5 Things Landowners Should Consider Before Letting Land for Renewables
With increasing pressures on oil and gas prices, alongside the Government’s target for clean power to meet 95% of electricity demand by 2030, there is expected to be a continued push for the delivery of renewable energy schemes. This will inevitably require more land to be made available for such uses. Set out below are five key points that landowners should consider before letting land for renewable energy development.
1. Impact on Existing Business
While the potential financial returns can be attractive, careful consideration should be given to how any renewable energy scheme may impact the wider business. Will the development require the business to operate differently? Does the scheme align with the business’s objectives and overall ethos?
2. Tax Implications
Several tax implications may arise and consideration should be given to the ownership of the land in question and the timing of any transfer. It is therefore recommended that specialist tax advice is sought from an accountant.
3. Payment Terms
Whilst a headline rent may seem appealing, careful consideration must be given to how this is structured. For example, how payments may change over the length of the agreement and whether provision is made for different permitted technologies and their potential evolution over time.
4. Lease Expiry
Consideration should be given to what happens at the end of the lease term. Renewable energy leases are often for a considerable period, but it is important to establish how the site should be left on expiry. What benchmark will be used to assess the reinstatement and what security needs to be put in place?
5. Professional Advice
Obtaining advice from professionals specialising in this area at an early stage is essential. Avoid entering into discussions without an agent acting on your behalf, as there is a risk of unintentionally prejudicing future negotiations. It is also worth noting that agent and legal fees are generally covered by the developer.
If you have been approached by a developer, or are considering letting land for renewable energy technologies, please contact Rural Surveyor & RICS Registered Valuer, Matthew Wilcox on 01884 235701 or [email protected].
