The European Investment Bank (EIB)

Farmers who are looking to invest in new buildings, machinery, or equipment should be aware that there are currently funds available from the European Investment Bank (EIB) which are aimed at helping investment in small and medium sized enterprises (SMEs).

SMEs are defined as businesses which employ less than 250 staff and so this covers most farmers. The size of the loan can be anything from £25,500 up to about £11m and so this should cover most levels of borrowing.

The funds, which can be accessed via high street banks or organisations such as the Agricultural Mortgage Corporation (AMC) reduce the borrowing rate by about 0.8% for loans of between 2 and 10 years and 0.6% for loans between 11 and 25 years. These discounts are available throughout the lifetime of the loan which on a £100,000 loan over 10 years would save the borrower about £4000 which is not to be sneezed at.

However, it must be understood the funds cannot be used for all types of borrowing and care is needed to identify whether the proposed investment qualifies. For instance the purchase of land or the refinancing of existing debt, which are two common reasons for borrowing money, does not qualify.

The EIB is EU’s long-term lending institution which is owned and financed by the Member States. It was established way back in 1958 under the Treaty of Rome and is there to support the EU’s priority objectives and in this instance funds are available to support investment being made by SMEs.

Farmers intending to stay in the industry for the long haul also heard from other specialists, Pat Tomlinson, associate director at Old Mill, and Mike Butler, head of rural services at Old Mill both of whom gave excellent speeches.

Pat, who was until recently head of the agricultural team at HSBC gave an excellent insight in to the banking sector and explained the importance of presenting one’s case to the banks very carefully because although they have money to lend they are looking at all applications for loans very carefully.

Mike then went on to examine various taxation issues and in particular the advantages of a corporate structure as compared to being a sole trader or partnership where one cannot take advantage of the comparatively low rates of corporation tax.

The amount of money being made available by the EIB is limited and it is likely this fund will run out soon. Therefore any farmer who is contemplating making a capital investment which will involve borrowing money is urged to make contact with their local Carter Jonas AMC agent or the author of this blog, James Stephen who will be able to put you in touch with the appropriate member if staff.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Not playing the blame game

Imagine a media interview in which a politician, in under eight minutes, managed to not only answer two interviewers’ questions but appeared to be without the yolk of partisanship in clearly setting out how a country could, step-by-step, find its way out of recession through central government policy.

The politician being interviewed came from a Euro-currency country but he bore no bitterness towards his more powerful northern European neighbours, nor grudges toward his southern Euro-counterparts. He was very much not in the blame game.

How refreshing but it’s probably no surprise to anyone who has done business in the politician’s country. It was Mark Rutte, the Minister-President of the Netherlands– equivalent to the UK’s Prime Minister.

He spoke clearly and openly about his country’s growth strategy which seemed remarkably similar to what many people in this region and other UK hotspots targeted for growth have been urging as the way forward.

Rutte’s strategy for the Netherlands is to focus on the innovation, creative and technology industries, aligning the universities with business and vice versa at the earliest possible opportunity.

The Dutch Minister-President was being interviewed in Manchester - another great university city with a science focus through UMIST, its university’s institute of science and technology – where his delegation had been visiting a number of SMEs in the creative and innovation industries, as well as sharing thoughts on transport.

Not by coincidence as these things play out, the previous week, forty business leaders from the Netherlands had been on a fact-finding mission to Cambridge and had met several of our academic, business and civic luminaries including Prof Alan Barrell, Dr Hermann Hauser and the Mayor of Cambridge.

You would think that at such a time of crisis for his country’s currency, that as a political leader, Meneer Rutte would be grandstanding about the need for financial institutional reform, taking a view about the role of the European Central Bank and, as a politician, he surely wasn’t going to resist having a pop at some of his counterparts?

Not a bit of it. In fact he admitted he wasn’t a fan of huge institutional debates.

Instead he coolly and calmly outlined his roadmap for growth which he summarised as getting public finances in order, taking away hurdles for new business, making government smaller and getting the universities involved as quickly as possible in business life to get development from innovation.

The Dutch leader felt that it was important for him to get in to the thick of what was going on and he couldn’t do that from The Hague. He appeared really pleased to be in the thick of it over here and complimented us by saying the UK’s innovative and creative capability were needed - with 50 per cent of our exports going directly in to the Eurozone, he’s got a point.

According to Meneer Rutte, we have much in common with other non-Euro currency countries such as Sweden, Poland and the Baltic states who are all growth oriented as much as his own country – which, after all, is this region’s closest continental neighbour across the North Sea.

This 44-year old politician is just over a year in to a role which has no limit to its term in office and based on the interview, he sounds like a person with whom we’d all like to do business.


Will Mooney MRICS
Partner
Commercial, Cambridge

Investing in the Future of Your Farm

Last week saw the second of two seminars here in the West Country, run by Old Mill accountants based in Shepton Mallet and Carter Jonas, a national property consultancy based locally in Wells and Bath. Both seminars were sponsored by the Agricultural Mortgage Corporation (AMC) and supported locally by the Royal Bath and West of England Society who also hosted the first event at the Showground.The seminars were entitled “Investing in the Future of Your Farm” and both attracted over 100 farmers which only goes to show how eager they were to hear what the speakers had to say, or perhaps the free supper afterwards was also a bit of a draw! But whatever the motivation for attending I don’t think many left disappointed.

Kit Harding, Partner at Carter Jonas opened the meetings with a talk on the market for agricultural land which, unlike the residential property market remains extremely strong, being driven largely by scarcity and increasing farm profitability.

The scarcity factor was brought home particularly starkly by one slide that showed the area of farmland sold annually has fallen steadily since the war and at about 120,000 acres being predicted for 2011, this is little more than 10% of what was sold in the late 1940s. Thus it is no wonder prices have risen, especially in these uncertain times when anyone with cash is looking for a secure investment and farmland seems to fit that description.

Further, farmland makes an attractive investment because it can attract 100% inheritance tax relief which is one of the reasons why farmers when they retire, tend not to sell their land preferring to retain it and let it out. This contributes to the scarcity of supply which is made worse by the very obvious point that “they are not making any more of it”.

Jonathon Day, new regional manager for the AMC in the South West chaired one of the meetings and said there was cautious optimism in the farming industry. He commented, "Commodity prices are the best for a while and it has been a record summer for investment and although CAP reform is on the horizon there is some reason for confidence".

Farmers intending to stay in the industry for the long haul also heard from other specialists, Pat Tomlinson, associate director at Old Mill, and Mike Butler, head of rural services at Old Mill both of whom gave excellent speeches.

Pat, who was until recently head of the agricultural team at HSBC gave an excellent insight in to the banking sector and explained the importance of presenting one’s case to the banks very carefully because although they have money to lend they are looking at all applications for loans very carefully.

Mike then went on to examine various taxation issues and in particular the advantages of a corporate structure as compared to being a sole trader or partnership where one cannot take advantage of the comparatively low rates of corporation tax.

All in all it seems the attendees left satisfied, having both food for thought and food for the stomach.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

George Osborne’s Autumn Statement

There is some good news and some bad news for the property industry in George Osborne’s Autumn Statement delivered to the House today. Another £5 billion of infrastructure funding on top of the £1.3 billion already promised, and a possible further £20 billion of funds from UK Pension Funds will certainly provide a boost to the economy not only from the work they generate, but also from the increased accessibility that will result for the regions which benefit. Couple that with the intention to make planning appeals faster and more transparent and we might actually get to see some of these projects starting on the ground. The rural Growth Networks and the already announced Growing Places Fund of £500 million will also help to deliver new much needed housing. Enterprise Zones have worked in the past and should help to stimulate growth but only if businesses are strong enough to take advantage of the opportunities.

Not such good news though is the end of the stamp duty concession for first time buyers. Whilst Osborne is convinced that the concession did not have much effect, it certainly did ease the path for those buyers who were in a position to enter the market and it remains to be seen whether the Government mortgage guarantee scheme to enable buyers of new homes to get a 95% mortgage will be any more effective. And somewhat pie in the sky is the Government’s affirmation that it will support new locally-planned large scale developments ‘which have clear local support’. The abolition of the Regional Spatial Strategies has removed what was a convenient policy for local and national politicians in favour of development to hide behind should vociferous parts of their electorate oppose development. Now they have no option but to listen to those voices – and that coupled with the Coalition’s slavish adherence to the Green Belt, much of which was set out in the 1940’s and ‘50’s and now totally anomalous, is not going to make development any easier.

The Chancellor has a difficult tightrope to walk, to provide what stimulus he can to our struggling economy on the one hand, whilst continuing to reassure our funding partners that we are serious about tackling the deficit. He has probably succeeded in that aim but it is still going to leave us with a challenging 2012 and beyond.

Chris Haworth
Head of Commercial Division
Commercial, Cambridge

T: 0207 016 0729
E: chris.haworth@carterjonas.co.uk

Bottoms up in Bath!

The big Christmas lights switch on with John Cleese in Bath last Thursday has signalled the official beginning of the festive period and as we know this is usually followed by the swift hibernation of the UK housing market!

However, in recent years with increasing access to property via web portals and smart-phone web apps the housing market has become far less seasonal and 2011 as a whole looks to be continuing that trend.

The early ‘New Year’ market was particularly buoyant in the southwest region and certainly out-performed the perceived stronger selling seasons of spring and early summer and this has become somewhat of a trend in recent years as quick decisions about property are made following the Christmas and New Year break.

The early autumn market too used to be a popular period for both buyers and sellers but the summer holiday hangover seems to have lasted longer in recent years and that is certainly true of 2011 in the southwest as the market didn’t really start to pick up until early October. We’re now rapidly approaching the end of November and viewing levels are still encouraging even though quality stock is in short supply and the viewing to offer ratio has come down to approximately 1 in 8 for October which was 1 in 49 in September. Activity is such that we have just released two new properties to the market, something that we would not have generally advised in years gone by and after just a few days we have had several viewings on both and an early bid on each.

It is also worthy of note that the greatest activity, particularly since the summer has centred on property below £1m and even more so on those below £500,000 suggesting that should a recovery be forthcoming it will have been supported to a greater extent from the bottom up rather than from the top down! In Bath we are particularly keen on increasing the level of city centre property that we are dealing with but we are now focusing just as much on high quality flats and apartments as we are on fine Georgian town houses due to the greater demand.

I am convinced that with just a few more positive headlines regarding the housing market we will see the return of buyers for the regions prime country houses, although in many cases significant price reviews will be needed as unrealistic pricing has been a fundamental reason for the severe lack of activity and confidence in this sector of the market in recent months.

So the Christmas parties, drinks receptions and general celebrations will have to wait at least for a few more weeks while we still have willing buyers and motivated sellers. We have all learned a great deal from the 2011 market, particularly from the vantage point of our new office here in Bath, the recovery is clearly going to be a slower process than many ‘experts’ predicted back in 2008/9 and old fashioned proactive agency together with realistically priced property will be the key to a successful 2012 and we’re eagerly anticipating a busy and productive New Year.

Patrick Brady
Associate
Residential, Bath

Learning to live with whatever ‘the new normal’ is

I’ve been told recently that ‘being on the brink is the new normal’ and this is how it is going to be for the foreseeable future. There is the temptation to head for the hills but that’s a little difficult for us in the flatlands of eastern England.

Yet in the past month, I’ve read comments by property grandees and gurus which suggest parallel ways in which we can survive and actively thrive in this new normality.

At a strategic, long term investment level, it’s difficult not to agree with those – like Jeremy Newsum of the Grosvenor Estate - who favour a quiet acknowledgement of the fact that while there is a good reason to panic and thereby to join the throng and sell wholesale, it’s probably best not to. We will only add to our own troubles.

The most sage should just sit it out day-to-day and resist the temptation to follow too closely the lead of the markets at such times.

Property, after all, is but a tiny part of something bigger which is happening.

While there’s the feeling that we neither know what that something bigger is, nor do we know how it will play out, it’s better to control what we can than add the to mayhem.

Yes, there are select deals to be done because even a modest return on property is better and safer than other many asset classes.

While the cool advice is to choose to do nothing on one level, there is a level where a more thrusting approach is required. This advice is encouraging us to adopt tactics now to embrace this ‘new normal’ and come to terms, quickly, with the opportunities emerging and on offer to us by this new world order.

This advice talks with confidence about now being a time for new skills, new sectors and, even, new sub-sectors. So while the world is ‘getting more global every day’, it seems the way forward for property advisors is to become more specialised and niche to get in tune with our more fragmented markets.

It is cheering that while property is a dry investment, it’s still considered an investment with a return, nonetheless.

Anyone advising clients with retail and leisure interests will get what is meant by the need for specialist advice in fragmenting sub-sectors.

What we can all agree on is that we’re in a time of price correction when it comes to assets. The hurt we’re taking in property is probably only what we’re due anyway post-2008, if we really stopped to think about it.

As we look around to other business sectors, let us be thankful that if price correction is the worst punishment we’ve got to take and with the addition of working a harder in new ways for our clients in order to advise them better on all things niche, then we’ve got off quite lightly.

If a state of affairs goes on for long enough then it’s normalised - so we’d best get used to it.

While it’s a good time for neophiles, it’s a bad time for haters of business jargon and I am going to add to their groans here by suggesting that, perhaps, the default state of being for the foreseeable future is one of renewal becoming the new normal.

Will Mooney MRICS
Partner
Commercial, Cambridge

Investing in fundamentals

This week’s housing market reports and predictions are as contradictory as they are arbitrary, which is de riguer in an uncertain world.

In times of uncertainty, investments in fundamentals are seen as a safer haven. Concerns over European leaders being able to tame the sovereign-debt crisis have further boosted demand for gold as a safe haven investment. Spot gold prices reached $1,804.10 an ounce, a seven-week high, in yesterday's trading in New York. Farmland prices have almost doubled in the past five years and are somewhere around 5% higher than a year ago. Over the past 10 years agricultural land has grown 204%; which is twice the increase shown in London property prices and notably above the 6% growth experienced by the FTSE 100 during the decade. Even best English shotguns have been targeted by investors with record prices being paid and valuations rising around 3-5% a year.

Residential property, however, which is as fundamental an investment as most of us own, is, it appears not the darling of the press it once was. It is cheaper to buy than to rent. Yet, we seem to have become immune to the charms of historically low mortgage rates and the opportunities as differentials gaps narrow.

Rising commodity and fuel prices have exerted growing pressures on household incomes. But there are waiting lists across some of the quality marques for their latest range of smaller SUVs. A client tells me track side, bookmakers have reported as much as a 20% increase in takings, certainly Ladbrokes’ recent quarterly results showed a 2.5% increase over the same period last year.

The property market in Hampshire is frustrated. We have any number of excellent buyers but a steady flow of fresh properties coming to the market is being hampered by media sentiment and a feeling that perhaps it is better to wait until spring. All of this is quite understandable but our mailing lists are full of purchasers who have see the light of buying in this climate.

November, whilst not a classic time to launch a sale, offers the backdrop of an autumnal landscape and the focus of Christmas. Yet the mild weather and turning shades has given us some wonderful days. Both rivers and the countryside teem with life and entomological hatches are still a valuable food source. Game feeders provide further food for over wintering song birds and skeins of geese can be heard at dusk as they return to the safety of the river from a day’s grazing. The clocks changing gives a welcome sunrise to us early dog walkers and it is not cold enough yet for a winter coat. But as surely as night follows day, winter is close by. If the weather patterns of the past few years are repeated, we may have to wait a long time until spring. Whilst autumn can feel like a prelude to the main event , we must be careful what we wish for. Perhaps the thing that is most missed by those who leave our island for warmer climes, are the seasons. This year, mother nature has excelled herself with the loveliest autumn display. Jack frost, surely cannot be far away.

Matthew Hallett
Partner
Head of Residential Sales, Winchester

New “Small Capital Grants Scheme” for Farmers in England poised to be launched

Following the coalition government’s decision to abolish Regional Development Agencies (RDAs) the England Rural Development Programme (ERDP) has been in turmoil.

The ERDP forms part of the Common Agricultural Policy and elements of the programme had been developed and administered at a regional level by the RDAs. Thus their abolition has left a vacuum and threatened the delivery of European funds for the remainder of the programme which runs to the end of 2013.

However the government has recognised this problem and has taken the scheme back in hand to be administered by DEFRA. What this means is that they have done away with the regional delivery programmes and developed and national programme so there is now conformity across the country.

To my mind this makes a great deal of sense because under the old scheme, whether or not a farmer or rural business qualified for grant aid depended on the programme which was developed by the various RDAs. This lead to unfairness on occasions where for instance a business in Hampshire may have qualified for grant aid whereas across the regional and county border in Wiltshire, a very similar business may not have.

As you can imagine, the process of harmonising the various regional schemes has taken time and some difficult decisions have had to be made on what schemes to drop, although the national programme is now just getting up and running. The first of the new schemes which is about to be launched is called the “small capital grant scheme”.

This is an exciting opportunity for farmers although funds are likely to be limited and so farmers and foresters should be ready to make an application the moment the grant scheme opens which it is believed will be sometime in mid-November.

The scheme will initially be open for about eight weeks before it closes to allow the applications to be assessed and then the scheme will open again for another eight weeks and so on until the funds are exhausted.

The grant aid will vary from £2,500 to £25,000 although until the rules are published it is difficult to be precise as to exactly what investment proposals will qualify but in broad terms it is understood the money will be targeted at increasing the competitiveness of the agricultural and forestry sectors.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells

Confidence and bumblebees; the great intangibles?

Aerodynamically, a bumblebee should not be able to fly but a bumblebee does not know this, so it goes on flying regardless. The housing market, it seems, like bumblebees, carries on regardless, despite seemingly unending evidence and opinion in the media that it shouldn’t.

At the start of 2007 the average property price to income ratio was 4.4, by the second quarter of 2011 this is 3.6. The cost of borrowing is at record low levels. It is, on average, cheaper to buy than to rent.

As an island with one of the highest property owning rates on the planet, ownership of your own little piece of England is as natural as it is to talk about the weather. Our country’s rich history and diversity has brought so many benefits to life in modern Britain, yet the fundamental of your home being your castle it appears is hardwired into our country’s psyche. With rising life expectancy, the prospect of actually paying off a mortgage has allowed family homes to become meaningful parts of retirement plans.

Yet the dripping tap effect of daily reporting of negative headlines has left quite a puddle. A two year old views a puddle as the most exciting thing in the world, grownups, however, tend to avoid them (although I, for one, cannot resist a splash in my wellies, when no one is looking, as I walk my dog at 6:00 each morning!). Yet properties are selling and people are moving, for the much same reasons they moved last year and are likely to move next year.

The autumn is in full flow as burning shades of leaves fall to the delight of children and the frustration of gardeners. Halloween has passed and we look forward to celebrating the thwarting of Guy Fawkes’ Gunpowder Plot . Gunpowder was discovered in the 9th century by Chinese alchemists searching for an elixir of immortality. As a byproduct of his work to improve mining safety, Alfred Nobel developed the forerunner of modern smokeless ‘gunpowders’ in 1887. The irony of these twists and turns of history is sadly apparent, as we prepare to commemorate Armistice Day at 11 o’clock on 11/11/11.

Bumblebees, regretfully are in decline. Of the 25 species found in the British Isles, three are nationally extinct and many more are seriously threatened. However, there are many plant species which require bumblebees to fertilize them. Confidence is the pollinator of our market; encouraging vendors to sell and purchasers to buy. Yet confidence can become a self-fulfilling prophesy, as those without it may fail or not try because they lack it and those with it may succeed because they have it. The housing market it seems, like the humble bumblebee is surviving. There were plans to reintroduce the short –haired bumblebee back into the wild this summer.

Also, the Heritage Lottery Fund are directing £340,000 towards the charity Bees For Everyone, a Bumblebee Conservation Trust initiative, to assist its 20,000 volunteers with an awareness campaign to help protect the endangered bumblebee.

I have high hopes for the bumblebee and a reintroduction of confidence back into the market with the optimism of a new year and all that awaits us in our Olympic year.

Matthew Hallett
Partner
Head of Residential Sales, Winchester

Bobbing for apps

I am told there are 280 buying agents in the London borough of Kensington and Chelsea alone. On some days, it feels that there are more buying agents than selling agents; which is indicative of the abundance of money over time in some parts of our market.

As half term runs into its second week, the effect of holiday’s this year has not been insignificant. This was particularly evident in April as Easter gave way to the Royal Wedding celebrations. When I moved out of London 12 years ago, the market has distinct seasons. Post 9/11 two changes have been an increase in holiday entitlements taken with a general lack of seasonality otherwise. The result had been a market that is more affected by the school holidays than it is the weather. This was borne out earlier this year when we were busier during the disruption of the snow in February than the usual watershed of Easter.

The last week in October is also the final week of the financial half year for many businesses. We are working hard to get our clients sales completed before the clocks go back. Monday is Halloween, a sixteenth century Scottish variant of All-Hallows-Even , the night before All Hallows Day. However, it is more typically linked to the Celtic festival of Samhain, (originally pronounced sow-an or sow-in) meaning "summer's end". Whilst the warmth is fading in the air as the sun no longer rises to its summer zenith, the magic of autumn is now in full flow. As the tree opposite my office turns burning shades of amber, in market terms it is not the weather that makes the difference rather that families are together over half term. The autumn brings fresh challenges in marketing campaigns; clients are asked to keep lawns free of leaves and photographers chase the sun, which like early season pheasants is reluctant to gain altitude.

The market has some really high quality buyers, ready, willing and able to make a Christmas move. Yet the choice is limited. As the countryside offers everything from field sports to long walks, Hampshire firesides are a special retreat from the rigors of the city. Despite European financial turmoil, interest rates are pegged at record low rates and the FTSE seems as resilient as ever. What better a time to buy or sell a Hampshire home? Demand is still high, supply is low and the countryside becomes even more magical as autumn gives way to winter. Hibernating wildlife cram for winter, yet I cannot help thinking we have not seen the best of this season and our harvest festival could turn into a winter of contentment.

Next Saturday is bonfire night. As fires and fireworks are enjoyed throughout the country in remembrance of the events of 5 November 1605, the cold becomes a welcome visitor. Whether bobbing for apples or enjoying all that a gunpowder plot of your own can bring, spare a thought because everything makes this time of year special is unaffected by headlines and a market that is frustrated.

We launched our new Carter Jonas iPhone app this week which is now available from the App Store for iPod Touch and Apple iPhone.

The last twelve hours have seen the app downloaded as far afield as China, the former Yugoslavia Republic of Macedonia, Slovakia and the United States. A recent review read; “Quick and easy to use - I like this app as it is straightforward, easy to use and I found it very quick too. Great descriptions and photos and easy link to the map for location too”

The Carter Jonas property app will allow you to search for the latest residential sales and lettings from Carter Jonas.

The functionality includes a shortlist property for later review, search for properties near you based on your GPS position, alternatively search for properties based on your desired town, county, city or postcode, email and telephone the branch directly from your iPhone, view photos and read about the key features of the property, find a Carter Jonas office near you, quickly search for new properties based on your previous search criteria and email your favourite properties to your friends and family.

Matthew Hallett
Partner
Head of Residential Sales, Winchester

The Badgers and Bovine TB issue

The Badgers and Bovine TB issue rumbles on with a recent debate in Westminster Hall where Farming Minister Jim Paice strongly defended the government’s proposal to introduce a trial culling programme of badgers.

Much of the debate surrounded the science behind the government’s proposals but Jim Paice responded knowledgeably stating that, “I do not believe that doing nothing should be an option”. He went on to explain in some detail that it is widely accepted that a badger cull as proposed would reduce the incidence of TB in cattle by 16% and explained further that the latest “science shows that the incidence of TB in the culling zones fell by up to 34%”

It seems to me the debate about the science will go on forever but what is also clear to me is that if we only try to control the disease in cattle and pay no attention to badgers which are known to be a source of infection in cattle then the incidence of TB in cattle will continue no matter how many cattle are tested and subsequently slaughtered. That is not to say that other avenues of research should not continue.

For instance an effective injectable vaccine has been developed for badgers although it is not practical to administer on a wide scale while an effective oral vaccine unfortunately appears to be many years away. As far as cattle are concerned an effective vaccine is thought not to be far away but there will then be major problems with the EU in getting agreement to use it.

So while the TB problem is getting worse both financially and geographically it seems the government’s proposals to introduce trial badger culls is coming nearer to fruition but it is also clear from Mr Paice’s statement that there will be a sting in the tail for the wider farming community in that the cattle testing regime is likely to become tighter. As Mr Paice stated in the debate, “We propose to reduce or abandon compensation where farmers are overdue a TB test.” So the bovine TB debate continues and although it appears this government is prepared to implement some form of control of badgers this will be accompanied by ever more stringent cattle testing and biosecurity measures on farm.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells

The property market and other paradoxes…

September was a record month, both for temperatures and our Winchester business. Hampshire harvests were safely gathered in and although rivers were low, there were some lovely days sport to be had with good grilse runs and some large late season brownies.

October has been marked by England’s departure from the Rugby World Cup and some choice phrases from the Governor of the Bank of England; “It is unfamiliar – that’s because this is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. And we’re having to deal with very unusual circumstances but react calmly to this and to do the right thing.” Mervyn King’s words, whilst chilling are also apt for the Hampshire property market, where we are contending with very unusual circumstances indeed. The dearth of prime properties for sale is more extreme than usual, yet buyers are less willing to compromise. Whilst there are plenty of buyers looking for good country houses, there is currently less urgency to purchase and the negotiations are more complex than usual. When markets are faring well, buyers are more prepared to compromise, so if 7/10 of their boxes are ticked, they are more than likely to proceed. Currently, however, buyers do not want to consider any risk whilst the markets are uncertain and would much prefer for all ten boxes to be ticked, which can sometimes prove to be an unachievable aspiration. Buyers are reluctant to bid, in effect, against themselves and in many cases, would prefer to wait until there is competition to confirm the level of market value. All of this slows the process whilst the battle of wills is played out.

The oxymoron of a shortage of properties and buyers unwilling to compromise is alien to Hampshire and in stark contrast to conditions in London. The prime London market, which is dominated by international buyers, is moving much more quickly; there is a shortage of property coming onto the market so buyers know that they have to act quickly in order to compete. A mild autumn and a lively London market are the usual indicators of a busy October in Hampshire but sellers of prime property are in short supply. Negative market comment in the media appears to have become a self fulfilling prophesy; clients, like early season partridge are, it seems, understandably easily spooked. Perhaps the most frustrating paradox is the lack of property creates a lack of property; potential vendors are unwilling to enter the upheaval of a sale without a reasonable chance of a suitable alternative home to trade up or down to, thus there is a logjam.

I have just returned from my yearly pilgrimage to Scotland, in pursuit of the silver tourist; Salmo salar and whilst a wonderful week was had, as always, we were plagued by river water levels. Salmon get trapped in pools, waiting for a spate large enough to return upstream to their redds; the Hampshire market has similarities with buyers and sellers in a holding pattern, waiting for the flow of activity to return.

I am regularly updating buyers and their agents and hope that the current impasse in the country market can be resolved before the city Christmas bonuses are announced.

Matthew Hallett
Partner
Head of Residential Sales, Winchester 

Wheat prices on the slide

Arable farmers will be looking with a degree of gloom at the recent trend in wheat prices which has seen them steadily fall since a peak in April of over £200/t to £142/t last week, which is the first time in over a year that this year’s price has dropped to lower than it was a year ago. Further a year ago wheat prices were rising on fears of world shortages as Russia had banned wheat exports but in contrast the market pressures are in reverse this year with fears of falling demand due to the slowdown in the world economy and generally better than expected harvests. It seems there is little a farmer can do to influence these international forces and so they must turn their minds to improving the efficiency of production in other ways.

In this respect many readers will have notice that in recent years there has been a trend away from ploughing land following harvest towards what is known as “minimum tillage” where the farmers pass over the stubble with a various types of machinery which usually comprise a combination of discs and tines of one form or another. The seed for the next crop is then “direct drilled” in to the seed bed which has been created. This makes sense on various levels; first it maintains the soil structure which is otherwise broken up during conventional cultivation techniques because a plough basically inverts the soil. Once ploughed the soil has to be broken down again by various other machines to create a suitable seed bed in to which the next crop can be drilled. This work is in itself expensive in terms of machinery and fuel.

At another level the minimum tillage techniques are also believed to preserve an better population of earthworms which help with the soil structure and having been on one farm walk earlier in the year, it was clear that this technique had retained far more moisture in the soil than would otherwise have been the case had the soil been ploughed. This has been particularly important in recent dry years when spring sown crops in particular have suffered from the drought conditions.

However, what I had not realised until I read a recent report of some field trials is that there can be a very significant benefit in yields for wheat crops which have been the direct drilled rather than using conventional cultivation techniques.

A recent study carried out in Suffolk has shown that the average yield from 31 plots which were direct drilled was 3.7t/acre as opposed to an average yield from all the conventionally drilled plots of 2.9t/acre. This represents an increased yield of over 25% which seems quite staggering to me and begs the question why everyone is not adopting this technique.

One reason is perhaps the fear that it is more difficult to control weeds, which is probably true, particularly for such things as “black grass” which can be very pernicious but the benefits of minimum tillage do seem quite compelling and so I suspect this will be an increasing trend for many arable farmers.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells

September beginnings

September is an exciting month. Families wring every drop out of the holidays, returning to schools and workplaces with tans still fresh from a mad drive up from some foreign port, the day before term starts. Children commence new academic years with the mixed emotions of catching up with missed friends and the fresh challenges of being another year older and just that little bit more grown up.

In Winchester, our September starts with the Alresford Show. A wonderful agricultural show which allows us to launch September sales and greet clients, old and new. It is lovely that in a business where over 80% of new clients commence their search via the internet, there is still a place for a chat in a field with a glass and a nibble. Each year, we seem to help more and more clients in this way.

Harvests are safely gathered in and the countryside sports stubbled fields in the gentile manner that gentlemen “forget” to shave on a Saturday yet get away with it with a smart shirt. There is a wonderful market at this time of year, whether it is an Indian summer or an early autumn. Buyers busy themselves, as does the rest of nature – hoping to have everything buttoned down before the winter. Salmon race up chalk streams towards their redds, squirrels bury acorns in lawns that are never to be found, gamekeepers prepare for early season partridge and agents prepare to launch post summer sales.

Seasonality has largely been lost in the housing market as a continued shortage of prime property has eroded the traditional “closed seasons” of the school summer holidays. Whilst it is true that many fathers will spend more time away with their families, this does not replace the desire to find the right property. Conversations around holiday supper tables are no less property orientated than weekend dinner parties in town or country. We have experienced consistent markets throughout the year in this respect. Yet the sea change in buying activity is as arbitrary and unpredictable as the seasons themselves. We have sold houses in April heat waves and August monsoons. A remarkable result in the last round of snow, earlier in the year, was a 17% premium achieved for perhaps the most neglected property we have sold.

Continued historically low interest rates have given way to some very cheap mortgage deals. It is essentially cheaper to buy than rent. Stock markets are within pre credit crunch ranges and sovereign debt has arguably been a feature of western economies since they came off the gold standard. It is the differential that is important, what you sell for is only important in relation to what you pay for the next property. In this market, there has arguably never been a better time to trade up.

A 15% premium was achieved in the recent sale of a village house; following 38 viewings, another recently achieved a 12.2% premium after 42 viewings and 23 offers generated over 10 days of marketing. A current sale of a house in Winchester launched last Thursday has generated 44 viewings, 3 offers and 12 notes of interest so far. The market is of short of good properties; therefore it is a sellers market, with great opportunities for our clients to achieve some impressive results.

I can only look forward to the unfolding sales season the onset of autumn with leaves turning to shades that make the whole countryside appear on fire and all that this lovely time of year has to bring. I have packed away my summer marketing skills set, along with my trout rod. My wellingtons and shooting coat are resident in my car. I have a diary full of property appointments and shoot dates. I am excited by all this new season has in store!

Matthew Hallett
Partner
Head of Residential Sales, Winchester