing line comes between land that is predominantly in hand and land that is let.
Land reform
Land reform is firmly on the political agenda, whatever the outcome of next week’s referendum on independence. The Land Reform Review Group has recently issued its report: Land Reform, Common Good and the Public Interest. Overall the group recommends the creation of a Scottish Land and Property Commission, a single body responsible for the oversight of land ownership and management in Scotland, and charged with recommending changes in the public interest. Other recommendations cover registration, ownerless land, compulsory purchase, Crown property rights, the national forest estate, “common good” lands, urban renewal, new housing, existing housing, rural land use, land taxation, tenant farms, public access, water, fish, and wild deer.
Community Empowerment Bill
In the words of one senior chartered surveyor in Scotland, the report’s recommendations will “affect every single chartered surveyor in Scotland”. The Community Empowerment Bill already contains proposals that will allow communities to purchase “abandoned” land. But how straightforward will this be for derelict sites in urban locations, let alone rural areas of huge natural heritage and ecosystem importance but little apparent management activity?
Agricultural holdings review
Political views on land ownership are central to the land debate in Scotland, in a way not seen in England for decades. For example, an Agricultural Holdings Review Group is chaired by Scottish government rural affairs and environment secretary Richard Lochhead. The review group seeks a flexible dynamic agricultural lettings sector, yet with the possibility of qualified rights to buy backed up by potential compulsory purchase powers for underperforming landlords.
Market reluctance to invest in the let property on the Kinpurnie Estate should be a clear signal of what can happen in an agricultural tenancy sector too beset with outside interference. This is also in marked contrast with the distinctly non-political approach taken to farm tenancy reforms south of the border, where the government has consistently made it clear that legislation will only be introduced on the back of industry consensus.
Common agricultural policy (CAP)
The Scottish government has also been slower off the mark than its English counterpart in sorting out the implementation of the latest CAP reforms. Farmers need to know urgently how the new greening measures will work, in detail, with regard to cropping plans for this winter, next spring and beyond, but the Scottish government has been slow to release the details.
The “slipper farming” problem has been attributed to Scottish landowners but according to Andrew Midgley, head of policy at Scottish Land and Estates, there are also significant number of tenants hanging on to entitlement rights to claim against “naked acres”. In short, for a government that is committed to a vibrant agricultural sector, there seems to be much that is acting against farming’s competitiveness with its southern neighbour.
Referendum and future direction
Whatever the outcome of next week’s referendum, land reform “isn’t going away”, according to Midgley. The direction of travel will remain the same: a continued shifting balance in favour of tenants and owner-occupation. A “yes” vote might cause some delays in the delivery of political promises such as the SNP’s Land Reform Bill during this Scottish Parliamentary term. On the other hand, a “no” vote might have considerable repercussions for the 2016 Scottish Parliament election, inducing a swing to Labour in the Scottish Parliament.
Buy, sell or hold?
Where does all this leave the investor in Scottish land? Scottish social aspirations are likely to come at the expense of economic and even environmental aspects of sustainable rural land management. Far from letting land, investors are likely to seek the novel ways of avoiding farm tenancy legislation that came to such prominence in England in the 1970s and 1980s.
Rather than the growth of a vibrant tenanted sector, it is likely that fragmented owner-occupation will grow, leading to greater barriers for would-be new entrants and greater problems in undertaking landscape-scale environmental management. Scotland’s political social gain now may come at the expense of its longer-term environmental health and rural economic prosperity.
Charles Cowap is a rural practice chartered surveyor
