Commercial events on rural estates

With the reduction in farming subsidies and increasingly tight margins on let property, many rural estates are exploring the commercial earning potential of their physical assets. This may involve turning their space into a venue for a winter light trail, triathlon series, music festival, or film location for shooting the next streaming hit.

The idea may come from an entrepreneurial team within the estate, but often an estate is approached by a third party. In either case, but particularly the latter, although the potential income offered can be (very) attractive, there is risk involved for both parties. For that reason, it is crucial that an appropriate venue hire or location agreement is put in place.

Terms agreed and deals struck will vary hugely depending on the use in question, but there are some fundamental points which will apply in nearly all cases.

1. Is this something the estate should be doing?

Beyond the obvious financial incentives, opening up the estate and its facilities is not without risk. These risks are not just financial: they extend to possible damage to property, liability for personal injury and damage to reputation, to name a few. It is important to give thought to which areas of the estate will be used, how the site(s) will be accessed, and whether this will interfere with the day-to-day functioning of the estate. It is also important to consider the impact on other occupiers and whether they are “on board” with the new venture. One may conclude that these risks outweigh the fee being offered, or that the estate is still keen to proceed, but only for the right fee.

Most estates tend to “undersell” the value of their site, particularly as a film location. If the estate has been approached for a specific reason – perhaps the cantilevered staircase in the main hallway, or acres of open field closely accessible to a major motorway – find out what it is, as it will give the estate a better idea of the value in
the hire.

2. What and where?

Make sure that the estate fully understands what it is exposing itself to in exchange for the fee. With a music festival, how many days in advance do the organisers need access to set up, and how long afterwards to clear the site? Will estate infrastructure be used to supply services and, if so, are these charged separately or included in the fee? Who is responsible for reinstatement (always a concern where there is parking in fields)?

The scale of the event, the size of the crew and the degree of “on site” facilities (food trucks, washrooms, toilets, makeup trailers) will be key indicators of the likely impact on the site. A colour coded plan is often useful to show the site which may be used, and how this will be accessed, to avoid ambiguity and potential dispute later. Get these details clear in the agreement to start with, but then also be prepared to police and enforce these constraints on use and access when it comes to the hire itself.

3. Contracting parties

Taking the example of a film location agreement, it is usual for the estate to liaise with a location agent on behalf of the production company (the entity actually coming on site to film). It is therefore vital to identify who the contracting party actually is, not just who you are speaking to: who is “on the hook”? On the flip side, thought needs to be given to what the estate will use as the contracting party. It can often be sensible to ringfence liability within a limited company rather than the landowning entity contracting in its own right, but if a trading subsidiary is being used, make sure that it has the rights it needs to grant the onward licence.

4. Who is in charge?

Not only do the identities of both parties needs to be clear, but a key purpose of the agreement is to make it clear which party is responsible for what and who operationally is running and managing the event. This may sometimes be tricky to pin down in the case of a music festival or sporting event where the landowner may supply the land, existing infrastructure and perhaps also some staff to help. If the organiser then supplies everything else and promotes, manages and runs the event, the estate will have little control over the activities and as such the risk of those activities should not be borne equally. As well as the fact this is important to get right so that everyone knows what they are expected to do (practically speaking), it is crucial in terms of where liability falls if something goes wrong.

5. Damage and liability

Damage to estate property is the most likely risk of this sort of commercial venture and ultimately you know the stresses and strains your land can take. The agreement is your opportunity to help manage the appropriate use of the land. The entity you contract with should always be under an obligation to meet the full costs of reinstating the site (and any other areas of the estate accessed) to the state they were in immediately prior to the hire, and sometimes responsible for arranging those repairs (depending on the degree of control the estate wishes to have). A photographic record of condition prepared immediately prior to the hire can often be useful to refer back to, particularly if it is a large-scale project.
Liability for personal injury is also a key concern and the landowner should expect to receive a full indemnity from any event organiser, particularly where tickets are being made available to the public.

6. Insurance

If the venture is an event open to the public, depending on who is responsible for running this operationally will also dictate who should be responsible for insurance. Where the onus is on the contracting party as the event organiser, the level of insurance to be carried by them (on a “per claim” basis) should reflect the likely loss the estate could suffer if things go wrong. An early conversation with the estate’s insurance broker is sensible and can be helpful to assess this figure. Getting this figure right is particularly important as the event organiser will typically want to cap their liability to the level of their insurance (note, however, it is not possible to cap liability for personal injury). If the level of insurance cover is not high enough, this can leave an estate exposed to the “mezzanine” liability above that cap, so understanding the extent of protection the contracting party is offering and the residual liability beyond that is crucial.

Separately, make sure that none of the planned activity falls foul of any of the restrictions in the estate’s existing insurance policy (or indeed any other restrictions, such as where buildings are listed). Practically, always ask to see evidence of the required insurance before anyone is allowed on site.

Looking to the future, Martyn’s Law (the Terrorism (Protection of Premises) Bill) will, if made law, impose duties and liabilities on “persons responsible for qualifying public events” to take measures to protect the public from terrorist attacks. That responsible person is likely to be the person “who has control of the premises”. Although the legislation is still in draft, this is a clear example of why it is important that the agreement is clear about the roles and responsibilities of the parties.

This article is part of the Rural Estates Newsletter 2024, click here to read.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, February 2024