Category Archive: Investment

Great Yorkshire Show 2017

Diversification is a huge talking point in the current climate due to Brexit, and uncertainty within the rural sector, we wanted to take to opportunity to open the doors to diversification for farmers and rural businesses at this year’s Great Yorkshire Show. We have organised a busy schedule of events that include seminars and live diversification case studies to wine tasting and our annual drinks party.

Great Yorkshire Show

Take a look at our schedule…

 

Great Yorkshire Show – Tuesday 11th July

11.00am – George F. White Stand (202)

Simon Britton and Miles Crossley look into a live farm diversification project with Park Lodge Shooting School to identify challenges and determine the factors that have contributed to its success.

3.00pm – NFU Stand, Sixth Avenue

Rural Practice Surveyor, Matthew Brown, and Head of Planning and Development, Richard Garland, give a Tenancy and Planning and Development update.

 

Great Yorkshire Show – Wednesday 12th July

9.30am – Seminar Room, Hall 1

Simon Britton explores the concept of diversification, looking at what business owners have already that could provide a new revenue stream and what diversification holds for business growth.

2.30pm – George F. White Stand (202)

Tony Cleary from Lanchester Wines discusses how diversification has allowed him to further pursue his goal of becoming the world’s first carbon-negative beverage business.

3.30pm – George F. White Stand (202)

Wine tasting with The Pip Stop, independent wine and beer retailer.

 

Great Yorkshire Show – Thursday 13th July

All Day – George F. White Stand (202)

Come and meet our Yorkshire Team and enjoy some light refreshments.

 

Competitions

During the week we will be giving you the opportunity to enter various competitions to win some fantastic prizes from the likes of Park Lodge Shooting School, The Pip Stop and local producers, Tarte and Berry.

We look forward to seeing you there!

Uncertain Times Calls for Business Stability and Confidence

As it remains unclear on how a coalition government approach to UK leadership will work, and the formal discussions on how we exit the European Union properly continue, it’s fair to say we’re living and working in a period of great uncertainty. Putting in place measures to protect your business, and livelihood, therefore are more important than ever.

Farmers need to start looking at how adaptable their business is to an ever-changing, and increasingly challenging, environment. Although many farmers and landowners are aware of diversification and the benefits it can provide, not many are maximising new opportunities to do so.

One great area for diversification is the development market, which is becoming increasingly buoyant now that land banks are depleting. This is an obvious route to spread risk and create value, whether it is via short-term land transactions with housebuilders and developers, or through the strategic promotion of land through local authority regional development plans.

Optimising the value of land encourages lenders to both support and invest in future projects, which will enable your farm business to diversify into an area which you feel maximises growth opportunity. Currently, lenders are looking for development opportunities so now is the time to speak to them, supported by the right advisors. Given the changing climate, we’ve seen several changes in our clients’ aims and requirements with a heavier focus on securing development deals and optimising the best value they can for unwanted land or land they’re keen to let out or sell.

Local authorities have become increasingly proactive and are now facilitating development which is clearly quantifying risk and encouraging a more productive market place, making development a key strategic area for many farmers to explore and diversify their business. Residential development isn’t the only opportunity, we are currently working with energy companies for instance who are developing sites for electricity storage, and therefore require the ability (and land) to do this. Landowners who, for example, can devote land (up to three acres) near substations are becoming key targets for utility providers who are eager to enter into long-term leases and pay significant rents for the rights to develop land.

What we need to have in business is a bit more robustness – businesses should focus on what they can control, rather than what they can’t, and make logical investments based on this premise. This huge focus on development really can provide a golden ticket to landowners and farmers but it’s vital to ensure you get the right advice and support before making any life-changing and long-lasting decisions.

To discuss this further, please contact Miles Crossley on milescrossley@georgefwhite.co.uk or 07894 885274.

Are fixed rate finances the way forward?

Since the worldwide crash in 2007/2008, UK interest rates have been at a record low, they were recorded at their lowest last month by a further decrease to 0.25% in the wake of Brexit. I am told by an eminent economist that if the country was running normally the Bank of England’s base rates should be 5.5% on average, what I am finding now is that after nearly eight years of low interest rates, most people are viewing the 0.5% Bank of England base rate as the norm.

Money has been cheap, particularly for farmers, over the last few years which has certainly influenced the land market meaning that Brexit has had one useful impact, in that those customers looking for long term fixed finance can benefit from exceptionally low rates. The fixed rate finance market has been likened to a government bond tracker, a lowering of government bond values (such as it was in the wake of Brexit) results in lower fixed rates deals. It is good news to hear from most financial institutions lending to farmers that is it business as usual following Brexit and the appetite for lending still there.

Now some farmers are capitalising on the cheap rates by leveraging out their farming assets over long term 30 year fixed rate deals at under 3% all in and are using the funds to invest in higher yielding non-agricultural property. Fixing gives certainty as to annual payments, but may have disadvantages such as early redemption penalties etc.

If you have variable rate finance at the moment it may be wise to consider fixed rate finance. The key questions to ask are what would payments be on your existing arrangement if the Bank of England base rate is 5.5% and is there any loan covenants that give a bank the ability to renegotiate or call in a loan?

Of course interest rates may remain low for many years to come or they may jump up significantly. If I knew the answers I would be sailing in a yacht in the Bahamas, however I do think there is merit in hedging against the risk of increased interest rates giving certainty for the future. If and when interest rates rise, the fixed rate market is likely to be much more expensive than it is now.

Andrew Entwistle is a partner with George F White who procures funding for clients from a wide range of sources, including High Street Lenders, Agricultural Mortgage Corporation and private equity. Andrew can be contacted on 0797 751 8156.

Joint Ownership of Land

With rising property prices, there is a growing trend for multi-family buys where families pool their money to buy a bigger (and better) property than they might otherwise be able to afford.  It is vital in these transactions that agreements between joint owners are well thought out and properly documented, as the majority of problems occur when matters are agreed verbally, but not formalised legally – especially in families.

The following is a brief overview of the main options for buying property to be owned in joint names.

  1. Joint Tenants

This means that the shares are always equally divided between the number of joint owners.  If there are three owners, they will each own a nominal third share.  When one owner dies their share is automatically transferred to the surviving joint owners and so, in this case, the remaining two will then own half each.  If the property is sold, or rented, they each get an equal share of the profits.  Most married couples own their family homes like this.

  1. Tenants in Common

This is slightly different and enables you to choose the shares in which you each own the property and enables you to determine what will happen to your share after your death.  For example, three joint owners could buy a property and own it as to 25%, 25% and 50%; useful if one person contributed more of the purchase money than the others.  If it is sold or let, then each owner is entitled to that proportion of the sale proceeds, or rental income.  Owning in this way means that you can leave your share to a person of your choice in your Will, rather than it automatically reverting to the other joint owners.

  1. Creating a formal trust

This is the more complicated option and trust mechanisms range from the very basic, to the wildly complicated – and as professionals’ fees vary accordingly, this is probably only worth considering for higher value property.  Advantages are that you can be considerably more precise about who is entitled to what and when e.g. one person is allowed to live in the property during their life, but when they die, their children (say) are then allowed to rent it out and share the income.  In a trust, a number of trustees are appointed to be the legal owners of the property (these can be family members, or professionals, or commonly a mix of both).  The Trustees are not entitled to the profits from it, but are the people who need to sign the documents dealing with any legal interest in it.  This creates a level of subjectivity and safety.   Without trying to over-complicate matters, it is useful to understand the distinction between legal and beneficial ownership here as the distinction is a peculiarity of English law.  Although usually vested in the same person, the legal ownership (the name that appears on the legal title documents relating to a property) and the beneficial ownership (the right to live in the property, or to receive the money generated by it if sold, or rented) can be split up and held by different people – this is the basis of a ‘trust’.  The major advantage of this is that the beneficiary is allowed to live in the property, say, but cannot sell the house without the trustees’ say-so – useful for parents concerned about spendthrift children!  There can also be advantageous tax treatment of property held on trust.

Two caveats to the above: firstly, even if you agree shares, or if a property is bought in a single name, there are cases where an occupier who has made substantial contributions towards the cost of paying the mortgage, or renovation, say, is deemed to be entitled to a share when the property is sold – typically this occurs on a divorce where the house is/was owned in one partner’s sole name.  Secondly, this is only the property law aspect of such purchases and a family law specialist will be needed to advise on the relevant marital home / civil partnership and similar legal aspects.  As to the wisdom and sanity of buying jointly with one’s parents or children; well, that is one for Phil and Kirsty to unravel.

This is a guest article written by Alice Story, Bond Dickinson – tel: 0191 279 9056 email: alice.story@bonddickinson.com

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