Sowing the seeds
of partnership Rural estate
A thoroughly modern relationship
There is no place for the outdated landlord/tenant model in a modern, forward-thinking organisation like ours. During the year we implemented the Business Deal, which provides a framework for the way in which we work more proactively with tenants to mutual benefit.
A comeback for the Black Poplar
In decline for the last 200 years, the Black Poplar is making a comeback on our Dunster estate where it will enhance the species and habitats on the rural estates in line with our commitment to the conservation of biodiversity. At the last count, only around 2,500 of the trees remained in Britain. Cuttings have been taken from one of our black poplars and will be planted at locations where the trees can mature.
Giving nature a helping hand
National Nest Box Week launched a series of long-term conservation initiatives across the rural estate. On the Dunster estate in Somerset there are now well over 50 nest boxes. These will provide nesting sites for a range of birds such as barn owls and kestrels
Engaging with tenants
We continue to engage with tenants at every opportunity, for example through public consultation on estates such as Tabley. During 2009/10 we also launched a new customer research initiative, with our employees using telephone conversations to gauge tenants’ views on our performance. Although findings show a high level of customer satisfaction, they also indicate that there is room for improvement – something that our new Management Deal aims to address.
Setting down roots
We work hard in the fight against climate change while also enhancing the fabric of the rural landscape for the enjoyment of future generations. During National Tree Week in December, we were proud to join in the Tree O’Clock project, a BBC initiative to plant thousands of trees. Across the estate, our teams and volunteers from local communities planted 3,800 trees.
Stakeholder event
At Burnhill Green.
Revenue by activity 2010£million
- Agricultural – 17.0
- Residential – 5.1
- Minerals – 2.8
- Forestry – 0.2
The rural estate comprises 146,000 hectares (360,000 acres) of agricultural land and forests as well as residential and commercial property. The estate achieved a pleasing performance during 2009/10, not only in terms of capital growth and revenue but also in the work achieved to build and maintain proactive partnerships with tenants.
The past 12 months have seen a good performance from the rural estate, as the hard work from our team delivered positive results despite the recession. Capital value rose by 5.7% to £971.7 million, largely due to the resilient market for agricultural land. Revenue was £25.1 million, down by 6% on the previous year.
To put these figures into context, according to the Department for Environment, Food and Rural Affairs (DEFRA) the total income from farming in the UK is estimated to have fallen by 6.2% in real terms during 2009. Within the industry, specialist pig and poultry farmers enjoyed an extremely positive year while dairy and arable farmers tended to be adversely affected. The poor weather played an important role in the fortunes of many, with our farming tenants in Scotland and Yorkshire particularly hard hit by heavy snow and floods respectively.
Land values remained strong, with tight supply holding average values firm. Projections for the short to medium term suggest annual growth of around 6%, according to Savills. During 2009/10, construction output fell dramatically, with a knock-on effect on the demand for minerals.
In the strong land market, sales naturally dominated purchases during the year. The ongoing restructuring of the estate resulted in the completion of strategic disposals valued at £19.0 million, including the sale of a site to Aldi at Neats Court in Kent and of Bronydd Mawr in Powys. We made a number of modest acquisitions, in most cases adding small parcels of land to facilitate our longer term plans and those of our tenants.
Modernising the landlord/tenant relationship
Looking beyond the figures, the most demonstrable impact of the work we carry out across the rural estate lies in its positive influence on tenants and their local communities.
2009/10 was a year in which many of our customer focus initiatives made good progress. We completed the implementation of the Business Deal, which provides a framework for the way in which the estate, as landlord, can work more proactively with tenants to mutual benefit. Developed in conjunction with tenants, the Business Deal sets out a series of key principles for landlord and tenants: for example, placing the onus on the estate to ‘provide capital for viable co-investment projects’ and to ‘facilitate the promotion and marketing of high quality products and services.’ We have already found that the Business Deal has helped tenants to seize new business opportunities, an important factor at a time when there is pressure on returns.
Where the Business Deal aims to enhance the landlord/tenant relationship, the Management Deal was introduced during the year to achieve similar benefits for our relationships with managing agents and other suppliers. These organisations and their employees are in many cases the public face of The Crown Estate. The Management Deal aims to ensure the consistent application of our values and guiding principles throughout the estate.
We work hard to make sure that our initiatives are aligned with the best interests of our tenants, learning from past experiences and striving to improve wherever possible. To this end, we evaluated a new approach to customer research during 2009/10. This involves structured telephone conversations with tenants selected at random, to gauge our performance on an ongoing basis.
Crucially, the research is not outsourced but carried out by members of the team who know our business and understand the business of our tenants. Early indications suggest a very good level of customer satisfaction, but we know we have work to do in certain areas if we are to achieve the high standards to which we aspire.
We strive to work alongside all those who are affected by our activities, not just our tenants, and have implemented detailed stakeholder engagement plans on several estates. A programme at Dunster in Somerset included the initial stage of an ‘Enquiry by Design’ to gather the views of local residents and stakeholders regarding the estate’s future growth. At Tabley in Cheshire, following discussions with the Parish Council, we held a two-day public consultation event, including proposals for possible residential development and leisure facilities. Further detailed consultations were initiated at Taunton in Somerset and Bingham in Nottinghamshire.
Investing to support our customers
For the year to 31 March 2010, we invested over £9.2 million in new works and improvements on the estate. In Scotland alone, the task of restoring and repairing property damaged by the harsh winter conditions will require over £1 million, a substantial sum in the context of the annual revenue of the Scottish rural estate.
Our investment is frequently made alongside that of our tenants’ businesses, where we can add value or help them bring a project to fruition, whether that is diversifying into food processing or developing new commercial facilities.
As we reported last year, the Supply Chain project has advanced well, with key tenants meeting with Waitrose and Dovecote Park, the supermarket’s dedicated processor, to agree terms for a pilot beef supply chain. As Waitrose has committed to supplying 100% British beef, this project represents an opportunity to create mutual benefit, with our tenants adding value to their businesses through achieving fair and consistent prices. We are consulting with lead tenants regarding opportunities to expand the project into other market sectors, through their leadership.
We introduced the Residential Quality Standard during the year, formally assessing our residential properties and identifying ways in which we can raise standards of comfort and environmental performance for our tenants. The objective is to gain a more informed perspective on tenants’ needs so that we can target future investment where it will deliver most benefits.
The Renewable Energy Strategy, under which we are co-investing in appropriate schemes, is also currently being implemented across the estate. Although it is unusual for landowners to work so closely with tenants, we believe this is essential to both help businesses to ‘futureproof’ energy costs and to reduce the impacts of climate change. Schemes are categorised as ‘commercial’, ‘midi’ and ‘micro’ generation. To date, over 20 commercial and midi schemes have been identified together with many more micro generation schemes which, if successful, will generate in excess of 500MW of renewable energy.
The recent introduction of the Government’s new ‘Feed in Tariffs’ will make micro generation more attractive, and we will report on this in more detail in next year’s Annual Report.
Sustaining our standards into the future
The project to build 10 new environmentally friendly homes at Burnhill Green, eight miles from Wolverhampton, is now largely complete. Situated on our Patshull estate, the homes are built to Level 4 of the Code for Sustainable Homes, the national standard for the sustainable design and construction of new homes, and aim to reduce carbon emissions by approximately 25%. They incorporate the latest energy-saving technology, including rainwater harvesting, ground source heat pumps and underfloor heating.
In order to clarify future design standards for new build on The Crown Estate, we held a successful development workshop at the Upton development in Northampton. Facilitated by the Prince’s Foundation for the Built Environment, the outcome is a design guide which sets out the key principles to be applied on all our developments. It will be published during the summer of 2010.
Launched in the previous year, our estate-wide Biodiversity Action Plans identify the key biodiversity challenges across the estate, with species and habitats targeted to improve performance. As 2010 is the International Year of Biodiversity, we will be using the opportunity to highlight the work we do, engaging with DEFRA and Natural England to highlight best practice.