Bath Estate Agents

Model Estate 2024

Welcome to the 2024 Model Estate research report, the thirteenth annual publication produced by Carter Jonas, which documents the changing nature of a rural estate and its diverse range of income streams.

Traditional rural estates have, historically, been attractive to investors and high-net-worth buyers as they provide secure and consistent assets, whilst often affording exceptional family homes and other amenity interests. Against uncertainty in the wider economy, the variety of assets in a multi-let estate offer income stability and partial protection from commodity price volatility.

Many rural estates continue to consider opportunities for capital growth through development and asset release. This includes the release of farms and residential properties from multi-generational lease arrangements or restructuring holdings to take advantage of development opportunities.

About the Model Estate

The Model Estate is a hypothetical agricultural estate created by Carter Jonas in 2010. The Estate has evolved over the years and comprises over 3,000 acres. It includes a combination of let and in-hand farms, a commercial and residential portfolio, a telecoms mast, fishing rights, a syndicate shoot, a solar farm, an Option to Lease for a 100MW Battery Energy Storage System (BESS), and a quarry. It is located within the geographical triangle bounded by the M4, M40 and M5 motorways.

Why was the Model Estate created?

In using the example of a hypothetical mixed rural estate, similar in structure to many under the management of Carter Jonas, we gain an interesting and helpful insight into the performance of a rural estate and the dynamics at play. This enables us to make strategic recommendations for the future.

The Model Estate is also used to compare the short- and long-term capital value performance of agricultural land and assets against a basket of alternative asset classes: residential and commercial property, equities, gold, fine wine and classic cars.

Please note that all findings in this report are based on valuations undertaken on 31 December 2023.


The Model Estate was valued at £51.54m in December 2023, representing an annual increase of 2.8% against a value of £50.12m in 2022. While growth has slowed from the previous three years, capital values are showing resilience. This upward trend emphasises the advantages of a diversified estate, particularly in a climate of sluggish economic growth and high inflation. The longer-term capital value growth of the Estate has been particularly strong, with 10-year annualised growth at a robust 4.6%, or 56.7% cumulatively.

The Estate's renewable energy assets recorded the strongest growth, a result of a notable increase in the solar farm’s value and the addition of an Option to Lease for a 100MW BESS. The quarry ranked second. We have analysed the renewable energy assets and the quarry separately from the ‘other’ assets (telecoms mast, let syndicate shoot and fishing rights) this year due to their growing share of the Estate’s value.

Agricultural land, which accounts for 56.6% of the Estate’s value, also saw healthy gains over the year, reflected in the performance of the in-hand and let farmland. The value of the residential assets also rose, albeit modestly. However, the value of the manor house and the ‘other’ assets held steady, and the commercial element experienced a slight decline in value.

Total value: £51.54m
Annual change: 2.8%



Let farms

1,494 acres of arable land and 371 acres of pasture land
Six farms, four let on FBTs and two let on AHAs
Three farmhouses, one let on an FBT and two let within the AHA
Four sub-let cottages, one let on an Ag Protected tenancy and three let on ASTs

In-hand farms

1,073 acres of arable land, 71 acres of pasture land and 60 acres of woodland

One four-bedroom farmhouse

Manor house

A Grade II listed Manor House and 23 acres of garden, grounds and amenity woodland.

Let residential

Seven houses, five let on ASTs, one let on an Ag Protected tenancy and one occupied in-hand by a family member

Let commercial

13 properties, all let on L&T tenancies, one with roof mounted solar

Renewable energy 25 acre solar farm and an Option to Lease for a 100MW Battery Energy Storage System
Quarry 65 acre quarry


A telecoms mast, let syndicate shoot and fishing rights

FBT Farm Business Tenancy; AHA Agricultural Holdings Act 1986 tenancy;
Ag Protected Rent (Agricultural) Act 1976 tenancy; AST Assured Shorthold Tenancy;
Rent Act Rent Act 1977 tenancy; L&T Landlord and Tenant Act 1954 tenancy

Figure 1 – Components of the Model Estate (by capital value)

Component Performance

Figure 2 - Model Estate Performance, 31 December 2023

A continuation of the trend towards higher energy prices is likely

The Estate's solar farm recorded a remarkable year-on-year value increase of 18.6% which, combined with the addition of a Battery Energy Storage System (BESS), made the renewable energy category the top performer in 2023.

Despite there now being a year less on the remaining lease term, the Net Present Value of the solar farm has been bolstered by an increase in rent (in line with RPI inflation) and longer-term buoyant energy prices. In addition to rent, the Estate receives income from the solar farm based on a percentage of its output. The wholesale energy price has fallen sharply from its record highs in 2022 but remains inflated compared to historic averages. A continuation of the trend towards higher energy prices is likely with the effects of the Ukraine conflict and disruption to global energy supplies lingering, which means the Estate is likely to continue to receive a ‘top-up’ rent.

A major challenge with many renewable energy sources is their intermittent nature, and so there is a growing demand for BESS to assist in their management. These are essentially large rechargeable batteries that store energy and discharge during times of peak demand.

The Estate has removed 5 acres from in-hand arable farmland and reallocated it to develop a 100 MW BESS. An Option to Lease agreement has been signed with a BESS developer on a 30-year term (at £1,500/MW, with a connection date in 2025), and a £15,000 option payment has been received.

Reflective of a decline in minerals markets for housebuilding activity and infrastructure projects, reported levels of productivity and sales at the quarry demonstrated a notable year-on-year downturn. Sales reported by Quarry Co. for the prior year represent a 30% fall in volume when compared to the previous year. Yet, falls in lease-derived income (the income received based on sales performance), have been offset in part by an increase in rent of approximately +11%.

More positively, the environmental permit required to facilitate inert waste tipping and recovery operations has now been granted. The commencement of the first phase of inert infilling is anticipated within the next twelve months. Acknowledging lead-in times for planning applications, Quarry Co. also remain keen to progress their proposals for a planning application supporting a lateral extension to the quarry in the next 18 months. They recognise that the long-term benefits of progressing an application outweigh any potential short-term costs.

Despite downward pressures on mineral sales in the short-term and the continued depletion of the mineral asset, the asset value of the quarry is observed to have been somewhat insulated from a corresponding fall in value. This is attributable to the impacts of inflation imposed and applied under the quarry lease, an expected upturn in market activity in the year ahead and the continued development potential at the quarry. As such, the capital value of the quarry has increased by 7.5% year-on-year.

In the southern regions (where the Estate is located), farmland values continue to trade above national averages.

The Estate's in-hand agricultural land climbed in value by 3.4% year-on-year, marking the third consecutive year of growth. The arable land saw a 3.5% uplift to reach £10,250/acre, while the pasture land increased by 3.3% to £8,750/acre. With farmland accounting for a large percentage of the total value of the Estate, these positive movements underpinned much of the overall growth for the year.

This growth broadly aligns with national trends, which saw annual increases of 3.8% and 3.7% for average arable and pasture land, respectively. While national year-on-year growth has eased from the levels seen between Q4 2021 and Q2 2023, it remains on a healthy upward trajectory. In the southern regions (where the Estate is located), farmland values continue to trade above national averages. Notably, South West values have surpassed their 2016 record highs, with the South East following closely.

The combined pressures of a historically low supply of marketed farmland, a sizable cash presence and an increasing array of purchasers continue to drive up land values, while negative influences on market sentiment have been easing. In particular, inflation has fallen sharply, which increases the expectation of interest rate cuts and could lead to improved profit margins.

Additionally, long-awaited details on public environmental schemes arrived in the latter half of 2023, providing farmers with the ability to plan for the near-term and boosting market sentiment. The Estate, like its peers, has been assessing the impact of the Basic Payment Scheme (BPS) phase-out and has looked to the Sustainable Farming Incentive (SFI) as a potential source of income to replace it. While the longer-term opportunities presented by private natural capital markets, like Biodiversity Net Gain, are still appealing, SFI’s flexibility offers a favourable solution, at least while private markets develop.

See here for more information on how farmers are using SFI to complement their bottom line.

The Estate’s woodland also gained value this year, outpacing both arable and pasture land at 9.0%. It is now valued at £5,960/acre, on average. Totalling 60 acres, the woodland offers a range of amenity benefits and acts as a shelterbelt for the farmland. Demand for woodland is being driven by the increasing calls to mitigate climate change and enhance biodiversity, with a key focus on sustainable management practices.

The value of the let farmland has seen a moderate 2.1% increase over the last year, albeit a slower pace than the in-hand farmland. This can be attributed, in part, to the return of 5 acres of arable land to the Estate and reallocated for the future development of a BESS (without the reallocation, the overall increase would have been 2.4%). Also, the sluggish performance of the residential sector has constrained the potential uplift of the accompanying cottages.

The latest Land Occupation Survey by the Central Association of Agricultural Valuers (CAAV) highlights that activity in the sector remains subdued, a trend continuing since 2005. This is attributed to the phase-out of direct payments and a cautious approach while new policies develop.

However, the increasing appeal of SFI has sustained a healthy level of demand over the past year, preventing rents from falling. Looking forward, this, coupled with a longer-term decline in let holdings, is likely to put upward pressure on rental values.

On the Estate, the 740 acres of Farm Business Tenancy (FBT) lets average £158/acre and are all on sub-3 year or periodic FBTs to three different farming businesses. Overall, we are reporting a gross yield of 1.53% on the let agricultural assets, reducing marginally from 1.56% last year but still largely in line with regional averages.

Overall, the Estate’s let residential assets saw their value increase 1.4% over the year. This marks a slowdown from an increase of 3.6% the year before, and a significant deceleration from 2021, when its value surged by 15.8%.

The year saw a lull in the sales market as buyers adjusted to a new reality of higher mortgage rates, with total mortgage approvals down 23.2% (Bank of England) and house prices falling across most of the country. HM Land Registry reports a 1.6% fall in average house prices nationally in 2023, with gains in the summer months offset by falls at the start and end of the year.

However, the lettings market remains competitive which, coupled with the continued appeal of picturesque countryside locations, has boosted the value of the let residential portfolio. The imbalance of supply and demand is evident in the strong rental growth from mid-2022 onwards. Official data (ONS) revealed that UK private rental prices climbed 6.2% by the end of 2023, showing a strong upward trend throughout the year. While the Royal Institution of Chartered Surveyors (RICS) reports that growth in tenant demand softened towards the end of the year, it highlights that supply remains scarce. Consequently, it is generally expected that rents will continue to rise over the near-term.

With that in mind, the three rent reviews on the Estate resulted in significant uplifts to move rents in line with the local market. The residential portfolio is now reporting a yield of 3.75%, up from 3.51% a year earlier.

With holidaying in the UK countryside an ever more popular choice for both international tourists and domestic travellers, the Estate has been considering using some of the residential dwellings to diversify into the holiday let market. However, they are cautious of the impact of the pending new rules due “this summer” where dwellings used for short-term lets (more than 90 nights a year) will fall under a different planning use class. Therefore, they have decided to wait until the full details are available before deciding how to proceed. Until then, the potential implications of such a decision on the assets’ capital values are unclear.

For more information, see here >

The country house market remains subdued, with low transactional activity translating into little change in values. As such, the value of the Estate’s manor house and accompanying gardens has held firm at £7.85m for a second year in a row. Mirroring pressures in the wider residential market, the increased cost of borrowing has reduced demand for those requiring finance. However, the market for larger, prime assets is largely underpinned by cash-rich buyers with less exposure to increased interest rates. Demand from these buyers has kept prices buoyant, with discerning buyers taking advantage of a slight lull in price growth in anticipation of a healthy trajectory for future capital growth.

The value of the sporting rights, telecoms mast and fishing rights have held firm over the last year.

The UK commercial property sector continues to evolve, and both office and industrial markets are navigating varying periods of adjustment. As a result, the value of the Estate’s commercial portfolio fell by 0.8% year-on-year for the second year in a row.

Both office and industrial occupiers are exposed to persistently high inflation and rising labour costs, putting pressure on profit margins for businesses and exacerbating the focus on cost reduction. For the office occupational market specifically, 2023 highlighted the growing importance of location and building features for tenants, who are seeking higher quality, flexible office spaces with strong sustainability credentials. Demand has weakened for out-of-town and secondary office stock (such as on the Estate), which are generally underperforming in comparison to their prime, city-centre counterparts, and negatively impacting investor sentiment.

More positively, we have seen a decline in the number of office occupiers downsizing, and recent data suggests that office occupancy rates have broadly levelled off over the last year (Remit Consulting), and the three-day office week has emerged as the new normal. In addition, offices on rural estates have many unique advantages, including a sense of community among businesses, value for money, proximity to nature and ample parking away from congested town and city centres. As such, all office tenants on the Estate have remained in place, with rents averaging £14.50/sq ft.

Logistics demand has been holding up relatively well, buoyed by ongoing structural change, and the influence of e-commerce, with ‘last mile’ units for urban delivery being a key growth area. However, the market has also been facing headwinds, with subdued consumer confidence and the near flatlining of household expenditure having had a knock-on effect on the need for warehouse space. While assets in urban locations have benefited from the growing demand for last-mile logistics, demand for out-of-town, demand for rural industrial spaces has cooled. The previously vacant unit has now been re-let at a discounted rate of £3.72/sq ft (from a previous rent of £3.84/sq ft). Rents on the industrial units vary from a low of £3.72/sq ft for an old airport hangar to £6.25 for a workshop unit.

It is expected that commercial property markets have reached the bottom of the current cycle (RICS UK Commercial Property Monitor), with a more optimistic outlook for the year ahead. However, the Estate is starting to consider what needs to be done to comply with upcoming tightening of the minimum energy rating required for rented properties. Under MEES (Minimum Energy Efficiency Standards), it is expected that the minimum rating for commercial rented properties will be bought up to an EPC ‘C’ by 2027. Several of the assets fall short of this and have an ‘E’ rating (the current minimum), and so the Estate is starting to anticipate the capital expenditure needed to bring these up to standard before 2027.


Alternative Asset Classes

The Model Estate has benefited from an increasing diversity in assets

Figure 3 - Long-term alternative asset class performance

When ranked against a range of alternative investments for capital growth 2023, the Model Estate came third, falling behind gold and equities (see figure 3). The basket of tangible assets includes fine wine, gold, classic cars, equities, residential property and commercial property.

Global gold markets soared in 2023, ending the year at a record high. At the close of 2023, gold prices ($/t. oz) were 13.1% higher than the same period a year earlier. Central banks bolstered demand as they expanded their gold reserves in 2023, a trend continuing from 2022 (World Gold Council). Increased geopolitical risk, too, is likely to have contributed as investors often turn to gold as a safe haven during periods of uncertainty.

Equities, measured using the FTSE All-Share index, concluded the year with a 3.8% year-on-year gain, recovering from the previous year's decline. However, the market exhibited its typical fluctuations throughout the year, reaching a peak in February before experiencing a 10.1% decline overall by October. A rise of 7.6% by the end of the year propelled the index back into positive territory.

Meanwhile, residential and commercial property, classic cars and fine wine, recorded a fall in value over the year. Capital values in the residential investment sector (reported in the MSCI Quarterly Index) saw a deceleration from last year with a 2.5% decline (compared to -4.9% in 2022). Price correction of the All Property index (reflecting mostly commercial property values), albeit still falling significantly, softened from -12.8% to -5.7%. Yet, while industrial values appear to be levelling out (-0.3%), the retail sector continued its longer-term decline (-5.7%) and office values plummeted over the year (-14.1%). 

Classic cars, our top performer in 2022, reversed its upward trend according to the HAGI Top Index (-6.1% year-on-year). It is likely that the high costs of servicing and maintaining classic cars has had an impact on investor sentiment and reduced activity in an already small market. The fine wine market has also seen a price correction after three years of annual growth (the Liv-ex 100 Index reported a 14.1% fall). The decline has been partly attributed to investors capitalising on the market’s previous periods of growth and cashing in on their investments.

Over the longer-term, the Model Estate has benefited from an increasing diversity in assets and exhibited lower volatility compared to the alternative investments. Over the past decade, the Model Estate has reported an impressive 4.6% annualised growth rate, surpassed only by the classic car market and matched by gold. Its strong growth outpaces the longer-term growth observed in the other asset types.

Our contributors

Tim Jones
Partner - Head of Rural
01223 346609 email me
Christopher Rhodes
01865 404484 email me
Sophie Davidson
Senior Research Analyst
020 7493 0685 email me
Harry Robertson
Associate Partner
020 7518 3285 email me
Nicola Quick
Associate Partner
01823 428594 email me
Anna Hicks
Associate Partner
0117 403 9946 email me
Paul Clarke
Partner, Minerals and Waste Management
01743 213269 email me