Savills |

aspects of land

| spring / summer 2017

DIVERSIFICATION

“When we meet an owner and discuss what might

work for the estate, the first step is to understand their

aspirations and how these might be translated into

commercial opportunities. A lot of the time, location

plays a major role in what will work best,” says Simon.

“Depending on the enterprise, you can see a return on

investment in a relatively short space of time.There can

also be tax benefits as running an enterprise such as a café

and farm shop, that is classed as a trading activity, opens

up eligibility to business property relief when it comes to

inheritance tax.”

Choosing the right diversification is crucial and often

the network of other estate owners can provide informal

help and advice as a starting point.

“In recent years, there has been a move by estates

to look much more seriously at the opportunities and

not just from holiday cottages or camping,” says James

Higham of Savills Leisure and Trade Related Property.

“We’re working with a Scottish estate at the moment that

is developing a yoga centre and retreat; it is a good fit for

them as there is a personal interest in the activity, plus it

is in an area that has traditionally attracted creative types

such as artists and musicians,” says James.

Finding that right fit from a personal perspective is

another key element to choosing the right enterprise. Not

everyone is a “people person”, says James.

“Being honest about your strengths and weaknesses is

important – if you don’t enjoy being hands on and engaging

with people day to day, then offering something like

holiday cottages won’t work. It may be that other members

of the family, or team, are better suited to that, or it may

be better to outsource the management of the enterprise.”

James also advises being clear about what role the new

enterprise will play. For example, if the aim is to generate

income that will help to maintain an existing asset such

as a historic house, this can be influential in persuading

planners to green light the project.

“Business plans that look five, 10 or even 15 years

ahead are crucial, as is making sure the younger

generation is on board with the plan,” says James.

The influence of the next generation of estate owners is

not to be underestimated – Simon says there is a tangible

trend for more contemporary leisure enterprises as

younger owners take the reins.

“Where once it was about opening the house and

gardens up to the public, now owners are working harder

to draw in a whole new demographic of visitors,” says

Simon. “The wedding market remains very strong, but

there has been a move to offer something more informal

and imaginative than just the stately home as a venue.

There are children’s playgrounds, museums, festivals

and seasonal attractions such as Easter egg hunts and

Christmas markets. ”

Inevitably, the cost of a new enterprise is a significant

factor and it varies hugely. At one end of the scale,

Owners are

branching

out from the

traditional course

of opening

the house

to the public

by providing

glamping, cafés

and wedding

venues

HOW TO DIVERSIFY

SUCCESSFULLY

Know your aims and

aspirations in advance.

Choose something that

you are interested in and that

is appropriate to the location.

Prepare a long-term

business plan.

Make sure future

generations share your

enthusiasm for the project.

Do your research before

you start work.

provision of land for an external promoter to use as

a festival or event location usually requires no capital

investment and can provide a very good return.

“Holiday lets are still a very popular diversification

and will generate a good return if the properties are in

the right location and finished to a high standard,” says

Simon. “Converting a cottage for use as a holiday let

usually means costs of £40-50,000 but, done well, it

will quickly see 75-80 per cent occupancy rates.”

A more major project, such as turning the estate into

a wedding venue, could require a seven-figure capital

investment for a complete renovation of the main house

KEITH MORRIS / ALAMY

NIK TAYLOR / ALAMY, SHUTTERSTOCK