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Buying a smallholding in Wales? Nobody tells you this…

If you’re thinking about buying a smallholding for sale in Wales right now, then you need to read this article to find out how to offset the cost by creating biodiversity net gain credits.

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Smallholdings for sale in Wales: prime opportunities to generate novel sources of income

If you’re buying a smallholding in Wales, whether to farm the land yourself or rent out and produce income, at some point you’ll want to consider expanding the footprint of your operations. For example, you might want to restore a dilapidated agricultural building so that it can be used again, or maybe convert an old barn into a dwelling (a Class Q planning consent for conversion to residential is something you might need a bat survey for).

What you might not have considered is the opportunity to create substantial income from your smallholding by creating biodiversity net gain credits.

Nobody is talking about the enormous potenital for Welsh smallholders to create income from BNG credits

You can do this by (for example) planting trees or other permanent vegetation in areas of open ground, such as along the edge of a field. These plantings will sequester carbon and reduce the speed rain-induced soil erosion – leading to improved soil quality and retaining more carbon dioxide in the atmosphere, among a million other ecological benefits.

I’m buying a small holding in Wales: what do I need to know?

The net gain credits are calculated based upon a government metric (version 3.0 is apparently being published in July this year). By employing an ecologist to survey the smallholding you’re looking at purchasing for the number of baseline biodiversity units, and then creating a “net gain plan”, you can get an idea of how much income you could receive if you created BNG credits on your land. These credits can then be sold on to developers who aren’t able to accomodate net gain within their own sites.

The next question is, when will developers start to need to provide mandatory net gain on their sites?

The new BNG rules are being rolled out in stages. From late 2021, developers will need to start providing net gain within their sites; as will major infrastructure projects, like HS2. It’s also thought that from 2023, they’ll be required by law to provide at least 10% mandatory net gain on nearly all planning application sites in the UK; although it’s possible there will be exemptions for individual homeowners, including smallholders that are not developing for profit.

Make sure that you understand ‘the legals’

If you’re looking at buying smallholding in Wales and creating biodiversity net gain credits as a source of additional income interests you, it’s highly advisable to speak with your solicitor before you buy. That way if there are any issues with the land (such as restrictive covenants or overages fro “uplifts’ in the value or income produced by the land), then you can make an informed decision before you buy.

How much income can you generate from credits to offset the cost of buying a smallholding in Wales?

How much do credits cost to create? It’s hard to say, because they’re not (yet) a commodities market. The price is highly dependent on the size of development site; for example if you plan to develop an entire forest with net gain credits, then expect to pay up-front £100 000 per hectare, or more, and therefore the price of the credits will need to reflect this. Equally, you can create credits much more cheaply by doing things like wildflower seeding, pond creation and hedgerow restoration. BNG credits have sold anywhere from £10-12k right up to £20k, £30k and even £40k each, so there’s plenty of value to be had for buyer of Welsh smallholdings if you engage an ecologist early on and create the “right” solution for net gain on your smallholding.

Where is the most expensive place in Wales to buy a smallholding?

While there’s no definite answer, it will probably be in and around the Snowdonia National Park (area of outstanding national beauty, or AONB). The price of smallholding in that area over the last 20 years has increased by up to four times in value for.

What should I consider before buying a smallholding in Wales?

The most important things are: whether you need it for your own occupation, what the land is used for. Clearly, for biodiversity net gain (the clue and thus the value is in the name), it’s easier to produce a gain on a fairly ecological inert area of land (such as a ploughed field), than it is on a very biodiverse area (which as ancient woodland). Therefore, one consideration might be to look for plots that you can buy cheaply, with a lot of potential for net gain, as well as all of the other practical considerations for day to day smallholding operations.

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