Author: manageruser

Minimum Energy Efficiency Standard (MEES) Regulations mean that from 01 April 2018, it is illegal to re-let properties with a rating lower than ‘E’. Both domestic and non-domestic properties in England and Wales will need to meet these minimum standards. EPC Certificates are valid for 10 years and all properties must have current certificates in date.

Farmhouses let under an agricultural tenancy, both Agricultural Holdings Act (AHA) 1986 tenancies and Farm Business Tenancy (FBT) are exempt from these regulations. Licences are also not within the scope of the regulations. Residential properties let under the following tenancies are required to comply with the new regulations:

• – Assured tenancies under Housing Act (HA) 1988 (including ASTs)
• – Regulated Tenancies Under Rent Act 77
• – Assured agricultural occupancies under s.24 HA 1988
• – Protected tenancies – s.3(6) Rent (Agriculture) Act 1976
• – Statutory tenancies – s4(6) Rent (Agriculture) Act 1976
• – Excludes social housing but includes extensions and renewals

A new tenancy or renewal of an existing tenancy will not be issued on any properties below an ‘E’ rating after 01 April 2018. Fine of up to £5,000 for Landlords who are in breach of this new legislation.  Properties with existing tenancies will need to have an EPC rating of ‘E’ or above by 01 April 2020.

Properties with ratings below an E will need to make efficiency improvements to boost the rating before the property is compliant to let. EPC reports provide a list of recommended measures to help improve the energy efficiency performance of the property. Due to the nature of many older rural houses and cottages, these have been highlighted as more susceptible to not reaching the required standards and won’t always meet the standards required for compliance. There are a number of temporary exemptions which Landlords can register for on 01 October 2017 if any of the following criteria applies:

• – The Landlord has made all relevant energy efficiency improvements and the EPC rating is still ‘F’ or ‘G’
• – There are no relevant energy efficiency improvements that can be carried out to the property.
• – Devaluation: The required improvements will either cause damage or reduce the value of the property by 5% or more
• – Consent: It is not possible to gain the consent for the works to be completed required by the Tenant, Lender or Superior Landlord.
• – Cost: The identified improvement measures are not cost-effective, either within a seven year payback or under the Green Deals Golden Rule.
• – New Landlords (further rules apply).

Exemptions are valid for 5 years from the date of registered.

We strongly advise that those letting properties, start implementing the required changes immediately to ensure compliance by the 01 April 2018. This will also allow the cost of works to be staggered if extreme measures are required. Meller Speakman are able to provide further advice on this, if required please contact get in touch.

Succession Planning

Succession planning is key to protecting the future prosperity of a family business.  Owners of family businesses should assess their short and long-term objectives, potential structural risks to the business and plan for generational changes.  Businesses should also assess the impact the loss of key player could have on the day-to-day management, again both short-term and long-term.    

Businesses should aim to have robust and logical plans agreed and put in place that will avoid unnecessary last-minute conflicts, ambiguity and muddled business strategies and help maximise available tax reliefs along the way.  It is all too common for landowners and agricultural businesses to leave succession planning until the ‘11^th-hour’, just ahead of the passing of a family member, or when it is often too late, i.e. after the sudden death of a family member or when a key player can no longer continue in their role.  This often leads to an illogical approach to planning, making the whole experience stressful and worse than necessary; can lead to family and shareholder disputes and place a business under unnecessary financial pressure.  Good succession planning allows time for potential business risks that could have a significant impact on the business to be discussed, evaluated and key objectives agreed allowing the correct strategy and business structures to be adopted. 

Businesses and families should take a proactive stance by starting discussions early on, ensuring all involved parties have a chance to voice their future ambitions and objectives and how they wish to achieve them. This will provide a platform for logical, well thought-out plans and appropriate structures to be considered.

Future generations should be brought into businesses from an early stage, slowly building skills and knowledge whilst older generations still have overall control.  Clear lines of responsibility provide accountability, but also helps younger generations feel they add value and are a valued part of the business.

To plan, it is recommended that an independent third-party agent is appointed to offer advice on structures to assist with discussions.  This can also help avoid a breakdown in communication.

Removing Agricultural Occupancy Conditions

Do you own a property which is subject to an agricultural occupancy condition? Are you looking at getting it removed (or modified)?

In order to do this you will need to apply to the Local Planning Authority (LPA) to determine that the condition is no longer deemed necessary.  If that is refused, then the matter can be taken to appeal for decision by a planning inspector. 

The process is often a difficult one because LPAs must be persuaded that the dwelling, which was probably only given planning consent on the grounds that it was required for an agricultural worker, is genuinely no longer required for that purpose.  Further, the wording of the most modern occupancy conditions is such that the issue has to be proven for the locality generally and not just in relation to the particular farm in question.

An agricultural occupancy condition can be “lifted” in one of two ways:

(1)     By applying for the removal of the occupancy condition.  If successful, the condition will be removed from the planning consent and the property is then unburdened. 

(2)     If the property can be shown to have been occupied in breach of the condition for ten years, then the application can be made for a Certificate Of Lawfulness of Existing Use or Development

When applying for the removal of the condition, as set out under (1) above, LPAs will expect to see detailed evidence to support an application for the lifting the restriction. 

The most difficult issue to address is how to respond to the common insistence by the LPA that there is a lack of demand for that type of accommodation from those employed or last employed in agriculture.  The real test here should be that of whether there is a need for an agricultural occupancy condition on that dwelling (in its locality) and not of demand for it.  Marketing can only test demand, not need. 

The common traditional approach required by LPAs has been to test the market for potential occupiers by offering the property for sale or to let with marketing over an agreed period with appropriate advertising, often on a basis agreed in advance with the LPA.

Alongside the required marketing effort, it will usually be expected that he property must be offered at a discounted price to reflect the condition. 

Other evidence which might help to demonstrate a lack of demand (or indeed need) for agricultural workers’ dwellings in the area might include:

• – a review of the general demand for housing in the area;
• – an assessment of the number of rural workers employed in the area at the current time, compared to the number employed when the property became subject to the condition;
• – details of any new rural workers’ dwellings made subject to occupancy conditions over say, the last five years;

For further information and advice on the above please contact Peter Wain, Managing Director.

Landlords in England are now subject to even further legislation aimed to improve the standard of rented residential accommodation. The Homes (Fitness for Human Habitation) Act 2018 came into force on 20 March 2019. The Act amends the Landlord and Tenant Act 1985 requiring rented residential accommodation is provided and maintained in a state of “fitness for human habitation”. The consequence of which is it provides tenants an alternative process to request repair and improvement works to be undertaken. Should the landlord, or a landlords managing agent, not undertake the works and the accommodation remains unfit for human habitation it can result in the tenant issuing legal proceedings without needing to contact their local authority first.

The Act uses the Housing Health and Safety Rating System (HHSRS) to determine the accommodations fitness. This is done using the 29 hazards identified by the HHSRS which include but are not limited to:

• – Condensation, damp and mould growth
• – Excess cold
• – Excess heat
• – Asbestos and Manufactured Mineral Fibres (MMF)
• – Carbon monoxide and fuel combustion products
• – Electrical hazards
• – Sanitation and drainage problems
• – Water supply
• – Structural collapse and falling element
• – Crowding and space
• – Inadequate natural lighting

The accommodation only needs to be defective on one of the 29 hazards to be deemed unfit. The landlord will not be responsible:

• – For repairs which the tenant is liable:
  • The duty of the tenant to use the premises in a tenant like manner
  • An express covenant of the tenant of substantially the same effect as that duty
• – Rebuild or reinstate the dwelling in the case of destruction or damage by fire, storm, flood or other inevitable accident
• – To keep in repair or maintain anything which the tenant is entitled to remove from the dwelling
• – To repair which, if carried out, would put the landlord in breach of any obligation imposed by any enactment
• – To carry out the works or repairs requiring the consent of a superior landlord or other-third-party in which consent has not been obtained following reasonable endeavours to obtain it

The act is applicable to all tenancies which provide accommodation unless they have a fixed term of 7 years or more. Periodic tenancies in existence on 20 March 2019 will be covered by the provisions of the Act but benefit from a 12 month grace period restricting tenants from issuing court proceedings until 20 March 2020. A Farm Business Tenancy that is continuing annually (but not under a new agreement) after a 7-year term has expired it will still be exempt.

Meller Speakman’s roots are deep. They date back to Mr E Meller who established a Land Agency and Surveying business in Manchester in 1836, just a short while after the World’s first steam-powered railway opened between Manchester and Liverpool in 1830.

In 1860 Mr Meller brought his son on board to form the partnership E Meller and Son before recruiting a further addition – Mr Speakman – becoming E Meller Sons & Speakman some years later. Records show the partnership then expanded their business south and across Cheshire and included the management of Mr Henry Loyd’s Minshull Vernon Estate for over 50 years until it was sold in 1912. A framed letter dated December 1912 displays Mr Loyd’s gratitude to their longstanding service and can be found hanging in our new offices!

In 1916 the firm amalgamated with a Land Agent, Mr J H Hall; the firm was renamed Meller Speakman & Hall and moved to new offices located in Cooper Street, Manchester. One of the estates Mr Hall managed was the Toft Estate, Knutsford and Meller Speakman continues to manage the estate to this very day! In 1933 Mr Hall was commissioned by Manchester City Council to identify a number of potential sites for a new airport to replace Barton aerodrome. The recommended site was ‘Ringway’, or perhaps better known today as Manchester International Airport, which now handles over 23 million passengers a year!

In 1946 Meller Speakman & Hall acquired an interest in John E Braggins, auctioneers and Estate Agents based in Knutsford and in 1976 the ‘association’ formally became Meller Braggins & Co.

More recently in 2013, the Land Agency business of Meller Braggins became Meller Braggins Estates Plus before re-branding this year to the new name Meller Speakman coupled with a move to new offices in Wilmslow.

Property transactions are generally exempt from VAT, which means the associated input tax cannot be recovered.

It is not compulsory to register for VAT if ALL of your supplies are exempt from VAT or your taxable supplies are below the £81,000 threshold. If you have non-residential properties within your portfolio or other supplies that are not exempt you may wish to consider voluntary registration. This may also mean opting some or all of your non-residential land/property to tax.

Although this will then mean charging VAT on any taxable activities, you will also be able to reclaim the VAT on expenses relating to these activities. As long as your input tax exceeds your output tax in a given period, you will be able to reclaim the difference from HMRC. Dependant on the amounts of VAT you can reclaim you may wish to submit returns on a monthly basis. This would result in an increase in paperwork but allows you to reclaim monies back sooner.

If you would like to discuss this further please contact Meller Speakman Finance Director, Rachel Degg at rachel.degg@mellerspeakman.com or telephone 01625 468789.

Agricultural rents remain strong for land across Cheshire and the North West due to unprecedented demand.

The market shows significant demand for smaller farms, after a successful marketing campaign of a 75-acre farm, which produced a considerable number of tenders, for a wide variety of uses. The requirement for small farms is driven by both farmers looking for supporting holdings and younger farmers aiming to start up their own enterprises, particularly where accommodation is also available.

The shortage of smaller farms being brought to the market has helped produce highly competitive rents. We are seeing that when units become available they are amalgamated with other neighbouring units on Estates which reduces the number of units coming to the market and opportunities for new entrants.

Demand for bare grazing land to rent is also on the rise in the North West again due to demand outweighing supply. We have a database of farmers looking for land so if you are thinking about restricting your portfolio please get in touch.

Contract farming may be the answer you are looking for.

Whether you are a landowner needing to re-structure for succession or tax purposes or an owner-occupier looking for an alternative arrangement to lighten the day-to-day workload, Contract Farming could provide the answer in today’s demanding environment.

Why Contract Farm?

• -Re-structure for succession
• – Re-structure for retirement
• – Reduce workload and time commitment
• – Introduce greater expertise to improve efficiencies and margins in an ever-demanding industry
• – Improve economies of scale through the amalgamation of operations
• – Create or preserve a ‘trading’ environment
• – Take back control of land and farms to reduce the risk of changes in tenancy legislation
• – Help encourage new entrants into dairy farming

How does contract farming work?

The landowner or owner-occupier farmer provides the land, buildings and fixed equipment (milking parlour etc.) and in return receives a ‘Basic Return’ (rental equivalent) for the land and buildings, plus a return on any capital invested in plant, infrastructure and in respect of dairy farming operations and, depending on livestock ownership, a return based on an initial livestock valuation.  The landowner or owner-occupier farmer also receives all subsidy income e.g. Basic Payment Scheme (BPS) and environmental scheme income, plus a depreciation charge based on any fixed assets employed.

The contractor provides the expertise, management skills, working machinery and labour in return for a ‘Contractors Fee’ to cover the costs employed.  Again, in respect of dairy farming operations and, depending on livestock ownership, a return based on an initial livestock valuation is also received plus a depreciation charge and return on all capital invested in machinery employed.  The Contractor, or in conjunction with Meller Speakman, can offer the resources to manage and administer the trading business so the landowner or owner-occupier farmer doesn’t have to and to minimise their involvement.

Meller Speakman can also manage your trading account, day-to-day supplier invoices and report frequently and professionally against agreed budgets to provide the transparency and confidence you need.

What next?

If Contract Farming is of interest to you, contact us for an initial FREE no-obligation discussion.