Hugh Townsend is a fellow of the RICS, CAAV and Institute of Arbitrators and the founder of Townsend Chartered Surveyors. The firm are traditional land agents doing everything you would expect land agents to do but also specialize in Natural Capital markets both creating units and selling them which is very much as we were with Milk Quota, sheep and beef quota and BPS entitlements since 1992.
As such, we are the leading independent broker regulated by the RICS for BNG in England.
HABITAT BANK CREATION
We are currently consulting on the creation of 91 Habitat Bank sites throughout England and this year so far, we have sold more than £6.5m’s worth of units for landowner clients.
We offer a Land Agent’s perspective on Natural Capital projects, for NN and Carbon as well as BNG, creating units with a focus on the practical and best use of land with a holistic approach, considering all business and estate matters resulting in the creation of market friendly assets.
Average habitat bank set up costs have been £30-40k per site, but these costs are coming down.
BROKERAGE
As national brokers we act for everyone selling BNG units including BNG operators who often do not own the land they are using. We have the broadest range of vendors from our “start to finish” consulted clients’ projects, other private Habitat Bank owners, land agents, BNG brokers, and operators. This enables us to fill gaps in one vendor’s supply with units from another, allowing greater trading flexibility for vendors with limited unit choice.
As a result, we have the largest market coverage and know what’s going on across the whole market.
Purchasers (developers) return to us repeatedly and have confidence in our ability to deliver through the transparent trade of units we promote, with our national sales by tender every six weeks and publishing prices in Farmer’s Weekly and Farmer’s Guardian. We provide competitively priced units for a total bundle of habitat types needed by a developer. We sell units to 98% of purchasers who approach us. Unlike operators, we have no financial tie to vendors, other than a commission currently at 3% and hourly fees, meaning that our clients take home a greater percentage of the gross sale proceeds.
RECENT CHANGES TO BNG
Due to increasing demand for ecological expertise from our environmental team, this element of creation cost has increased, whilst the rest of the set-up costs are becoming less expensive. LPAs are learning, together with everyone else, and there are also now an increasing number of Responsible Bodies coming to the market to provide more competitive services. The amount of legal input is also becoming more affordable as things start to become standardised, as we saw with the development of Milk Quota and BPS markets.
The Planning and Infrastructure Bill will apply from next May which will create a massive increase in demand for BNG units but will take a few years to build up.
The Labour Government are supporting BNG having reviewed it this May.
The results of the Defra consultation currently being carried are not expected soon as there was a lot of engagement and any potential changes may have to go through parliament. Personally, we believe if small sites were exempt, it will not be a threat to the market we are operating in, where sales range from fractions of a unit to greater than 250 units w and there may also be potential changes that will be of benefit to vendors.
This includes changes to trading rules for small sites making it easier for vendors to sell further afield, without having to take the hit on spatial weighting. Hierarchy may be loosened for small sites.
LATEST MARKET UPDATE
Prices have fallen and may fall further but market activity has picked up. The current price range for units most often traded is between £17,000 and £22,000 and those less often sold up to £45,000 per unit.
Initially an acre can produce a maximum of 3.7 units in ideal conditions and after maybe a further 10 years a secondary habit creation could produce another 3.8 units in perfect conditions.
So as an example, where you can produce 2.5 units per acre initially you are looking at gross sale proceeds of at least £51,000 per acre and you do not sell the land. But of course there are ongoing costs maintaining the site for 30 plus years.
The average lot size we sell is currently 14.69 units (compared with 1.29 recorded on the NE Register) so on average our sales are worth more than £250,000 each.
Only 1,188 units have been sold and completed on in England so far under the mandatory framework introduced last February and there are now 160 habitat banks on the NE Register.
We have to say it is still a gamble to set up a site as the market has not yet fully emerged and as with any market, of course prices can go down as well as up.