Strategic Evaluation of Rawburn Farm

Question 1

How many residential properties do Roxburghe Estates have?

Answer 1

189 - let residential
38 - service occupancies

Question 1

Why did the farm manager resign?

Answer 1

He found a similar job better suited from a geographical point of view, so that he could be closer to his partners parents. This aided childcare etc.

Question 2

How many commercial premises do RE have?

Answer 2

4 shops
15 garages/units

Question 3

How many agricultural tenancies do RE have?

Answer 3

40

Question 4

What is the tenancy breakdown?

Answer 4

1991 Act: 28
LDT: 8
MLDT: 1
SLDT: 3

Question 5

What is the main land classification at Rawburn?

Answer 5

• In bye: 4.2
• Hill: 5.2 - 6.3

Question 6

Define land class 4.2

Answer 6

• narrow range of crops
• primarily on grassland
• short arable breaks of forage crops

Question 7

Define land class 6.3

Answer 7

• rough grazing
• can sustain low quality plants

Question 8

Give an example of a low quality plant

Answer 8

Bracken

Question 9

What is a Livestock Unit (LSU)

Answer 9

A way of comparing the nutritional requirements and grazing impact of different grazing animals.

Question 10

Why did the Estate make the decision to let the farmhouse on a PRT?

Answer 10

The newly employed farm manager at the time was young, and did not require a house the size of Rawburn. It made more economic sense to put the farm manager into Whinrig, a smaller property, and let Rawburn on a PRT.

Question 11

What rent was achieved at the time?

Answer 11

£1,700

Question 12

How did you define this rental figure?

Answer 12

Using local comparative evidence.

Question 13

How is VAT handled on residential property?

Answer 13

Residential rental income is exempt from VAT.

Question 14

When did the LDT between FFP and the 2nd Trust commence?

Answer 14

28th of May 2003

Question 15

What was the initial term?

Answer 15

25-years

Question 16

What is the maximum length an LDT can be?

Answer 16

When granted, the LDT at Rawburn could have been for a minimum of 15-years.

Now known as a Modern Limited Duration Tenancy as per Land Reform (Scotland) Act 2016, a LDT mas to have a minimum period no less than 10-years. There is no ‘maximum’ period.

Question 17

The LDT comes to the end of its term in 2028, what will happen?

Answer 17

To terminate a LDT, the landlord must serve two separate notices as per the following:
Written intimation: giving the tenant 2-3 years notice.
Notice to quit: must give 1-2 years notice, and be sent out at least 90 days after the intimation.
If the agreement reaches the end of its contractual term without notice served, the lease will continue for a further period of 7-years.

Question 18

What objectives were taken into account when conducting Rawburn farm analysis?

Answer 18

• to optimise and diversify income streams
• to retain core assets
• to act in a manner that best serves RE’s trustees and beneficiaries
• Preservation for future generations

Question 19

When negotiating terms, how would this be done?

Answer 19

This would often be done orally, but I would ensure that I always followed up any negotiations with a letter or email to leave a paper trail of negotiation.

Question 20

Why is the grouse moor seen as a key asset?

Answer 20

As well as being passion of the Roxburghe family, the grouse moor, when conditions allow generates a unique and staple source of income.

Question 21

Why would a sale pose devastating impacts on the said sporting interest?

Answer 21

Upon sale, RE would lose all control of 788ha of grouse moor. Not only is this a large proportion of the moor, but the activities in which the purchaser were to carry out could not be dictated by ourselves.

Question 22

What is an active farmers status?

Answer 22

In order to be eligible to apply for the Basic Payment Scheme, a ‘farmer’ must be seen to be undertaking ‘agricultural activity’. Thus deeming them an ‘active farmer’.

Question 23

What is an agricultural activity?

Answer 23

An agricultural activity can include the; production, rearing or growing of agricultural products, including harvesting, milking, breeding and keeping animals for an agricultural purpose.

Question 24

Why do you think the employment of reliable staff is becoming increasingly difficult?

Answer 24

I think the geographic make up of Rawburn plays a huge role.
- discuss reluctance to partake in rural living etc.

Question 25

You mention investment into machinery was required, please expand.

Answer 25

The current farm tractor was nearing the end of its life. An investment of sub £100,000 was required.

Question 26

What Inheritance Tax reliefs would be available at Rawburn?

Answer 26

Agricultural Property Relied (APR)

Question 27

How do you qualify for APR?

Answer 27

To qualify for Agricultural Relief, the farm must have been occupied and used for farming purposes for the past two years by the person transferring their estate. Alternatively, the property will need to have been owned by the person transferring their estate for the past seven years while being used for farming.

Question 28

Do all farm tenancies qualify for 100% APR?

Answer 28

No, those granted before the 1st of September 1995 are only eligible for 50%.

Question 29

What threat does the Autumn budget pose to APR?

Answer 29

Whilst not yet confirmed, the rumour around the Autumn budget if that APR may be abolished, leaving ITH payable on farms.

Question 30

What threats does the autumn budget pose to CGT?

Answer 30

A potential increase to some 40%. Again, not yet confirmed, just an assumption.

Question 31

Why might you let the land at Rawburn on a grazing license as a pose to a fixed term tenancy?

Answer 31

• higher £/ac
• more security to landlord/proprietor

Question 32

What benefit would you have letting the entire holding on a fixed term tenancy (MLDT or SLDT)?

Answer 32

A longer term let would provide perspective tenants with an element of security. This security would give tenants more incentive to farm the farm as if it were their own.