The Rural Update: The countryside needs certainty
Your weekly dose of news, views and insight from Knight Frank on the world of farming, food and landownership
7 minutes to read
Viewpoint
Today marks the launch of the Spring Summer 2025 edition of The Rural Report, Knight Frank’s flagship publication for rural property owners. The report includes a number of exclusive interviews with some of the country’s leading landed estates and environmental pioneers, including Holkham, Blenheim, Wiston and Nattergal. All are striving to deliver better outcomes for local communities and nature. All are achieving amazing results with much more still to come. You can click here to access the full report.
Last week’s news that the current BNG scheme could be heavily revised, and environmental funding for all but the smallest farms scrapped, was, therefore, particularly ominous. The rural economy already has to deal with increasingly volatile weather conditions and global commodity markets.
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Commodity markets
Outputs up, inputs down
The price of agricultural outputs increased by almost 5.5% in the 12 months to March 2025, according to the government’s latest Agricultural Price Indices report. The biggest gainers were cattle and calves (+5.7%) and milk (+3.9%). However, potatoes (-2%) and poultry (-1.4%) saw falling prices. The overall cost of inputs fell by 1.4% over the same period, although fertiliser rose by 0.9%.
Asda’s Uruguayan beef
In a bid to offset some of the price rises mentioned above, supermarket Asda has resorted to stocking a new range of Uruguayan grass-fed, 30-day matured sirloin and fillet steak that sells for about 20% less than the UK-reared equivalent. The move has led to protests on social media from farmers and environmentalists.
The headlines
BNG rules relaxed
The government is proposing that biodiversity net gain (BNG) requirements for small housing and commercial developments should be scrapped. Currently, what are known as “minor” sites – those with under 10 houses and below 1,000 sq metres – must deliver similar BNG requirements to bigger developments.
However, the government believes delivering BNG is too onerous for small builders and is affecting its aspiration to build 1.5 million new homes during this parliament.
BNG involves replacing or paying somebody else to replace any habitat lost, plus at least 10% extra, during a development.
Around 70% of the planning decisions made last year involved “minor” sites, and small builders would be delighted with the move. But environmentalists and BNG providers believe that exempting “minor” developments from the requirements will damage confidence in the nascent market for BNG credits and hinder nature restoration efforts.
Richard Benwell, CEO of umbrella group Wildlife and Countryside Link, said: “These changes could leave the BNG system dead in the water and, with it, the government’s main guarantee of nature-positive planning.”
In addition, the consultation on the proposals, which closes on 24 July, proposes creating a new category of “medium” sites of 10 to 49 homes that could be subject to less onerous BNG rules than “major” developments.
To help further speed up the delivery of new homes, the government wants to fine developers who don’t build quickly enough, writes Oliver Knight of Knight Frank’s Residential Development Research team.
Nature budget scaled back
Funding for environmental projects is set to be slashed and restricted to smaller farms as part of this month’s nervously awaited government spending review, according to Defra sources.
The £5 million two-year budget that Defra has committed to until 2026 will remain in place, but after that, it is believed that any remaining funds will be focused on areas with the highest perceived potential for nature restoration, such as the uplands and peat soils.
Critics of the move, however, point out that wildlife doesn’t acknowledge farm boundaries and removing larger farms from any future schemes would be counterproductive and cripple the country’s nature-restoration aspirations.
It is believed the government is hoping that private capital will take up some of the slack.
Elsewhere, to celebrate World Peatlands Day on Monday (2 June), the Scottish Government announced that 14,860 hectares of peatland had been restored across the country during 2024, a 42% increase on the previous year.
News in brief
HLS payments up
Higher-level Stewardship (HLS) environmental payments for 157 options are set to rise to ensure they align more closely with the Sustainable Farming Incentive (SFI) and Countryside Stewardship (CS). The uplift, which totals £30 million, will see HLS rates, which have remained static for the past 10 years, increase by 34.4% of the difference with the equivalent SFI and CS actions. However, farmers, particularly in the uplands, say the hike is still not enough.
Gulf trade deal worry
Hot on the heels of its controversial trade pacts with the EU, US and India, farm leaders are bracing for the government’s next deal, which is expected to be with the six members of the Gulf Cooperation Council, including the UAE and Saudi Arabia. NFU President Tom Bradshaw has warned that the deal could allow the uncapped import of poultry produced to lower welfare standards than those permitted in the UK.
Agri-innovation cash
A Defra agri-tech competition with £5 million up for grabs opened on Monday. The Farming Innovation Investor Partnership, which combines government grants with funding from the private sector, is aimed at small and medium-sized businesses that have developed near-market technology solutions to help the agricultural sector take significant steps towards improving productivity, profitability, sustainability and resilience. Competition entries should be received by 2 July.
Kent nature reserve
An 800-ha site in north Kent, which includes a carbon-neutral vineyard, has just been revealed as the country’s next National Nature Reserve. The North Kent Woods and Downs reserve offers access to a rich mix of wildflower meadows, chalk grasslands and ancient woodlands which have maintained tree cover since the Tudor era.
Scottish park scotched
Meanwhile, north of the border, the Scottish Government has just announced that it is abandoning plans to create the country’s third National Park in Galloway and Ayrshire. Almost 55% of respondents to a consultation were opposed to the proposal.
Reservoir plans revved up
Two proposed large-scale reservoir projects in the East of England have been designated as “nationally important,” meaning Defra Minister Steve Reed can overrule local objections and approve them. Anglian Water’s 166 million-litre-a-day Lincolnshire Reservoir to the south of Sleaford is set to be operational by 2040. The utility company has also partnered with Cambridge Water to propose the 87 million-litre Fens Reservoir, located between the towns of Chatteris and March and set to be completed by 2036. The government wants nine new reservoirs online by 2050.
The Rural Report SS 25 – Out now
The Summer 2025 edition of The Rural Report, Knight Frank’s flagship publication for rural businesses, which looks in more detail at many of the issues discussed in The Rural Update, is out now. The new report includes the latest news, research and insights from Knight Frank’s rural property experts, as well as thought-provoking contributions from some of Britain’s most iconic estates.
Available online and in print, you can click here to access the full report.
Property of the week
Suffolk sea view
A 127-acre block of land on the north bank of the River Orwell at Levington, near Ipswich, offers a rare opportunity to acquire a large parcel of nature-rich Grade II listed parkland. Steeped in history and located close to Suffolk’s Heritage Coast, the land at Broke Hall includes a mix of rolling parkland, traditional woodland and marshland. The guide price is £1.5 million. Please get in touch with Georgie Veale for more information.
Discover more of the farms and estates on the market with Knight Frank
Property markets
Development land Q1 2025 – Market falls
The value of greenfield development land fell by 2% in the first quarter of the year. Urban brownfield sites, however, lost 5% of their value over the same period, according to the Knight Frank Residential Development Index.
Farmland Q1 2025 – Values resilient
The Knight Frank Farmland Index, which tracks the average price of bare agricultural land across England and Wales, showed a marginal drop of 1% in the first quarter of 2025 to £9,072/acre. This follows a similar small decline in the final three months of 2024, bringing the annual fall to just 1.9%.
Country houses Q1 2025 – Mixed picture
The average price of desirable homes in the countryside slipped by just 0.3% in the first quarter of the year, according to the Knight Frank Prime County House Index. Over the past 12 months, values have fallen by 1.6%.