With the price of materials increasing due to disruptions in the supply chain and pressures of inflation, a growing number of people are now unaware that their buildings may cost significantly more to rebuild than what they are actually insured for.

The issue of underinsurance is having a significant impact across the UK with many business owners losing out on pay-outs due to their insurance policy being undervalued.

In 2022, leading insurer Aviva, in its latest Risk Insights Report, estimated that half of SMEs in the UK are underinsured, and 40 per cent of buildings covered in policies were underinsured by 20 per cent.

Chris Clement
Copyright Stuart Walker Photography

Chris Clement, the commercial director for H&H Insurance Brokers, said “Many businesses have existing insurance policies in place for their buildings which they believe covers them for a full pay-out if anything does go wrong.

“But with the way the prices of building materials have risen, the actual cost of rebuilding after any sort of damage may have doubled or even trebled in some instances, so what they are finding is that the value of the building has risen and the sum the insurer is paying out doesn’t cover the full amount of the rebuild.

“This is hitting a lot of businesses across the UK hard in their pocket and can be potentially devastating to businesses but, by raising awareness of the problem, we hope to make this dilemma a very rare one for people across the country.

“Seeing your building destroyed by a fire or partially damaged by strong winds is traumatic enough and learning that you will only get a certain percentage of the rebuild costs through the insurance pay-out is a stress you can really do without.

“Making sure you are correctly covered is paramount and it’s why your broker must ensure every detail of the policy is accounted for to avoid this disappointment.”

The most common reason for underinsurance was cited as a failure of conducting regular valuations.

Chris said “When renewing policies, I think it is essential for your broker to visit the property and analyse the items which they’re looking to cover so they can get a more realistic and accurate picture of the level of cover required.

“During Covid when site visits weren’t allowed, many fell into the habit of carrying out reviews over the phone but I recommend that this type of review is kept to a minimum.”

H&H Insurance Brokers is the UK’s Independent Broker of the Year for 2022 and one of the UK’s leading independent insurance brokers operating across the North of England, the Scottish Borders and Wales, with nearly 40 years of experience protecting businesses across various sectors.

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But on 31^st December 2021, PDR reverted to the original limit of 28 days, threatening to derail the ongoing rural economic recovery.

According to figures from Pitchup.com, pop-up campsites generated £25m for the rural economy in 2021, with more than half of that money being spent with local businesses, meaning entire communities felt a financial uplift.

Yorkshire was one of the most popular destinations with campers, with almost £900,000 being spent in the county at pop-up campsites and surrounding businesses, Pitchup.com’s analysis revealed.

Dan Yates, founder of Pitchup.com, (pictured below) gave his full backing to Mr Goodwill and joined him in urging Michael Gove to reinstate the 56-day ruling.

He said: “The rural economy has benefited hugely from PDR being extended to 56 days. But this isn’t just about the economy, it is about people – small rural businesses, farmers, and communities doing what they could to survive a really difficult time.

“The 56-day ruling was instrumental in that. It enabled landowners and farmers to set up campsites for long enough to make a real impact on their own businesses and those around them. It kept a lot of businesses afloat during the pandemic, especially those in the tourism and hospitality sectors, that otherwise might have folded.

“To take it away now could undo all that good work. The pandemic hasn’t gone away, and with the terrible state of unrest in the world, which impacts hugely on farmers in regard to fuel and fertilisers costs, not allowing them to find alternative forms of income could be devastating.

“Not only that, many holidaymakers, still wary of flying, will be in need of a restful break in the beautiful English countryside. Keeping PDR at 28 days will deny many of them that opportunity.”

Mr Goodwill told Parliament that the 56-day ruling had worked well last year and generated no complaints.

“Twenty-eight days isn’t really enough, but 56 days would cover the summer holiday and peak season for camping and caravanning,” he said.

“And, of course, the more people that come to North Yorkshire, the more people will be spending money in the shops, pubs, restaurants and everywhere else.

He added: “If we don’t do this, people will start camping on other land without permission and we already have a problem with camper vans parking in lay-bys and emptying chemical toilets where they shouldn’t.”

Mr Goodwill urged the government to make a decision “fairly soon” as people need to decide whether to hire out camping facilities or use their land for another purpose ahead of the summer.

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(Picture: iStock)

Developers’ appetite for land is undiminished. Typically, developers offer landowners an Option or Promotion Agreement to promote their land. Beware of the following:

• How long is the agreement? Usually between 3-15 years. Short is best.

• Is there an upfront payment? Developers will offer a premium to landowners which the landowner will keep – paid at the outset and for any extension.

• 

  Nick Harper FAAV MRICS, managing director of Hawkspur

  Who will pay for all planning costs? Developers should pay such costs (which are high) – and the landowner’s agent and legal fees in preparing the agreement.

• Maximising land values. The developer should be obliged to maximise the residential value. Minimum housing densities or land values are recommended.

• At what value will the land be sold?
  • Option agreements – a developer will buy the land, discounting the value to give the developer a profit and leaving the landowner between 80-90% of the agreed value.
  • Promotion agreements – the land is sold on the open market and the promoter receives a percentage of the proceeds, leaving the landowner between 80-90% of proceeds. The benefit is that both parties’ interests are aligned – to maximise the price which will be shared.

• So does it matter if it’s an option or promotion agreement? In a word, yes. Land sold via an option cannot be exposed to competitive bids from rival developers. Promotion agreements allow open market exposure when the land is sold and give reassurance that the best price has been secured.

If your land has development potential or you have been approached by a developer offering an option or promotion agreement, contact Hawkspur for an impartial opinion.
 
Contact Nick Harper by email nickharper@hawkspur.co.uk, or visit the website HERE.

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Credit: Jones Food Company.

The new multi-million-pound vertical farm, being built in Lydney, Gloucestershire, will offer 148,000sq ft of growing space, making it comfortably the world’s largest vertical farm. It will be approximately the same size as almost 70 tennis courts and able to supply 1,000 tonnes plus of fresh produce to thousands of UK supermarkets.

Jones Food Company founder, James Lloyd-Jones, says: “With this new facility we further accelerate Britain’s position as a world-leader when it comes to vertical farming. We already supply thousands of British retail stores with basil grown in our first facility in Lincolnshire but this new site, which is three times bigger, will allow us to supply tens of thousands more stores and to widen our product offer with our partners.

“Our food supply chain is under significant stress, with empty supermarket shelves and shortages of foods increasingly commonplace, vertical farming is undoubtedly a vital part of the UK’s and the world’s farming future,” added Mr Lloyd-Jones.

Credit: Jones Food Company.

“Given what we’re already doing, the world-leading technology we have and the intensely pressing need for more sustainable forms of farming over coming decades we plan to be able to supply 70% of the UK’s fresh produce within the next 10 years.”

The Jones Food Company was founded in 2017, opened its Lincolnshire facility in 2018 and secured backing from The Ocado Group in 2019.

Mr Lloyd-Jones went on to add: “From an environmental perspective, vertical farming allows us to grow in 17 layers, so every acre becomes 17 times more productive. It allows us to grow entirely without pesticides and using 95% less water. And it means we can significantly reduce the air and road miles of the foods we grow.

“But vertical farming doesn’t just make environmental sense, it makes economic sense too. Scale is vital in order to create a cost base that allows us to deliver delicious, healthy herbs, salad leaves, cut flowers, fruit and veg at a price the average shopper also really likes. This second facility further cements our ability to do this.”

Mr Lloyd-Jones concluded: “I accept we’re currently a small part of the UK’s agriculture industry, but this move makes us mainstream, it makes us a really significant player in this country. And you only have to look at Germany, the Netherlands, the United States, across the Middle East and Asia to see this is a global movement, revolutionising the way the world grows produce – vertical farming is the future.

“Building the world’s biggest vertical farm puts the UK at the vanguard of this global movement – we’re leading the world’s vertical farming revolution.”

The new facility, dubbed JFC2, will open in early 2022 and be able to supply supermarkets across the UK.

Have your say and share your views with us on this story, or any other farming issue by emailing us at views@farmersguide.co.uk

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The Model Estate report demonstrates that businesses with multiple income streams will have emerged from the turbulent economic climate created by Brexit and the Covid-19 pandemic in the best shape.

Carter Jonas researchers tracked the performance of various asset classes over the past 12 months. The work included studying the financial returns from let and in-hand farming operations, commercial and residential property, telecoms, fishing rights, shooting and a quarry.

When the figures are applied to the notional 3,168-acre mixed estate, the results clearly show that non-farming income is integral to strong financial performance.

The solar farm’s capital value increased by 8.8% over the past 12 months, while returns from the residential element of the estate returned 4% annual growth.

By contrast, returns from in-hand farming and let land remained flat.

Tim Jones, Head of Rural, Carter Jonas

Carter Jonas Head of Rural, Tim Jones, said: “The Model Estate work this year continues to demonstrate that maximising the potential returns from an estate by diversifying and not relying solely on mainstream farming will be essential going forwards.”

Strong performance in the residential sector proved to be important, driven by a desire for space, location and good internet connections.

“As working from home became the norm, buyers realised they didn’t need to be tied to a specific location and house sales in more rural locations increased accordingly,” said Lisa Simon, the firm’s Head of Residential.

“The list of desirable qualities in a property changed to include, principally, more space and a strong internet connection while short commuter links to London took on less importance.

“The same was true for renters, who typically became more open to exploring the freedom and flexibility a new location offered.”

Similarly, a residential component of the in-hand farming operation was the sole reason for 1.4% annual growth. A manor house is included in the researchers’ profile of the farm business.

The impact of a poor harvest was lessened by burgeoning commodity prices, and the value of arable land remained stable, although pasture values fell by 3%.

“The hot, dry weather in the spring significantly reduced harvest yields in 2020,” Mr Jones said. “However, commodity prices witnessed a notable increase as a result of Brexit, and have continued to remain high, partly offsetting the impact.

“The downward tapering of BPS has continued to squeeze farm income across the board, highlighting the importance of diversification, maximising an estate’s potential by finding alternative income streams and reducing costs.”

The Model Estate work is now in its eleventh year, and based on the performance over the past 12 months its total value would increase to £44.36m in December 2020 – growth of 11.6%.

A significant factor was researchers analysing the impact of leasing 25 acres of farmland to introduce a quarry. By the end of 2020 the quarry was worth £4.4m and generated an annual income of £542,500.

“Creating a quarry is clearly not an option open to every estate owner, but this work demonstrates that exploring all the options available to you is essential in order to maximise potential,” Mr Jones added.

The Model Estate 2021

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The government has agreed a new Class MA right to allow for the change of use from commercial, business use and service use (Class E) to residential use (Class C3) without requiring a full planning application.

The idea behind having a new wider Class E designation was to allow buildings, particularly in high streets, to be used more flexibly, without needing to seek planning permission

Alice Robinson, senior associate director in the Stamford office of Strutt & Parker commented; “These changes add to the plethora of changes to permitted development rights that have been introduced in recent times with a view to easing the planning burden for property owners with buildings that may well be better suited to other uses – a number of which are now becoming a well-established route to successful projects,

“The new Class MA rights will take effect from the 1st August 2021, with existing arrangements for the change of use from offices and retail to residential applying until then.” Ms Robinson said the new Class MA rights could open up new opportunities for some farmers and landowners.

Diversification has become a necessary part of modern farming. But lengthy and complicated planning permission requests can put farmers off, or effect their plans.

The new changes could have benefits across society. Housing in the UK is both limited and too expensive for the average income. Allowing Farmers more freedom to convert old buildings could help ease the UK Housing crisis. Whilst also allowing the farmers to release the capital tied up in old and unused infrastructure.

The change should also be welcomed due to the lessened environmental impact of converting existing buildings, over constructing from new.

Class MA rights in detail

The Class MA right will be subject to the prior approval by the local planning authority in respect to a number of matters such as transport impacts of the development, impact on the character and sustainability of a conservation area and the provision of adequate natural light in all habitable rooms of the dwelling houses.

Unlike other permitted development for residential use, these new rights apply to buildings in conservation areas.

Development must be completed within a period of three years starting with the prior approval date.

It should be noted that not all commercial activities fall within Class E, for example, B2 (general industrial) and B8 (storage and distribution) use classes remain unchanged and therefore will be excluded from Class MA permitted development rights.

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The modern looking mechanically strong bituminous panels are a solid 3.5mms thick, yet lightweight and maintenance free with an extended 20-year guarantee.

Perfectly waterproof, DURO SX 35 has a trapeze profile with 38mm corrugations that aid ventilation, and is resistant to even extreme corrosive agents, also to strong blasts of wind.

Technical Sales Director Greg Hissey said: “As well as requiring protection from the elements, livestock can be badly unsettled by the loud noise of driving rain and hail pounding on the roof. With today’s increasingly unpredictable extremes of weather, that’s an important consideration.

“DURO SX 35 has been specially developed to deliver higher levels of sound absorption. This gives the animals a greater degree of acoustic comfort, particularly when compared to a metal alternative.”

Easy to transport, handle and install, the 200cm x 82cm panels weigh 3.66kg/m² and can be adapted to many different types of structure, whether that is for renovation projects or new buildings.

Installation is fast and intuitive. It is also easy to cut, shape and fix with just standard tooling.

DURO SX 35 carries the aesthetical look of a metal sheet and is available in a range of stylish colours that will not fade, thanks to advanced coatings technology that gives optimal colour stability.

Onduline has been manufacturing eco-friendly bituminous corrugated roofing products for more than 70 years and is an ideal partner for the farming sector.

Alongside their many other advantages, Onduline roofing sheets are popular for their thermal insulation qualities and also sit harmoniously in a rural landscape.

The sheets are made of 50% to 60% recycled cellulose fibres, contain no asbestos and do not release any hazardous substances. Independent testing in laboratories has shown they are completely safe for animals and humans.

Greg added: “We believe our new DURO SX 35 sound dampening roofing system is something to shout about. We are confident it will make a noise with the farming community but all will be quiet in the cattle shed.”

For more information on Onduline’s lightweight, eco-friendly and durable roofing solutions please visit www.onduline.co.uk.

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The Environmental Bill should become law by the year end and this will offer real opportunities for landowners with land that has little prospect of development, but with potential for environmental enhancement. The law will oblige developers to assess the biodiversity value of a site against a metric and to demonstrate that once developed, its biodiversity value has increased. 

If not, then they will have to compensate for this by either (a) providing off-site land that can be environmentally enhanced or (b) buy government credits. Option (a) presents the opportunity for the rural landowner to provide their land to developers in return for payment and a commitment to:

1. 1. Enter into a contract for at least 30 years for the site. This will be secured either by way of a S.106 Agreement or a Conservation Covenant. 
   2. Manage the site in accordance with pre-determined guidelines or allow a third party to do so.

The sum payable to the landowner will relate to the management works required and can be a capital sum and/or a management fee. In fact, biodiversity offsetting has been around for years. Representing a landowner/developer, I recall some 10 years ago having to agree to pay an adjoining landowner for the use of their land to offset lost environmental land being used for a commercial development in Kent. In this case, the sum paid equated to more than the freehold agricultural value of the land – but it will no doubt depend on market forces. 

When the Developer comes a’knockin – Option or Promotion Agreement?

I have written much about the pros and cons of different development agreements (see HERE for the latest) and while both can yield success for landowners, promotion sometimes has the edge in terms of alignment of interests with the landowner.

One matter often overlooked by clients is tax. Seeking specialist tax advice at the outset, whether IHT or CGT (preferably before a development agreement is signed) could save the landowner significant sums. 

Other important issues relate to requiring a minimum payment to the landowner when the land is sold and capping the developer’s deductible costs. A minimum receipt to the landowner ensures the land isn’t sold cheaply and insisting on clauses for overage and clawback can allow the landowner to share in any future uplift in values of the site even once it has been sold.

The development land market 

As things stand at present, there remains a shortage of sites with planning permission and this is underpinning prices paid by house-builders to landowners for their development land. This applies whether small or large sites, although there is particular interest in sites with permission for say 50 houses up to around 300-400 units. It will be interesting to see how the land market reacts to the tapering of the stamp duty holiday in September, the ending of the furlough scheme, interest rates, the vaccination programme and to employment levels. 

Experience from the 2008 recession suggests that there could be increasing disparity in development values between some regions as a result of any economic adjustment but regional hotspots will remain. The underlying undersupply of new housing sites by many local planning authorities against their five-year housing targets will inevitably lead to land values being buoyant for the moment.

Housing delivery test – how does your council shape up?

There has been some excellent work recently comparing how councils are performing in terms of delivering planning permissions for housing against their targets. Many have delivered although the research identifies that in some cases, for this to continue it is contingent on infrastructure delivery (e.g. Bedford Borough Council) and sticking to their own timetable for adopting the Local Plan. 

But – as many are not delivering sufficient housing and the NPPF dictates that these fall into the ‘presumption in favour’ of development or that an Action Plan is required to remedy this. A few examples are Uttlesford, Ipswich, North Herts and Basildon.

This provides opportunities for landowners to have their potential development land promoted for additional future housing – either through planning representations or an early planning application in some cases.

Be a BIMBY (Beautiful In My Back Yard)!

In proposed changes to the NPPF, the government is consulting on a National Model Design Code with the Secretary of State saying: “For the first time in the modern planning system, beauty and placemaking will be a strategic policy in their own right. This will put an emphasis on granting permission for well-designed buildings and refusing it for poor quality schemes […] We are asking all local authorities to work with local communities to produce local design codes or guides […] that new buildings will be expected to meet.”

This is good news. Many landowner clients are long term stewards of land and care what takes place on land sold to house-builders. As always, the devil will be in the detail but there are plenty of examples of great design and organisations such as the Prince’s Foundation for the Built Environment have been a leader in this field for many years. It also makes commercial sense for developers by winning support for good design.

If you want to find out more about any of these topics, contact Nick Harper via nickharper@hawkspur.co.uk or 07528 089419, or visit www.hawkspur.co.uk

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Planning should be objective for the most part. Government legislation and policy clearly identifies key aspects and requirements – though these do change from time to time.

For land owners and farmers, obtaining planning can and should be relatively straightforward, particularly in agricultural or forestry building terms. In many instances, full planning is not required – legislation clearly defines and allows farmers to build agricultural buildings even within areas designated as Green Belt.

Making use of your Permitted Development rights

An agricultural determination/prior notification is available to you if your farm/holding is 5ha or more (and to a lesser degree if less than 5ha). Farmers have the ability (under PD) to: erect, extend or alter a building, and carry out excavations and engineering operations needed for agricultural purposes (though you may still require full approval for certain details of the development).

The types of permitted development include: temporary uses of land, agricultural buildings with an area below 10,000 sq. ft or 1,000 sq. metres, forestry buildings or caravan sites and related buildings in some circumstances.

Johnstruct Ltd. submits many planning applications, the majority utilising clients’ PD rights. PD applications are low cost and quick (determined within 28 days). There is limited or often no public consultation; at most the local parish council are consulted (more often than not they are not in a position to respond). In theory, it mainly boils down to the planning officer assigned to your application.

The paradox occurs when we see many different responses, interpretations and decisions, even within the same local Planning Authority (LPA) regarding agricultural planning determinations.

At Johnstruct Ltd. we always aim to submit a 100 per cent objectively compliant application, though we occasionally fall foul of the LPA ability to subjectively refuse a PD application. This is mainly due to the determining case officer’s point of view or that of a local planning policy (these are sometimes not legal, therefore are not enforceable).

Normally a refusal is based on that of the visual appearance and sighting of the proposal being detrimental to its environment or similar. The subjectivity of this is extremely frustrating, however it is there to place some form of control and protection – we’re all someone’s neighbour.

If you’re looking to obtain planning for a new agricultural building/project or you are thinking about how best to approach your project, contact Johnstruct Ltd. for free planning and steel frame building advice and guidance. Call 01277 890 595 or email info@johnstruct.co.uk

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