What's the capital value of land in solar?

[Exfarmer]

The CGT should be on a taper. So in a 35 year lease the capital gain will be 100% in year one but diminishing in a straight line to year 35 when it’s worth 0%.
so I’m just a farmer not an accountant but that’s my take
So depends how long you think you’ll live I recon

I am afraid you are very wrong
I believe that normally to sell a chunk of land let out to a solar business you will be liable to 28% on any money you receive greater than the price you paid for it
Under certain circumstances you may qualify for business asset relief which would bring this down to 10%, but I am certain the scenario described would not qualify.
my understanding i currently there are no allowances for length of ownership.
it may be that land held before the late 90’s will qualify for the revaluation there was then.
of course land p[assed over at death will be revalued as of that date

 

[Clive]

Solar farms that got the tariff in a standard sunlight year at pre energy price rises will turnover around £25,000/ac/year which is a mix of elec sales and rocs.

newer farms without the tariff would effectively be 50% less although factor in new tech it might be a bit lower at 40% less.

So the value of the land will vary depending on tariff basically. The idea that solar farms will be removed at the end of the initial planning periods typically 25 years is wrong. They’ll never be removed as they are now to important to how we create energy in this country.

so to value them you need to think about the fact your only going to sell it once. The buyer is going to be earning upto £25,000/ac/yr until the tariff runs out then 50% if that per year. Then factor in index linking.

yes there’s running costs to factor in but in my view to sell one with tariff your into £100,000/ac territory at the very least.

If you’ve got one with tariff and let’s say 20 yrs left earning £25k/ac/yr that’s £500k of total income per acre. Then it runs another 20 yrs at £12.5k/ac/yr, that’s another £250k/ac. that’s without factoring in index linking or higher sale prices of elec due to the ongoing energy crisis. Total income £750,000/ac. If you’re selling at under £100,000/ac you are mad. If nobody will buy it at that level don’t sell it and keep earning from it.

of course there is a different perspective

mobile phone masts once paid well - a site was valuable and operators paid big rents

then, when initial contracts ended they had convinced government that these sites were critical national infrastructure, no rent negotiated any more - get what you are given !


could a solar site become a liability or looked back on by future generations as land that father “gave away” ?

 

[Exfarmer]

of course there is a different perspective

mobile phone masts once paid well - a site was a valuable and operators paid big rents

then, when initial contracts ended they had convinced government that these sites were critical national infrastructure, no rent negotiated any more - get what you are given !


could a solar site become a liability or looked back on by future generations as land that father “gave away” ?

Interesting perspective.

 

[Exfarmer]

Interesting perspective.

I think though you can still tell the mast operator to go and place his mast in a very dark place. Friend is in this position had 3 masts with a very good rent, now has 1 mast with 3 aerials paying a pittance certainly not the fat pension he was looking forward to. However the mast operators are in a totally different situation to solar park operators

 

[Clive]

Interesting perspective.

not suggesting it will happen but what has happened re phone masts must be of concern ?

solar and battery site will undoubtedly “critical national infrastructure”

 

[Clive]

I think though you can still tell the mast operator to go and place his mast in a very dark place. Friend is in this position had 3 masts with a very good rent, now has 1 mast with 3 aerials paying a pittance certainly not the fat pension he was looking forward to. However the mast operators are in a totally different situation to solar park operators

we have none but a friend was telling me that his once £20k a year phone mast now paid little more than a big electricity pylon. - no negotiation, take it or leave it

 

[Steevo]

I think though you can still tell the mast operator to go and place his mast in a very dark place. Friend is in this position had 3 masts with a very good rent, now has 1 mast with 3 aerials paying a pittance certainly not the fat pension he was looking forward to. However the mast operators are in a totally different situation to solar park operators

Sadly that is not the case.

The landowner is obliged to grant a new agreement when the operator serves the statutory renewal notice.

 

[Exfarmer]

Sadly that is not the case.

The landowner is obliged to grant a new agreement when the operator serves the statutory renewal notice.

I will bow to your knowledge, i know my friends are tucked away round the back of a workshop and he said that he thought he would take what he could rather than consulting a solicitor. He had been taking something like 30K and he was gutted when it turned into as few hundred

 

[Steevo]

I will bow to your knowledge, i know my friends are tucked away round the back of a workshop and he said that he thought he would take what he could rather than consulting a solicitor. He had been taking something like 30K and he was gutted when it turned into as few hundred

That was what I was told by the agents involved in our negotiations when I asked if I was obliged to grant a lease at such low rent levels or could just walk away. The Electronic Communications Code has given the telecoms giants significant rights.

The telecoms agent/solicitor know the system and the right afforded to them inside out so the landowner it as a significant disadvantage without representation, and will often try and push for unfair terms on the basis they know the landowner themselves knows almost nothing.

Each to their own but imo it's far better to consult an agent than try DIY because they have the experience as they have dealt with hundreds and are in regular contact with other agents doing the same thing.

The telecoms operator pays the fees (agent and solicitor) involved (to a fixed level agreed in advance which should cover the majority if not all) so it's a no-brainer to take advice from my perspective when such sums of money are at risk.

 

[Steevo]

The telecoms operators also seem to like giving one off incentives too - a £5000 bung at the start of a 25yr tenancy is a way to keep the headline rent level much lower so they can then say to the next person "Recent rents agreed are in the region of £400 a year" as opposed to £600 a year if that £5k was spread across the same 25 years.

 

[Doing it for the kids]

What area does a phone mast take up though? Few £100 must still be a respectable return?

Not sayings it’s right but bigger picture stuff surely?

 

[Clive]

What area does a phone mast take up though? Few £100 must still be a respectable return?

Not sayings it’s right but bigger picture stuff surely?

…… or put another way …….. how many millions does a privately own company make from selling bandwidth dependent on that mast ?

private industry should pay market prices

 

[lloyd]

Do solar parks pay business rates and if not why not? They can hardly be described as agricultural.

 

[Steevo]

What area does a phone mast take up though? Few £100 must still be a respectable return?

Not sayings it’s right but bigger picture stuff surely?

About the same size as 2 car parking spaces.

Cost to park at Heathrow airport long stay is £35 a space per day if pre-booked in advance.

Two spaces would work out at £25,550 a year for a random patch of tarmac.

 

[Steevo]

Do solar parks pay business rates and if not why not? They can hardly be described as agricultural.

Yes they do.

 

[lloyd]

Yes they do.

How do they work out the amount payable ?

 

[Exfarmer]

How do they work out the amount payable ?

Based on capacity installede. Think it is currently £8 /Kw roughly £2000 an acre times the rateable amount , Which I think comes out roughly £1000 an acre per annum
I may be oiut of date on my figures though so please correct me

 

[steveR]

. One has just been sold I know of at £50,000/ac.

Great way to raise capital... pay off a loan etc etc.

Wonder what the tax implication will be though?

 

[steveR]

The capital value of land in solar is a complex subject that depends on many factors, such as the location, size, design, and performance of the solar project, as well as the environmental and social benefits it provides. One way to estimate the capital value of land in solar is to compare the land use of solar photovoltaic (PV) systems with the electricity they generate. According to one source, the land use of solar PV systems can typically range from **60 to 400 ft per Megawatt-Hour (MWh)** for new utility-scale installations. This means that the more electricity a solar project produces per unit of land, the higher its capital value. However, this is not the only factor to consider, as solar projects can also enhance biodiversity, restore ecosystems, and support agriculture, which can increase their natural capital value.

Really?? Fair enough that some sites might do the above, but can that have a real financial value that can be realised??

 

[steveR]

Do solar parks pay business rates and if not why not? They can hardly be described as agricultural.

Yep, it's why Council's are not that bothered unless they get a massive issue with grumpy locals!