WORKING WITH THE KNOWNS AND THE UNKNOWNS
Published 24 May 2022
Former US Secretary of Defense Donald Rumsfeld got himself into all sorts of bother with his ‘known unknowns’ speech (20 years ago this year – are you feeling old?), but actually he was making a very valid point: there are some areas where you know that you don’t have the full picture and can do something about it, and sometimes you can take no action because you don’t know what you don’t know.
Having just finished another hectic window completing BPS Payment and Countryside Stewardship Revenue claims, it occurred to me that farming has recently become littered with more ‘unknowns’ than ever: input prices such as fertiliser and fuel, corn and feed; what future environmental stewardship schemes will look like; interest rates; and so much more.
Many farm budgets are going to have to be worked and reworked as this ever-changing landscape throws up more curveballs at us as that list of unknowns grows.
At times like this, it’s a good idea to concentrate on what we do know – what Donald would have called the ‘knowns’.
Whilst it’s far from clear what exact direction environmental legislation is going to take in the coming years, one thing we do know is that for those farms letting out excess cottages and houses – often an important revenue stream for agricultural businesses – the regulations are only going to get tighter when it comes to the environmental performance of those properties.
We already know what this will look like. Currently all rental property must conform to an EPC rating of ‘E’ or better. From 1st April 2025 the proposal is that all properties let on a new tenancy must have an EPC rating of ‘C’ or better. From 1st April 2028 all let properties, whether under a new or existing tenancy, will have to achieve the ‘C’ rating.
It seems likely that by 2030, the minimum standard will be a ‘B’ rating.
Currently there is an affordability cap on the expenditure for EPC improvement of £3,500 which is to increase to £10,000. Failure to comply with these regulations could result in financial penalties of up to £30,000 per property.
Knowing that these changes are coming, farm businesses should be planning to make any necessary changes now, before the deadlines approach. We are in an era of difficult budgeting decisions, so it’s important to keep an eye on those assets which you know will need improvement in the coming years.
It is also important to record any improvement work which is done, because it is not aways immediately evident. Keep details, take photographs, and record any work which is carried out, to ensure you achieve that vital EPC rating.
This move towards enforcing better environmental standards in buildings which are let is not restricted to residential properties: since 2018, any commercial building subject to a new lease has had to have an EPC rating of ‘E’ or higher, and you can be sure that this too will also become stricter as time goes on.
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