There will always be a requirement for landowners and their managers to adapt to change, however the last 12 months have brought a whole host of new challenges to the fore, particularly for those in Scotland. The latest Land Reform (Scotland) bill, although going through consultation will pass in to legislation in the near future; Westminster’s latest tax and particularly inheritance tax changes have more impact on rural property than budgets in recent history plus the first phase of a new farm subsidy system is upon us. These considerations are just a few of the reasons why now is a more important time than ever for landowners to take a step back and review their policies and objectives with their advisers.
In order to help ensure our landowning clients’ businesses are resilient going forward it is essential to strategically review the management strategy so that the objectives and operations of the property are considered in the context of today’s legislative and fiscal climate, whilst also considering what might be over the horizon.
The format of every Strategic Review will be different for each client, but some of the aspects typically covered include: reviewing finance and borrowing against fluctuating interest rates; reconsidering what the most important aspects of the estate are for the owner(s); reviewing the commercial viability of existing operations in comparison with alternatives; considering where sales may be appropriate; establishing how the estate will be held going forwards and by whom; and exploring where there are opportunities to work with local communities.
Understanding where the value in the asset lies is also essential in planning for the future. It might be relevant to the impact of taxes on transfer or restructuring; the potential to raise funds through sales, or the options available to secure funding to allow investment in another project. We have always carried out property valuations and it is more important than ever to understand the value of what is owned, and we are here to support our clients with this. Red Book valuations are regulated by the RICS, our professional body and carried out by Registered Valuers thus ensuring values with the necessary due diligence, research and evidence are provided so they can be depended upon for the intended purpose. Market changes in recent years may have had significant impacts on the values of various components of mixed estates. Consents or suitability for new alternative uses or projects may also have changed over time. It is therefore important to regularly review ones property and consider timings for any transfers in relation to activities that may adjust the property value.
For the time being, while we wait for the detail on Land Reform and IHT changes we are working with many of our clients on their Whole Farm Reviews, required now as part of their Basic Payment application., Although many meet much of the criteria through existing best-practice, we are supporting them in these new processes to ensure they remain eligible for their farm subsidy. As our clients go through 2025 and beyond there are changes to consider at a strategic level whilst also keeping up to date with the requirements for the operation of the existing estate enterprises. Now, more than ever, rural property owners in Scotland cannot afford to standstill and must evolve with the changing political and fiscal landscape.
