The environment and tackling environmental issues are at the forefront of climate change discourse, which has gained significant traction in recent years across all sectors. The rural and agricultural sector is no exception to this, with landowners and businesses alike increasingly thinking about how they can diversify, optimise operations, and develop new technologies to reduce their impact on the environment.
Whether selling or purchasing land that is prime for carbon sequestration and/or peatland restoration, investing in and further developing Scotland’s Natural Capital has become a very buoyant market.
There are various factors to consider in the context of these transactions, including whether or not the necessary grants have been applied for, as well as whether that has been done within the required timescales and in accordance with the existing regulations and guidance.
Beyond dealing with the sale of the underlying land, there is also the opportunity to simply sell or acquire the carbon units that are likely to be generated or have already been generated.
The tried and tested options for diversification are the low carbon electricity generation technologies supported by the Scottish Government through various support schemes, such as the feed-in tariff (FIT) scheme.
When dealing with transactions involving a change of ownership of a site that includes a FIT installation, the contracting parties will also need to consider how the transfer will impact on the FIT position and any payments deriving from the same. These transfers will usually involve an additional layer of formalities in terms of complying with the transfer framework governing such a transfer, e.g. filling in and submitting the required transfer forms.
On a smaller scale, beyond the diversification opportunities noted above, there are more practical environmental considerations that should be taken into account when selling or buying a rural property, such as waste disposal, invasive animal and plant species, and compliance with Scotland’s Environment Protection Agency’s (SEPA) regulations.
Looking at each of these in turn, the storage of various chemicals and disposal of agricultural waste can often throw a spanner in the works if not managed properly. Landowners must be aware of the provisions contained in the Waste (Scotland) Regulations 2005 when safely storing and disposing of agricultural waste (e.g. redundant machinery, tyres, silage plastics etc.). Environmental reports are also a great source of information, and although come at an additional cost, these should be obtained if this is a particular area of concern for clients.
Hazardous materials, pollutants and chemicals must also be handled with great care, and sellers will often be asked to warrant that there has been no contamination or issues arising in connection with the same when the property is sold. Effective management and the necessary precautions being taken are paramount to ensuring that no environmental issues arise, and particular care should be taken when dealing with special waste such as sheep dip, herbicides, cleaning chemicals etc.
Ongoing treatment and control of non-native invasive species, be it animals or plants, is also important, although this will often be an expensive and time-consuming process. However, failure to deal with these matters can have a negative impact on the value, marketability, and insurability of a property, as well as the natural environment. Some examples of invasive species encountered are Japanese Knotweed and Himalayan Balsam.
Although there is no strict legal requirement to control established non-native species, there is an expectation on landowners to take reasonable steps to prevent and control these species to minimise their impact on the natural environment and biodiversity. A sensible purchaser would ensure that these matters are adequately dealt with before purchasing a property.
The presence of a septic tank on a property or farming operations may also mean that compliance with SEPA is required and that the necessary licences are obtained in terms of The Water Environment (Controlled Activities) (Scotland) Regulations 2011. These matters are often overlooked, and a diligent solicitor should ensure that the relevant SEPA enquiries are made as part of the due diligence process.
These are just a few of the matters that need to be considered when dealing with rural properties; there are also issues such as old quarries and waste tips on sites, asbestos in old buildings and lead in old water pipes. The list is long and there are a myriad of regulations affecting these matters, so do ensure that you consider these aspects carefully whether you are buying rural property or about to put it on the market.
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