To describe Scotland’s modern rural estates as diverse is an understatement. Yet the truth is that, as landowners and managers navigate ever-shifting sands to secure a sustainable and successful future, that scale of diversity will become even greater still.
Yours are incredibly complex businesses. The pace of change over recent years has been intense.
The impact of ongoing policy change affecting every area of these enterprises is considerable. The challenge of managing this continues to be weighty. The importance to the national economy of getting this right is significant.
At the heart of rural economies
Rural estates are - in many cases - incubators of entire rural economies.
We all know that they are no longer only about farming, forestry, food and drink. They are integral to tourism, renewable energy, conservation, housing and more. The tentacles through which they support other businesses through their supply chains are vast.
Those responsible for managing almost any size of landholding are expected to be adaptable, innovative, entrepreneurial, compassionate - experts in any number of fields. Needless to say, that is a tall order. And it is all set against a backdrop of evolving legislative and regulatory change which has a direct impact on the running of every land-based rural enterprise.
Why diversification is accelerating
Changes to agricultural support packages, tax rules, climate change, land reform and wider cost pressures are, of course, among the drivers for diversification.
Circumstances are forcing landowners and farmers to take greater strides than ever in order to make their enterprises more resilient. The enquiries we are fielding and projects we are advising on indicate that the scale of diversification required in order to strengthen income and secure financial growth shows no signs of easing.
In order to maximise the economic benefits of any venture, though, it is wise not to overlook the legal detail which should underpin each individual diversification project - and how they interlink with the wider portfolio of the business.
Key considerations for renewables projects
When it comes to renewables and forestry, be sure to have taken proper advice about the long-term implications of any project, whether they be about supporting infrastructure, access or tenants’ rights.
A sensible starting point is to ensure you are clear on how much land is needed. It is thought that about 25 acres is required for every five megawatts of power produced. Whether you are looking at wind, solar or hydro, space will be needed for critical support equipment such as battery storage.
With all of that, a detailed understanding of access and services is needed. Might cables need to be run over land that is not yours? What agreements might that mean you need to have in place?
You also would not want to find yourself unable to work as you need with livestock or lose access to certain areas because you have not fully understood the detail around rights on that front or, indeed, who is responsible for the infrastructure.
Tenants’ rights can also be a factor where agricultural or other leases are in place. How might they be affected?
Permissions, leases and land use change
If you are redeveloping existing buildings or building new ones, do you understand what legal permissions need to be obtained and what the opportunities - and constraints - of them are?
Does what you are planning for constitute a change of use? Do you need to factor securing that into what you are doing?
If you intend taking land back in-hand from a tenant, are you following all of the prescribed legal steps?
Succession planning for a more diverse future
And what might all that you are doing mean for succession? Does your business model and succession plan work most efficiently when factoring in the UK Government’s £2.5m threshold for
Agricultural and Business Property Relief, in force from April 1st?
As rural businesses become ever more diverse, so too are the legal considerations. Obtaining early, tailored advice is critical.
It’s fair to say that when rural communities thrive, Scotland thrives. The potential for rural economic growth is considerable. Diversification has a major part to play in unlocking that. Ensuring you have the proper foundations in place for any move that you make - and fully understanding them - can pay dividends for your business, community and the greater good.
Featured in the Spring issue of LandBusiness magazine.
