Shropshire Star

Rural estates across England continue to record positive income growth

Rural estates continue their run of income generation according to the results from our Spotlight: Estate Benchmarking 2018, with a small rise in net income of 0.3 per cent in England recorded during the survey year.

Published
Rhydian Scurlock-Jones, head of rural at Savills in Shropshire

For most participating estates it is the residential and agricultural assets that continue to provide the majority of income, although depending upon location and an individual estate’s asset mix there are significant differences in the relative contributions of the asset classes.

In particular many owners have been giving renewed focus to opportunities for diversification with many privately owned estates looking to new trading businesses as a source of additional revenue and as a means of managing down the risk of the impact of Brexit on farm incomes.

Trading income now represents six per cent of gross income across the average estate. Location is key but meeting high customer expectations is crucial for success in an increasingly competitive market.

With the marked changes in UK Agricultural policy it is increasingly important for landowners and managers to understand the impact of the demise of direct payments on the estate’s finance and indeed the effect on the tenant’s finances. As a business strategy, diversification needs to be approached with caution due to the demands that a new enterprise can place on existing cash flow and management time. Market research and the right professional advice can help ensure success.

While gross income rose by 1.2 per cent, it cost 43 per cent of this to run the average estate, showing an increase of 2.5 per cent on 2017 survey results. Over half of all the costs were attributed to property repairs.

Owners may be tempted to cut back on property repairs, during this period of uncertainty. However history has shown that such an approach will impact on future performance due to a lack of demand for a poor product and the spiralling cost of overcoming years of no repairs. It is essential to keep residential stock at a level with market expectations.

Rhydian Scurlock-Jones, head of rural at Savills in Shropshire