March Ponderings - 2022

March Professional Ponderings

Professional Updates

 

With a number of recent developments in environmental and agricultural legislation, this month’s ponderings focus on two current “Hot Topics” that are both flying around in the press.

 

Planning and Development Team Hot Topic

Biodiversity Net Gain

 

Biodiversity Net Gain (BNG) is receiving increasing attention as a potential solution to help offset the reduction in income from the Basic Payment Scheme.  BNG is an obligation placed on developers to achieve an increase in biodiversity as part of their proposed development.  The principle is contained in the Environment Act 2021, and it will be implemented through local planning policy with Local Authorities setting out a requirement to achieve between 10% and 20% of BNG as part of any development scheme.

 

Developers will initially seek to secure their BNG obligations on site and they are already looking at how they plan schemes to accommodate this new requirement.  Where developers can’t create the required BNG onsite then they will be able to secure BNG credits off site, with a direct agreement with another local landowner, or they will be able to purchase credits as a last resort from a statutory biodiversity credit scheme which will then fund biodiversity improvements at locations on the national register of net gain delivery sites.

 

There is still a degree of uncertainty regarding the operation of the market for BNG credits.  There will be opportunities, but the pricing and taxation treatment for BNG credits is still evolving.  The key risk for Landowners is the legal commitment to providing the required habitat improvements through a 30 year conservation covenant.  This is likely to limit the future use of the land and could have an effect on the capital value.

 

We are in regular contact with local planning authorities and developers on this subject and we will monitor the opportunities for landowners.

 

Peter Moore

Partner, Planning & Development

 

Agricultural Team Hot Topic

Lump Sum Exit Scheme

 

There has been a great deal of attention within the farming press on the Lump Sum Exit Scheme, known to some as the retirement scheme. Whilst we are still waiting on DEFRA to deliver some of the finer details, what we do know is that there will only be one application round for this scheme, and this will run from April 2022 and close in September 2022.

 

The Lump Sum allows BPS claimants that are retiring from farming to effectively receive a lump sum of the monies they would otherwise receive in annual BPS payments up to 2027. The payment is calculated by a multiplier of your average claim across 2019, 2020 and 2021 and this is capped at £99,875.00.

 

The broad eligibility criteria are that the claimant will need to have either claimed BPS in 2018 or inherited agricultural land in England, or succeeded to an Agricultural Holdings Act 1986 tenancy, after 15 May 2018. However, to receive the payment you must agree to the following:

 

  • Transfer land that was on your 2021 BPS claim except land used for tree planting and up to 5 hectares can be retained.
  • Transfer can either be surrender of tenancy, sale of land or granting a new tenancy on land that you own for 5 years+.
  • Surrender all of your currently held BPS entitlements.

 

The set requirements of the scheme will mean that it won’t suit many people’s farming arrangements, but if you are currently positively considering stepping back from farming it could be a useful tool to raise capital.  With the April opening of the scheme fast approaching we would encourage anyone considering the scheme to begin discussions with family members and their advisors now, as there are many considerations to be made before an application is submitted.

 

Grace Millbank

Rural Surveyor, Agricultural

 

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