Development drive brings both opportunity and pressure for farmland

Environmental and socio-economic pressures are set to have a significant effect on the rural landscape.

Infrastructure demands, environmental regulation, housing, and renewable energy will all affect the countryside, says the Central Association of Agricultural Valuers (CAAV).

The government sees new infrastructure as a key to rebuilding the economy after the Covid-19 pandemic and levelling up the regions, according to the CAAV.

See also: Advice on long-term land agreements as new markets develop

Last year, HM Treasury announced £650bn of private and public investment to implement nationwide infrastructure projects.

Housing and the environment

Demand for new housing is taking land out of production, not only for new building sites, but also for biodiversity net gain sites, to offset losses from the housing developments.

Rebecca Collins, technical and policy adviser at the CAAV, says housing is a key focus, particularly in the Midlands and the North, with a target of 300,000 new homes to be built across the country each year.

In order to meet environmental regulation, new housing developments will need to produce a 10% gain in biodiversity.

This provides opportunities for both farmers and landowners to benefit from sales of land for development and also income from offsetting the developments.

However, more clarity is still needed on how these schemes will be implemented, she said.

Further responses from the government following consultations earlier in the year are due soon and should help to offer a better insight.

The total marketplace for biodiversity net gain land is expected to be relatively small, at about 4,000-5,000ha/year, according to the CAAV.

Nutrient neutrality

Development will also be required to achieve nutrient neutrality if in a river catchment area.

“Early indications are that deals are being made at £5,000-£7,500/house,” said Ms Collins.

“There are certainly lots of opportunities ahead, so it’s important to keep abreast of the changes to maximise the chances of a successful arrangement.”

These type of agreements between developers and landowners tend to be in place for long periods of time, often for 80-125 years.

Therefore, a significant amount of funding is needed to cover both the initial cost of implementation and also monitoring for the lifetime of the agreement.

CAAV secretary and adviser Jeremy Moody said: “It is thought there could now be 100,000 houses held up in the development process while people figure out what to do with nutrient neutrality.”

Water neutrality and air neutrality are both also growing areas of interest in relation to new housing developments and new targets may be introduced around these in future.

Advice for landowners

The advice for landowners and farmers from the CAAV is to not enter major commitments unless you are really comfortable with the terms of the price received.

Mr Moody said: “With biodiversity gain you are looking at 30-year commitments. Some of this may be modest changes to land use, which allows the land to continue to be grazed, just on more species-rich pasture, but some of it might be quite fundamental habitat and land use change.

“If that suits your plans that’s splendid, but don’t think what you’re going to be paid is necessarily life-changing.

“It all comes back to what people want. If that is what you want to do with the land and it suits your purpose, then being paid money for that land could be attractive,” he said.

It is also important to consult on the tax position, particularly around inheritance tax, according to Mr Moody.

Electricity

Demand for electricity in the UK is set to double by 2050, according to Ms Collins, and more than 30m electric vehicles are expected to be in use by 2040.

This will lead to increased demand for land for renewable energy, in particular for solar and wind farms, which could provide new opportunities.

“We might see more permitted development rights for small-scale solar, and easier planning permission for large-scale projects,” said Ms Collins.

Infrastructure

Compulsory purchases of agricultural land have already been seen through large infrastructure projects such as HS2.

Major road developments and implementation of large-scale infrastructure such as distribution hubs are expected to lead to more compulsory purchases of farmland in the coming years.