Solar farm land value

[snipe]

But business property relief is still available if the trading element of the business predominates!

True.. but most sites now are 100ac plus. With inflation linked in it would not take long for a solar farm to out perform a reasonable sized family farm.
then there would be full inheritances tax to pay.

 

[Grass And Grain]

You really must be extremely careful. Ideally the land would be gifted to you, then I think there is no stamp duty but there would be CGT on the increased value of the land since purchase to todays agricultural value.
be aware your parents could not take any rent equivalent from the solar farm as that would be a gift with reservations. Also if parents die in the next 7 years you will have IHT to pay
selling to a company would incur stamp duty and CGT.
not doing anything and your parents were unfortunate to die soon after planning the cost could be horrendous

Do you have to live 7 years if the gifted (agricultural) land was already inheritance tax exempt?

 

[Exfarmer]

Do you have to live 7 years if the gifted (agricultural) land was already inheritance tax exempt?

I am not certain, there is the complication of the planning grant though so expert advice is critical. I have mentioned elsdewhere a close frriend has got caught out gifting land and it has cost dearly

 

[MrNoo]

Do you have to live 7 years if the gifted (agricultural) land was already inheritance tax exempt?

I believe so as some was gifted here and I had to take out an insurance policy to cover such an event, it was gifted pre planning for solar. Also the tax is on a sliding scale so if the giftee lived 5 years before popping his/her clogs then you'd have quite a reduced rate to pay, 6 years and even less.

 

[Clive]

none ag assets are best wrapped up under a ltd in my experience both from income and iht ……… also possible to use trusts to maintain income whilst protecting assets against divorce or bankruptcy

pure farming better not limited

 

[MrNoo]

none ag assets are best wrapped up under a ltd in my experience both from income and iht ……… also possible to use trusts to maintain income whilst protecting assets against divorce or bankruptcy

pure farming better not limited

Yes ours is some and some, some owned by family members and the rest Ltd Co but am a Ltd Co for the business already

 

[Dog]

Am I right in thinking that you have to transfer the land into a Ltd company before planning is passed. But if planning is not passes it’s a big expense for nothing.
Did you get any feed back or Info from council or developer to the likely hood of gaining planning as the process progresses to help you decide what to do?

 

[MrNoo]

Ours (well some) was already in the Ltd Co. Am unsure how much it cost to set up a Ltd Co now as ours was set up by my grandfather.
No no feedback re which way it would go, either from the Council or Developer. But ideally you need to do whatever you decide to do before planning. There has been a bit of "push back" re some of these new applications and some gone to appeal but not heard of any flatly refused although am sure they exist.
Latest interest here is connection date 2032 and the DNO wants £15m to upgrade substation so a no go but I am unsure how truthful the Co involved have actually been as they've gone very quiet and no official documentation re the offer has been forthcoming, so will explore further

 

[steveR]

Ours (well some) was already in the Ltd Co. Am unsure how much it cost to set up a Ltd Co now as ours was set up by my grandfather.
No no feedback re which way it would go, either from the Council or Developer. But ideally you need to do whatever you decide to do before planning. There has been a bit of "push back" re some of these new applications and some gone to appeal but not heard of any flatly refused although am sure they exist.
Latest interest here is connection date 2032 and the DNO wants £15m to upgrade substation so a no go but I am unsure how truthful the Co involved have actually been as they've gone very quiet and no official documentation re the offer has been forthcoming, so will explore further

About time the Govt kicked back at the privately owned DNO's and their "upgrades" being paid for by the Developers, when in all honesty, they should be doing them already, If we are ever going to have a grid that is suitable for a "low carbon" future!

We know most of it is rubbish, but in all honesty with the push towatds EV's, Heat Pumps etc, it is becoming ever more urgent.

 

[Swagger]

Interesting thread. I've been approached by a developer, talking about £2500/ac/annum for about 6 ac to start with; maybe another 20ac later. My situation is a bit different to those above in that the land is owned by my SIPP, so as I understand it, APR is irrelevant anyway. Is that right, and what are current rates being offered? A 30-year lease running to completion would see me getting a telegram from the King first (if there were still such a thing as a telegram) !

 

[steveR]

Interesting thread. I've been approached by a developer, talking about £2500/ac/annum for about 6 ac to start with; maybe another 20ac later. My situation is a bit different to those above in that the land is owned by my SIPP, so as I understand it, APR is irrelevant anyway. Is that right, and what are current rates being offered? A 30-year lease running to completion would see me getting a telegram from the King first (if there were still such a thing as a telegram) !

Go find a good Agent and start pushing the Developer ...

6 acres sounds miniscule I have to say in the present climate though.... Unless you are talking batteries?

 

[snipe]

It sound a very small site and an enormous rent???.
get a land agent and first job for them would be getting the developers to pay land agents fees.

 

[MrNoo]

Got to be batteries at that size?? Most are circa £1.5k/Mw storage

 

[Grass And Grain]

6 acres of batteries would be more like £200k annual rent, although Swagger says they might want another 20 acres in future, that's either 400MW of batteries!!! or solar?

 

[Humble Village Farmer]

£100k an acre for land rented out for solar. Am I missing the point somewhere?

Yes, the decimal point

 

[Pottersfarm]

What would the land value be if it had planning for a 30 year lease for a company to put a solar farm on it. Just had a quick informal chat with a land agent and she thinks it would double its value. Roughly 20k/ac. Does that sound about right

We have a 100ac site. It earns us £1750/ac/year. It’s index linked and we get a set base payment that is then topped up depending on how it performs as we get a % of the turnover. We get offers to buy it regularly. The lowest value I’ve seen is £1.5 million and the highest so far has been £4.4 million.

 

[teslacoils]

We have a 100ac site. It earns us £1750/ac/year. It’s index linked and we get a set base payment that is then topped up depending on how it performs as we get a % of the turnover. We get offers to buy it regularly. The lowest value I’ve seen is £1.5 million and the highest so far has been £4.4 million.

Sorry for nosiness - but is the £1750 the base payment, or after the % turnover bonus?

 

[connordon]

does anyone know the rough value of land with a solar farm on it?

Yes I can help you with this. Subject to your lease arrangement the values will vary. I will use an example to explain- you can apply this exact method to your own rent, lease term etc.

Good news is your land is significantly more valuable. As you are the owner of the land and therefore you are the landlord for the lease you have 2 values which can be sold separately or together or not at all (my suggestion would be the latter).

Value 1: The Investment Value.
You now own an agreement that pays you Annual Reoccurring Revenue (ARR) that is most likely subject to annual rent increases linked to CPI or RPI, it could also be fixed but rarely are these days. please apply the method using your own figures


Rent: £1,000 per year per acre
Solar Size: 150 acres

= £150,000 rent per annum

Term 30 years
No Break clause.
Rent Review: 5% annual increase

Year 1 rent £150k. (+5%
Year 2 rent £157.5k (+5%
Year 3 rent £165 k+(5%
Year 4 rent £173 k ……..

and so on, until you reach the end of the 30 year when your rent is circa £450k. Very handsome increases. A pension fund or private equity would buy this from you because of the safe steady ARR increase

If you wanted to to sell the lease (not the land included) year 1

you would likely receive a multiplier of 18x your rent: £2,700,000 (say £3m)

Value 2: The Land - with Solar installs now benefits from longterm income.

Instead of your land being worth £8-£10k per acre (not sure where you’re located or how desirable your land is for farming. Grade 1,2,3…..?

Grade 1-2 £30k per acre
x
100 acres
=£3m

Add both Value 1 & 2 together and ythe value of your 100 acres that was once worth £400k - £1m (depending on location and quality)….. is now worth £5.7m-£6m +

If anybody ever needs any help in the farming community then please contact me and I will endeavour to assist them where possible.

I left a private equity firm and specialised in infrastructure portfolio management and acquisition and left that world to help people who really need help.

[email protected]

 

[steveR]

And thge rem

Yes I can help you with this. Subject to your lease arrangement the values will vary. I will use an example to explain- you can apply this exact method to your own rent, lease term etc.

Good news is your land is significantly more valuable. As you are the owner of the land and therefore you are the landlord for the lease you have 2 values which can be sold separately or together or not at all (my suggestion would be the latter).

Value 1: The Investment Value.
You now own an agreement that pays you Annual Reoccurring Revenue (ARR) that is most likely subject to annual rent increases linked to CPI or RPI, it could also be fixed but rarely are these days. please apply the method using your own figures


Rent: £1,000 per year per acre
Solar Size: 150 acres

= £150,000 rent per annum

Term 30 years
No Break clause.
Rent Review: 5% annual increase

Year 1 rent £150k. (+5%
Year 2 rent £157.5k (+5%
Year 3 rent £165 k+(5%
Year 4 rent £173 k ……..

and so on, until you reach the end of the 30 year when your rent is circa £450k. Very handsome increases. A pension fund or private equity would buy this from you because of the safe steady ARR increase

If you wanted to to sell the lease (not the land included) year 1

you would likely receive a multiplier of 18x your rent: £2,700,000 (say £3m)

Value 2: The Land - with Solar installs now benefits from longterm income.

Instead of your land being worth £8-£10k per acre (not sure where you’re located or how desirable your land is for farming. Grade 1,2,3…..?

Grade 1-2 £30k per acre
x
100 acres
=£3m

Add both Value 1 & 2 together and ythe value of your 100 acres that was once worth £400k - £1m (depending on location and quality)….. is now worth £5.7m-£6m +

If anybody ever needs any help in the farming community then please contact me and I will endeavour to assist them where possible.

I left a private equity firm and specialised in infrastructure portfolio management and acquisition and left that world to help people who really need help.

[email protected]

And the remaining issue to resolve, is how the 2 assets are dealt with on Death?? IHT? APR? BPR?

Best forming a Ltd Co?

 

[teslacoils]

Yes I can help you with this. Subject to your lease arrangement the values will vary. I will use an example to explain- you can apply this exact method to your own rent, lease term etc.

Good news is your land is significantly more valuable. As you are the owner of the land and therefore you are the landlord for the lease you have 2 values which can be sold separately or together or not at all (my suggestion would be the latter).

Value 1: The Investment Value.
You now own an agreement that pays you Annual Reoccurring Revenue (ARR) that is most likely subject to annual rent increases linked to CPI or RPI, it could also be fixed but rarely are these days. please apply the method using your own figures


Rent: £1,000 per year per acre
Solar Size: 150 acres

= £150,000 rent per annum

Term 30 years
No Break clause.
Rent Review: 5% annual increase

Year 1 rent £150k. (+5%
Year 2 rent £157.5k (+5%
Year 3 rent £165 k+(5%
Year 4 rent £173 k ……..

and so on, until you reach the end of the 30 year when your rent is circa £450k. Very handsome increases. A pension fund or private equity would buy this from you because of the safe steady ARR increase

If you wanted to to sell the lease (not the land included) year 1

you would likely receive a multiplier of 18x your rent: £2,700,000 (say £3m)

Value 2: The Land - with Solar installs now benefits from longterm income.

Instead of your land being worth £8-£10k per acre (not sure where you’re located or how desirable your land is for farming. Grade 1,2,3…..?

Grade 1-2 £30k per acre
x
100 acres
=£3m

Add both Value 1 & 2 together and ythe value of your 100 acres that was once worth £400k - £1m (depending on location and quality)….. is now worth £5.7m-£6m +

If anybody ever needs any help in the farming community then please contact me and I will endeavour to assist them where possible.

I left a private equity firm and specialised in infrastructure portfolio management and acquisition and left that world to help people who really need help.

[email protected]

So you'd sell a 30yr income stream alone at 18x rent, subject arr?

How would you value a 40yr version of the above?

Its interesting to then wonder what the value of the underlying land is worth on the day after its income stream is sold, as im not sure you would add Value 1 and Value 2 together. Surely the land value becomes highly discounted but appreciates as you approach the 30 / 40 years and getting posession back?