For sellers, buyers and agents alike, a New Year brings new hope.
For sellers, it is hope that the property they plan to launch for sale during the year ahead (or is already on the market) will be well received, and quickly sold for a good price.
For buyers, it is hope that the property they have been yearning to buy in their favourite location will finally come to the market and enable them to realise their dream.
For agents, it is hope that the cautionary factors that have pegged back the market and restricted trade in the previous 12 months and more will be dissolved, and market activity will be restored to levels expected of a thriving western economy.
In my last article, published shortly after the independence referendum, I opined that the vote of confidence in the UK which the ‘No’ result represented would stimulate buyer activity and result in a boost in property sales in the final quarter of the year.
Three months on and the reality is that the farm and estate sector in which I am active has remained subdued, with just a handful of transactions across Scotland and no discernible uplift in market activity.
The volume of estate and farm transactions in 2014 was the lowest in my 14-year career, as was the corresponding total spend.
What is now clear is that the market uncertainty created by the referendum was just one of three fundamental factors restricting activity in the estates and farms market.
In the commercial farms market, the reform of the Common Agricultural Policy and progression from Single Farm Payment entitlements in 2014 to the Basic Payment Scheme this year materially affects the quantum of EU subsidy agricultural producers receive.
Quite understandably, many farmers who may be considering selling a farm or expanding their business to buy more land are waiting to find out exactly what they will receive in support payments this year and beyond in order to factor this into their deliberations over the sale or purchase of a farm.
The effect of this has been the stifling of the farms market for a year but, with demand still strong, the market should open up once the new system beds in and putative buyers and sellers know exactly where they stand.
In the estates market, the biggest limiting factor to market activity is the Scottish Government’s land reform agenda.
To recap: in 2012 the Scottish Government appointed an independent Land Reform Review Group (LRRG) chaired by Dr Alison Elliot, a former Moderator of the General Assembly of the Church of Scotland.
The three objectives in the LRRG’s remit were to:
* Enable more people in rural and urban Scotland to have a stake in the ownership, governance, management and use of land which will lead to greater diversity of land ownership and ownership types in Scotland.
* Assist with the acquisition and management of land (and also land assets) by communities to make stronger, more resilient and independent communities which have an even greater stake in their development.
* Generate, support, promote and deliver new relationships between land, people, economy and environment in Scotland.
Following a two-year period of consultation, the LRRG published its final report, the Land of Scotland and the Common Good in May 2014.
The LRRG Report contained 62 recommendations to the Scottish Government for pursuing its land reform agenda.
In response to this, early last month First Minister Nicola Sturgeon announced that a ‘radical programme of land reform’ is high on the Scottish Government’s agenda, with the next stage being the preparation of a Land Reform Bill to be published this year.
It is intended that measures in the Land Reform Bill will include:
* Powers for ministers to intervene where the scale of landholding or conduct of the landowner is deemed to be a barrier to sustainable development.
* The establishment of a land reform commission tasked with developing the evidence base for future reform, and both supporting, and holding, public debate.
* Measures to improve the transparency and accountability of land ownership and make information on land, its value and ownership more readily available in one place.
* Action to ensure that charities holding large areas of land are under an obligation to engage with local communities.
* The removal of business rates exemptions for shooting and deer-stalking estates, with the proceeds being used to increase the Scottish Land Fund.
In tandem with a Land Reform Bill, the Scottish Government is preparing a land rights and responsibilities policy to help guide the development of public policy on the nature and character of land rights in Scotland, and to shape the drafting of the Land Reform Bill.
In order to draw up this policy, a 47-page document, A Consultation on the Future of Land Reform in Scotland, was published early last month.
This consultation sets out both the Scottish Government’s proposals for a Land Reform Bill and its vision for a land rights and responsibilities policy, and encourages detailed responses from the public on each.
The consultation period runs until February 10, following which the Land Reform Bill will be drafted and published and the land rights and responsibilities policy will be formulated.
I urge anyone interested in Scotland’s future particularly in the Scottish countryside to make their opinion count and engage with this consultation process by writing to the Scottish Government, as invited, setting out their views and opinions.
The next month or so is the critical period for those with a view to make their voices heard in the corridors of power in Scotland. The public have an opportunity to inform and shape the future of land reform, and it is important to capitalise on that.
With around half a dozen estate sales in Scotland last year against a 10-year average of 17 per year, the effect of the land reform agenda on market activity is stark.
Caution is likely to prevail until the Scottish Government publishes its Land Reform Bill, which should clarify how land reform will be woven into the fabric of 21st Century Scotland, and in turn enable prospective buyers and sellers of the country’s estates to make informed and prudent investment and disposal decisions.
* Robert McCulloch is a partner in the estate and farm sales and valuations team of Strutt & Parker based in Edinburgh.