- By Annie Garner Hutton, Senior Surveyor, MRICS, FAAV
For many rural estates, diversification is becoming an increasingly important way of managing risk. Farming is volatile. The weather, commodity prices and changes to government support all have an impact, and the Basic Payment Scheme is no longer there to provide the same level of certainty.
Having several income streams means not putting all your eggs in one basket. But diversification doesn’t just mean finding something that makes money and putting it on the estate. The most successful projects can be those that fit the estate and its surroundings and helping you achieve your long-term objectives.
Start with what you already have
The first question I ask any estate owner considering diversification is: what assets do you have?
Look at your buildings, land and existing activities, and think about what could be used differently without fundamentally changing the character of the estate. You also need to consider how involved you want to be. Do you want to run a new business yourself, employ someone to manage it, or simply let the opportunity to a third party?
It’s also worth looking at what neighbouring estates are doing. If there are already several wedding venues or glamping sites nearby, for example, you need to consider whether there is really an opportunity for another one.
This is where an initial appraisal or strategy report can be useful. At Evergreen Rural, we can look at an estate as a whole and identify potential opportunities and the possible income.
Diversification doesn’t have to mean running another business
One misconception is that diversification means suddenly having to become a retailer, hotelier, events manager or hospitality expert. In fact, around 90% of the diversification projects our clients have undertaken have involved setting up the opportunity and then letting it to a third party. That might mean letting a field to a glamping operator, for example. The tenant takes responsibility for marketing and running the business, while the estate benefits from an additional income stream.
There are other options too. We had a client considering a farm shop who did not want to run it themselves or let it to another business, so they employed a manager instead.
Whatever route you take, there are important issues to consider, including planning, insurance, health and safety and tax. We can help landowners understand what needs to be considered and signpost them to specialists where necessary.
Tax is particularly important. If you take something out of agricultural use and put it into an alternative use, this can have implications for inheritance tax. I would always advise speaking to a tax adviser before entering into a diversification project.
Think low-impact before you think big
If protecting the integrity of an estate is important to you, there are plenty of diversification opportunities that don’t require major construction or significant changes to the landscape.
Letting out underused farm buildings for commercial use can be relatively simple and can generate a good income. There are also some wonderfully simple ideas. A dairy farm might consider a milk vending machine or ice cream machine. We have run foraging courses on an estate during the foraging season – something that can take place for a day or two a month without having a major visual impact.
The letting of sporting rights can also provide an income while remaining aligned with the traditional identity of an estate. I have also seen diversification into holiday accommodation work extremely well. One estate had a beautiful but neglected cottage which was renovated and turned into an Airbnb, generating a turnover of around £65,000 a year.
Don’t let commercialisation change what people love about the estate
The biggest mistake I see is diversification becoming too commercial. Think about what happens when someone drives onto the estate. What do they see? Have you suddenly converted a whole yard into commercial space or a car park? Have you built structures that don’t fit with the existing architecture? How much additional traffic and footfall will there be? And how will your existing tenants and local community react?
There’s a difference between pursuing a new revenue stream because everyone else is doing it and choosing something because it genuinely fits your estate. A wedding venue might generate significant income, but if it causes problems for your existing tenants, it may not be the right long-term decision.
Commercial success can strengthen an estate
Done thoughtfully, diversification can actually reinforce an estate’s identity rather than weaken it. Look at major estates such as Blenheim Palace or Burghley, where commercial activities and events have become part of what people associate with the estate without erasing its underlying identity.
The key is to think about your values and your reputation as a landowner. Many landowners want to be seen as fair landlords and respected members of their local communities, not someone who is commercialising the countryside.
It can also help to zone the estate. Perhaps one area is used for commercial activity while another remains dedicated to traditional farming, landscape and wildlife.
Agri-environmental schemes can play a role here too. The Sustainable Farming Incentive and Countryside Stewardship Higher Tier can provide income while supporting habitats and wildlife. The principle is essentially public money for public goods; you receive payment for carrying out agreed activities, but you must meet the requirements and inspections can happen.
Get objective advice before making a big decision
For families struggling to agree on the future of an estate, bringing in an independent land agent or professional consultant can be extremely helpful. We can objectively assess the land, assets and potential income streams without becoming involved in the personal or emotional side of family discussions.
The need to diversify is likely to become greater as climate fluctuations and unpredictable markets continue to affect farming. But diversification should not be about chasing every possible source of income. Start with what you have, consider what fits, understand the implications and think about the estate you want to leave for the future.
Thinking about diversifying?
If you’d like an unbiased view of the opportunities available to you, get in touch with us for an initial conversation about your estate and how we could help you decide what comes next.
Get in touch with us and we’ll take it from there.
