Scotland Newsletter 2016 - Bidwells · trying but ultimately resolutions have been found, such as installing private line connections - often over long distances in some ... While

Summer 2016 Issue 45

NEWS FROM SCOTLAND

y Building a West Highland hydro scheme

y The Crown Estate - managing a unique asset

y Majestic makeover for iconic Glencoe hotel

y The realities of land reform

y Fruits of the forest - investment in woodland still strong

FEATURES

The dust has barely settled on the Scottish Parliamentary elections before we turn our thoughts to the European Referendum. The composition of our recently elected Scottish Parliament does have a more balanced feel and I believe that many of our newly elected MSPs will bring energy, focus and drive to politics in Scotland over the next five years. If I have one plea, it is for our politicians to focus on building a stronger economy and to support industry and business. Jobs will lead to national prosperity.

Despite the changing political and legislative landscape in Scotland, there remains opportunity and confidence. We highlight a number of exciting examples throughout Scotland where Bidwells is committed to supporting clients who are investing for our future.

I hope you enjoy reading our Newsletter and please do not hesitate to contact us if you feel we can help your business.

Finlay ClarkHead of Scotland

e: [email protected] t: 01397 707641

WELCOME TO BIDWELLS’ SUMMER NEWSLETTER

BUILDING A WEST HIGHLAND HYDRO SCHEMELast year was an exciting time for hydro electricity generation on some of our clients’ estates and so far 2016 is looking just as busy.

We have been working with our clients and their preferred developers to consent, construct and commission small hydro schemes mainly in the North West Highlands. In 2015 around 3.5MW were commissioned, with a further 1.5MW coming on stream in the first half of 2016 and another 5MW under construction.

Bidwells has been involved in these projects from the early concept stages. For some projects we tendered opportunities, assessed proposals and held interviews alongside our clients to identify the best development partner to work with.

Many of these projects have been developed by commercial hydro operators who have leased land from our clients. We advised on the commercial terms and necessary documentation to allow the schemes to be taken through the planning process and subsequently leased when all consents were in place.

Of course there have been challenges during the development phase but many of these have been resolved by working closely with our development partners. Grid connections and timings have been trying but ultimately resolutions have been found, such as installing private line connections - often over long distances in some locations - to connect projects.

By their nature, the majority of projects are located in fairly remote areas where the weather can be unpredictable and at times construction sites inaccessible. Combining this with the fact that most of the developments had a tight construction and commissioning time window, actually completing the build and generating electricity on occasions seemed very demanding and so we have been pleased to be working with experienced developers and contractors.

The majority of the schemes commissioned have been run-of-river structures built in locations which were identified as having low environmental impacts and, of course, plenty of rain. This year will also see the commissioning of a low head scheme on the River Arkaig which utilises two impressive Archimedes screws.

Alex Reading of Green Highland Renewables, who developed the Arkaig scheme, explained why this type of installation had been chosen: “The site is situated at the east end of Loch Arkaig where there is a large volume of water and a head of only five metres. The two main reasons for selecting the screw turbine were due to its environmental credentials and its ability to retrofit into the old water system that was originally designed to run a sawmill. The whole system has been designed to allow fish and eels to migrate freely.”

While 2016 promises to deliver further hydro capacity, changes to the Feed-in-Tariff earlier in the year means that developing hydro schemes will become much more challenging, at least in the short term. We hope that this situation will change in future years and that hydro schemes can continue to be built in Scotland by landowners, developers and communities as a renewable energy source and viable source of income.

Contact: [email protected]

“This year will see the commissioning of a scheme which utilises two impressive Archimedes screws”

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It has been many years since one of the truly spectacular estates in the Southern Highlands has come to the market, so the high levels of interest from prospective UK and European purchasers came as no surprise when Kinnaird Estate in Perthshire was offered for sale in September last year.

Kinnaird (pictured above) is unique in that it offers a magnificent but manageable mansion house, top class salmon fishing and a substantial mixed livestock farming enterprise. As if these were not enough, Kinnaird also offers some of the most challenging pheasant and partridge shooting in Scotland, grouse shooting, three species of deer and trout and pike fishing in its hill lochs.

Serious interest was generated from UK and European buyers and clearly the quality of the asset and the stability of the UK in general overcame any concerns of the Scottish Referendum and Land Reform legislation with the estate ultimately selling for well in excess of the asking price of £9,600,000.

The top-end residential market continues to be somewhat hampered by lack of supply, largely created by concerns about the new levels of Land and Business Transaction Tax (LBTT), considered by some to be punitive. There may have to be a period of adjustment during which both sellers and buyers of large houses come to terms with the effects of LBTT on values.

Farm prices seem to have stabilised, due to a combination of reduced agricultural commodity prices and the changes made to the Single Farm Payment regime having a depressing effect on net farm incomes. It is perhaps too early to say whether these changes will influence the volumes of land coming up for sale but we are aware of some very good quality farms being brought to the market this year. Opportunities to invest in the sector will be forthcoming in the near future.

Good quality, whether it be in residential property, major estates or farmland, remains in relatively short supply but Bidwells continues to buy and sell, often privately, key properties at the top end of the market to those with an eye for sound investment.


THE CROWN ESTATEMANAGING SCOTLAND’S FORESHORE AND SEABED Bidwells is entering a new phase in the management of The Crown Estate’s coastal assets in Scotland following the enactment, on 23 March, of The Scotland Act 2016. The purpose of the Act is to deliver the Smith Commission Agreement, including the devolution of the management and revenues of Crown Estate assets in Scotland, to the Scottish Parliament.

To help prepare for this change, The Crown Estate in Scotland has established itself as a separate operating division – called the Scotland Portfolio - effectively a step towards transferring responsibilities to Scottish Ministers.

The Scotland Portfolio team is now in a unique position, working with the Scottish Government, to create this property business, ensuring that the high standards of asset management and customer care continue. The assets include four rural estates, mineral and salmon fishing rights, about half of the coastal foreshore and almost all of the seabed. The Crown Estate has a significant role in supporting aquaculture, marine leisure, ports and harbours and offshore renewable energy.

Bidwells has been privileged for a number of years to be involved in supporting The Crown Estate with its coastal and foreshore asset management and we have developed a specialist team of 16 staff to deliver the required services.

Our role, working in partnership and guided by The Crown Estate's statutory requirements and values, is to facilitate investment, create value, collaborate with and support the customers and communities that wish to make use of this unique asset. The range and diversity of uses varies significantly from major commercial developments - including oil terminals, ferries, ports and harbours – to leisure and community uses including step-ashore facilities and local mooring associations.

As well as the more commercial side of our role, supporting coastal communities to develop their leisure and business interests is a hugely rewarding aspect of our responsibilities. Granting flexible agreements, or restructuring existing ones, to reflect business needs of both landlord and tenant has encouraged investment and collaboration and led to some of the key marine developments around the coast.

The industry-led strategic framework 'Awakening the Giant: A Strategic Framework for Scotland's Marine Tourism Sector', will further raise awareness of Scotland's unique and world class marine offer. Many would not believe that the economic value of the marine leisure sector rivals that of golf. The opportunities to develop it further, both in terms of awareness and investment, are huge.

While we are entering unchartered waters, there is no doubt that there are real opportunities ahead to develop this business to further benefit the Scottish economy and the diverse array of marine users that live, work and rely on Scotland’s coast.


SELLING SPECTACULAR

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Seated in one of Scotland's most dramatic locations, the Kings House Hotel in Glencoe is an iconic stopping point for walkers, hikers, skiers, tourists and travellers alike.

But this famous inn has reached a point where only substantial investment will secure its future, something which the new owner, Black Corries Estate, is prepared to do.

Bidwells’ managing agent, Susanna Thomson, said Black Corries was passionate about breathing new life into the Kings House Hotel to offer accommodation and dining which will meet the demands of a wide range of guests and, as such, lodged plans at the end of 2015 to begin this transformation:

"The new owners are determined to, once again, put the Kings House on the map for all the best reasons. With excellent food and drink, a fascinating history, rooms to cater for everyone and the unique surrounding scenery and wildlife to take in, we have no doubt that the Kings House will be a destination of its own as well as a must-stop point for anyone driving the scenic A82, walking the West Highland Way or looking for an escape.

"Whilst most of the public spaces will be significantly changed and improved to take in the spectacular surrounding scenery, we will be

Kate Sheppard, forestry consultant with Bidwells in Fort William, found herself in the spotlight earlier this year at a Forestry Commission Scotland reception at the Scottish Parliament.

Kate was one of a number of specifically-chosen people on a panel who were from within the world of forestry, whose lives and businesses are part of this broad and successful sector.

The theme for the evening was the recently published report – The Economic Contribution of the Forestry Sector in Scotland - and

keeping much of the Climbers' Bar intact. We know we have some very loyal customers, many of whom have great memories of times had in the Bar, and it's important to retain that connection.

"We hope to have a new hostel open before the summer and this will remain in operation during the development period along with a temporary bar serving simple, great food and refreshments."

The plans, which have been created by Benjamin Tindall Architects, propose to keep the historic core of the hotel but remove the 1960s extension and replace it with a more sympathetically designed wing. A dining room would be built to take advantage of the view of Glencoe, cantilevered and overlooking the River Etive and the number of bedrooms would increase from 45 to 80. The building will also be made more energy efficient and benefit from improved staff accommodation, sensitive landscaping and upgraded access.

More information on this exciting project can be found at www.kingshousehoteldevelopment.co.uk where news will be updated as progress is made. You can also sign up for the Kings House development mailing list.

Contact: [email protected] or [email protected]

the key note speaker was Dr Aileen McLeod, then Minister for Environment, Climate Change and Land Reform.

Kate’s determination to succeed in what has traditionally been a male-dominated sector has stood her in good stead and in 2011 she was awarded the Lantra Trees and Timber Learner of the Year Award. From there she developed her career to become a beat forester with Forest Enterprise Scotland in the Scottish Lowlands, managing a range of practical activities including planting, harvesting and thinning programmes. She then took up the position of harvesting manager with Euroforest in Lochaber where she managed all stages of the timber process from the forest to the mill. Now with Bidwells, her role involves managing and advising private landowners on their forestry holdings, tendering timber sales, writing forest plans and managing forest planting operations.

Speaking before the Holyrood event, Kate said: "Despite women’s strong heritage within the industry – think of the Lumber Jills during both World Wars - today forestry remains a largely male-dominated industry. However, women considering a career in forestry should not be swayed either by statistics or stereotypes. The fact remains that forestry provides excellent career opportunities for both men and women in Scotland.”


KINGS HOUSE HOTEL PLANS REVEAL A MAJESTIC MAKEOVER

BRANCHING OUT TO HOLYROOD

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the ‘productive capacity’ of the holding in order to agree a ‘fair rent’. How the productive capacity is to be assessed has yet to be explained but rather than simplifying the process, the end result is likely to be cumbersome and lead to confusion.

Perhaps the most controversial measure of part 10 is the new provision on the assignation of 1991 Act tenancies, which provides tenants with the right to relinquish their tenancy for value to their landlord or assign it to a third party, who must be a ‘new farming entrant’ or who wishes ‘to progress in farming’, for value. This is considered by some to be a contravention of the European Convention on Human Rights and is thus likely to lead to legal challenge.

Cabinet Secretary Richard Lochhead stated during the Agricultural Holdings Review Group consultation (at a time when, sensibly, Land and Agricultural Reform were being considered as two separate pieces of legislation) that a key aim was to create a vibrant tenanted sector. If achieved, this would have been a real result for both landlords and tenants. Instead there is little in the Act to encourage landlords to let land, even with the assistance of a Tenant Farming Commissioner whose remit is to encourage good relations between farm tenants and landlords. In fact, our recent experience shows that, as a result of the legislation, this role may be much less influential and useful than intended as landlords look to either sell farms to sitting tenants or buy existing tenants out in order to farm the land themselves. The resultant ever-increasing number of owner occupiers will not be able to be viewed as encouraging a vibrant tenanted sector.

On a positive note, despite all of the concern surrounding the legislation, when acting for either landlords or tenants, we continue to enjoy good working relationships and are able to reach equitable agreements and maintain good associations for all involved. If you would like to discuss or find out more about any aspect of land reform please do not hesitate to contact us.


THE REALITIES OF LAND REFORM

Across Scotland a number of large scale public sector infrastructure projects are in progress or being planned. Many of these schemes rely on compulsory purchase for successful delivery. However, it is not only public sector schemes which can use such powers. Private sector companies may be able to secure compulsory rights to construct networks, such as cables and pipelines, which are deemed ultimately to be for public benefit.

Given the importance of connectivity in the modern world, the availability of compulsory powers is often essential to create the services demanded by society: but for those affected by compulsory purchase in whatever form, difficult issues often arise.

Many of these schemes have a long gestation. This raises the question of how and when to engage with the promoters. The answer depends on whether you support the proposals or have serious concerns about them. Objections to projects are usually best made as early and as forcefully as possible. This provides the maximum opportunity to influence the overall plans or detailed design of the scheme.

When a project will affect your property, despite any effort to forestall it, your strategy may have to change in order to preserve your compensation options.

Assessment of compulsory purchase compensation can be complex. To minimise disruption and to secure entitlement to full compensation, care should be taken to examine all impacts of the scheme in detail and also to ensure that ownership rights, leases and other agreements are appropriately structured. Legislation provides entitlement to compensation but some elements are subject to qualifying conditions: care should be taken to comply with these where possible. Similarly, mitigation works can be used to ameliorate significant scheme impacts and should be considered carefully for current and future land uses.

If you think you may be affected by these issues or would like to discuss further, please get in touch.


COMPULSORY PURCHASE

A MISSED OPPORTUNITY?As has been well documented and reported, the Land Reform (Scotland) Bill was passed by the Scottish Parliament on 16 March 2016 and received Royal Assent on 25 April. Described by the Scottish Government as radical, ambitious, historic and a landmark moment on the land reform journey, the Act undoubtedly demonstrates the Holyrood administration’s determination to change the status quo of how land is held and managed throughout rural and urban Scotland.

Despite a number of positive aspects – such as encouraging transparency - the opportunity to create meaningful and substantive legislation for one of the most sensitive of policy issues has been missed. The resulting legislation is sadly lacking in detail with many key terms being as yet undefined. Only four parts of ten actually came into force the day after Royal Assent and the substantive parts will only become operative through (at time of going to print) unknown regulation or secondary legislation.

By attempting to combine Land Reform with the complex subject of Agricultural Holdings into one rushed piece of legislation, we fear the result will be practically unworkable and likely to unearth a number of unforeseen (by the Scottish Government at least) issues as it starts to be applied in the real world.

A prime example of this is in part 10 of the Act - Agricultural Holdings. Agricultural rent reviews are now to take account of

“The resulting legislation is sadly lacking in detail with many key terms being as yet undefined”

GETTING YOUR STRATEGY RIGHT

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APPETITE FOR FORESTRY CONTINUES TO GROWUncertainty is never a good thing when it comes to investment but despite the issues created by 2014’s independence referendum, ongoing Land Reform, Brexit, currency fluctuations and so on, the market for good quality forest properties remains as strong as ever.

hectares of early 1980s planting, also with a guide price of £400,000 and; Knockower near Carsphairn - a particularly attractive property with a strong backbone of productive conifer forest and extensive open hill ground. A total area of 800 hectares of which 234 hectares is mid rotation forest, all with a guide price of offers in excess of £1,200,000.

We are also excited to be acting as selling agents for a true “ jewel” estate located on Argyll’s Cowal peninsula. Glen Massan (pictured above and on cover) extends to some 3,280 hectares of which 1,660 hectares is high quality commercial forest, much of it in its second rotation. Set amongst glorious scenery in an accessible yet very private location featuring over 1,500 hectares of unplanted hill ground as well as areas of open space, lochs and permanent pasture. In the floor of the glen, the estate also has a recently upgraded (to a very high standard) four-bedroom cottage and existing planning permission to transform an additional beautifully located cottage into a principal residence. Good quality red deer stalking adds to the appeal of what is one of the finest forestry / stalking estates to have come to the market for years and we anticipate strong interest at a guide price for the whole of offers over £9,100,000.


Concerns of some home-based investors over the prospect of Scotland leaving the UK, or of significant reforms in the way land may be held, have undoubtedly led to a number of people deciding to place their funds elsewhere. But the depth of interest in productive forests is such that this has had no discernible effects on property values and new investors are still being attracted to the sector.

Well-located woodlands, planted with productive conifer species, are increasingly being recognised as sound, green investments. With ever greater emphasis being placed on the positive role which forestry plays in Scotland’s economy and the wide range of benefits it provides, the future continues to look bright.

We recently acted on behalf of the seller of Locherlour Forest - 105 hectares of prime, maturing woodland near Crieff - which quickly attracted high levels of interest and strong bidding at the closing date, achieving a price well in excess of its ‘offers over’ price of £850,000.

At the time of writing, we are marketing the Bannockburn Forest near Stirling - 231 hectares with challenging access but priced accordingly at offers over £400,000; Mireland in Caithness - 179

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CHANGES TO EMPTY BUSINESS RATES AS OF APRIL 2016

John Swinney, former Cabinet Secretary for Finance, Constitution and Economy, made a few significant changes to business rates in his Scottish Budget which became effective on 1 April 2016. The first of these changes was to increase the large business supplement from 1.3p in the pound to 2.6p which is estimated will raise £130 million. The second significant change was the removal of the 100% empty rates relief for industrial buildings, replacing it with a six month period at 100% followed by 10% relief thereafter. By comparison in England, industrial property is currently entitled to six months with 100% relief and no relief thereafter.

The general consensus from those involved in the commercial property and construction sectors is that this is bad news for industrial landlords and developers alike. At a time when private sector capital investment is required, this will act as an obstacle and have a negative effect on that ambition. Scotland has not seen the same levels of recovery witnessed elsewhere in the UK and speculative commercial development is now extremely challenging with these recent changes.

RATES REFORM IN SCOTLANDOn a more positive note, the Scottish Government has recently announced that they have appointed Ken Barclay (former chair of RBS Scotland) to review business rates in Scotland. Mr Barclay has been tasked with considering how business rates might better support business growth, respond to wider economic conditions and changing marketplaces and support long-term growth and investment. This follows George Osborne’s statement of major reform to the system in England and Wales in the 2016 Budget. Mr Osborne revealed plans to increase small business relief to £15,000 which would allegedly lift an estimated 600,000 small businesses out of the rating burden effective from 1 April 2017.

It has long been my view that an improved rating system in Scotland would include regular three-yearly revaluations rather than the current five yearly cycle. With an increased small business relief threshold south of the border it will be hard to see how businesses will not be disadvantaged if the Scottish Government does not follow Westminster's example and increase the relief level.

2017 REVALUATIONThe next business rates revaluation will come into effect on 1 April 2017 and will re-assess all non-domestic properties in Scotland based on rental values as at 1 April 2015. It has been a full seven years since the last revaluation and changing markets will undoubtedly increase the difficulty faced by regional assessors in calculating accurate rateable values. It is predicted that office occupiers in Aberdeen will be under the greatest pressure due to the unfortunate timing of peak rents and the ‘tone date’ of this revaluation.

With so much change in the marketplace it is important to obtain the right advice as significant savings could be made. Each property should be looked at on an individual basis and time is of the essence to meet the 20 September 2017 deadline to appeal the revaluation figure presented by the Assessor. Our team of experts are well-placed to act in your interests to ensure your rates bills are kept to a minimum so please don’t hesitate to get in touch with any rating queries you may have.


Bidwells’ thriving planning team has made representations to the recent Scottish Government independent planning reform. This included making formal, written representations at the Call for Evidence stage and actively engaging in the subsequent online forum. An outcome is expected this summer which we will review and brief our clients accordingly.

SCOTTISH GOVERNMENT RESEARCH PROJECTTogether with telecommunications specialists FarrPoint we jointly undertook a research project on behalf of the Scottish Government Planning and Architecture Division to produce evidence-based recommendations on the scope for legislative changes to further increase Permitted Development Rights for electronic communications infrastructure.

The research outcomes will be a key element in deciding how the Scottish planning system can support code operators in building the communications infrastructure required to ensure that everyone in Scotland can participate in the digital age.

DEVELOPMENT PLANS UPDATEWe maintain a current Development Plan schedule for all local planning authorities in Scotland. This enables Bidwells to alert our clients to key consultation and decision dates.

Perth and Kinross Council (PKC) is currently reviewing its Local Development Plan (LDP), which was adopted in February 2014. The Main Issues Report (MIR), which forms the first stage of this LDP review, closed for consultation on 16 March 2016.

Bidwells submitted a number of representations to the PKC MIR and site updates on behalf of landowners within the Perth and Kinross area.

The next stage of the LDP involves PKC publishing the Proposed Plan, detailing the settled view of the authority. There will be a further opportunity at this time to make representations to the Proposed Plan.


BUSINESS RATES SHAKE-UP

One of the more unusual roles carried out by Bidwells is to manage filming rights on our clients’ properties. Acting on behalf of the property owner, we have secured Location Agreements for everything from internet whisky commercials to the world’s biggest blockbusters, including Skyfall and Harry Potter. We have a wealth of experience in managing the relationship between location and production company.

In addition, we have successfully secured temporary planning permission for the infrastructure needed for major productions by negotiating local planning requirements to tight production schedules.

We would be very keen to hear from you if this service would be of interest.


PLANNING TEAM UPDATE

YOUR PROPERTY ON FILM?

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Bidwells is a trading name of Bidwells LLP, a limited liability partnership, registered in England and Wales with number OC344553. Registered office: Bidwell House Trumpington Road Cambridge CB2 9LD.

bidwells.co.ukFort WilliamCarn Dearg House, North RoadFort William PH33 6PPt: 01397 702433

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Perth5 Atholl PlacePerth PH1 5NEt: 01738 630666

InvernessElm House, Cradlehall Business ParkInverness IV2 5GHt: 01463 796050

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Scotland Newsletter 2016 - Bidwells · trying but ultimately resolutions have been found, such as installing private line connections - often over long distances in some ... While