The results of Savills 2017 Estate Benchmarking Survey show that average gross income across Scotland rose by 11% to £148 per acre. This is an annualised increase of 4.7% per year (3.2% in real terms) over the past three years.

Cost control over the past five years has increased net incomes by around 14% per annum. Core income (70%) is still derived from agricultural and residential assets (see below). Commercial assets contribute almost 20% of gross income, with the remaining amount derived from other sources, such as woodland, minerals, leisure, and other enterprises.

Since 2013, agricultural has seen a -6% change in contribution to the estate’s gross income (see below).

^{Source: Savills Research}

^{Source: Savills Research}

Agricultural income

Our research shows that, across the UK, agriculture makes a wide range of contributions to estate income. For Scotland, it’s 31% compared with 20% in the South East of England and 66% in the East Midlands. These contributions, at a regional level, are related to the strength of the markets for the other sectors, with variations at estate level depending on the mix of assets and land quality. The threats of Brexit are mitigated where the contribution of non-agricultural income streams is high.

The table (below) shows average agricultural passing rents across Scotland. Many of these increases are associated with holdings which have been under-rented. More details on rents can be found in our Agricultural Rents Survey and English Estate Benchmarking Survey.

^{Source: Savills Research}

Residential income

Residential property provides a core income source for Scottish estates (see chart below). On average, it contributed £57 per acre (39% of estates’ gross income).

Average annual rental income from SATs on all estates increased by 3.3% during 2017 to just over £6,900 per dwelling. This bucks the trend of the past three years where annualised growth has been slightly negative – the result of resumptions of traditional farm tenancies with poorer-quality housing being added to the let residential portfolio. Consequently, low rental figures for these properties diluted the wider average rent. The results demonstrate that, following capital improvement programmes, rents are being increased.

Average annual residential rents across Scotland range from £6,000 for a one- to two-bedroom house to £11,000 for a detached five- to six-bedroom property.

^{Source: Savills Research}

Costs

In 2017, the average total expenditure was 48.7% of gross income across Scottish estates (see table below), significantly lower than the previous three years, suggesting proactive cost management relative to increasing incomes.

However, there were some notable increases. Property repair costs were the highest for three years (£34 per acre across the average estate). This reflects expenditure on resumed farm properties.

Non-domestic rates

Income from rateable enterprises, such as commercial and leisure, has increased significantly over the last decade. Following the rating revaluation, this will result in increased rates bills for estates. We are also concerned about the impact of sporting rates. This could have a big effect on an estate’s rates, but also complementary holiday accommodation, employment of gamekeepers, and the viability of the whole sporting enterprise.

^{Source: Savills Research}