Solar or Battery Lease, or Putting Your Land Forward for Housing?

An energy developer looks first at the electricity network. A solar farm or a battery site is only worth building if it can export to the grid, so the developer needs a connection point within reach and a place in the queue to use it. Brown and Co, the agricultural surveyors, put it simply in their June 2024 guide for landowners: the size of a solar project depends on the available grid connection. A housing scheme looks first at the town or village. Homes need to sit next to an existing settlement, with roads, schools and shops nearby, and with a safe way in from a public road.

Those two tests rarely point at the same field. The parcel beside a substation or a high voltage line is often well out in open country. The paddock behind the last row of houses in a village is often too small, too overlooked and too far from a connection point for an energy scheme. Many farms have both kinds of land, which is why the question is usually which field suits which use.

A Quick Read of Your Own Fields

• Is there a substation, a large overhead line or an existing solar or battery site within a few miles? That is what draws energy developers.
• Is the land a large, open block, the scale a solar farm needs, rather than a small enclosure?
• Does a field touch, or sit very close to, the edge of a town or village?
• Could a safe access be made onto a public road from that field?
• Is the land graded as best and most versatile farmland, grades 1, 2 or 3a? That weighs against both uses in planning, though in different ways.

If the first two answers are yes for one part of the holding and the next two for another, the farm may have room for both, each on its own ground.

1. Heads of terms. A short summary of the proposed deal: the land, the rent, the length of the option and the lease, and the main obligations on each side.
2. The option. The developer takes an option, the right to call for the lease later, for a set period. Brown and Co described initial option periods of 3 to 15 years in June 2024, and Carter Jonas told a Farmers Weekly reader in May 2023 that a battery option could run up to 10 years because grid connection dates were reaching into the 2030s.
3. Grid and planning. During the option the developer applies for a grid connection, carries out surveys and applies for planning permission, at its own cost.
4. The lease. If both are secured, the developer exercises the option and takes a lease of the land for the life of the scheme. Savills, in its November 2022 research, said leases often last between 20 and 40 years, Brown and Co said typical lease periods can be 40 years, and a farmer quoted in a March 2025 report for Solar Energy UK, the industry's trade body, had a 40 year lease.
5. Construction and running. The panels or batteries are built, the rent begins and the developer runs the site. The landowner keeps the freehold and receives the rent.
6. Decommissioning. At the end of the term the equipment is removed and the land is put back into the condition the lease describes, after which it returns to the owner.

The option stage matters to the developer for a specific reason. Under the grid reforms approved by Ofgem in April 2025, a project has to show it is ready before it is given firm connection terms, and one accepted way of showing that it has land rights is the developer having an option to purchase or lease the land on which the project will sit. An energy developer that writes to a landowner is often looking for exactly that: secure land rights it can show to the network operator.

Many leases also give the developer the right to renew or extend. Savills noted that options to extend are often included within the initial agreement, and Carter Jonas, answering the battery question below, expected battery leases to come with an option to extend. The term the owner signs up to can therefore be longer than the headline figure.

The three sources, published over more than two years by a research team, a firm of surveyors and the industry's own trade body, agree closely, which gives some confidence in the order of magnitude. Each is a figure quoted across the market rather than the terms of one deal. For a sense of scale, the Solar Energy UK report set its figure beside the National Farmers Union's estimate that a typical cereal farm makes about £100 of profit per acre, though a rent and a farming profit are not measured in the same way. They also agree that rents are usually linked to inflation, so that the figure in year one is not the figure in year twenty. Brown and Co described the rent as index-linked, and Savills made the same point about indexing protecting the landowner against inflation.

The headline is not what reaches the bank. Savills worked through an example in which every figure was per hectare, the owner was a higher-rate income tax payer, there was no inheritance tax nil-rate band available and the rent was not indexed. On those assumptions it put the true margin closer to £2,100 a hectare rather than the £2,500 quoted, and arrived at a final annual net income figure of £588 a hectare, while noting that sensible tax planning could improve on it. Tax is the reason, and it is set out further down this guide.

Battery storage takes far less land than solar and pays far more per acre, because a battery site packs a large electrical capacity onto a few acres. Brown and Co, in June 2024, gave annual starting rents of £20,000 to £50,000 per acre for battery schemes, typically for relatively few acres. Some battery offers are set per megawatt of capacity instead, as in the example that follows.

A Farmers Weekly Business Clinic from May 2023 shows how such an offer is put together. A reader had been offered a 40-year lease of 3.5 acres for a battery site assumed to be 50 megawatts, at £1,250 per megawatt a year, index linked to the Consumer Prices Index, which comes to £62,500 a year, with a one-off £20,000 payment on preliminary acceptance. Jack Pocklington of Carter Jonas answered that the base rent was below the prevailing market rate, that leases of 25 to 30 years with an option to extend were what he expected because batteries need replacing, and that the decommissioning fund should be fully in place by year 15.

• Small area, high rent. A few acres beside a substation can carry a battery site, so even a modest corner of a farm can attract an approach.
• Shorter terms, then renewal. Batteries need replacing during the life of a site, which is why Carter Jonas expected terms of 25 to 30 years with a right to extend.
• The grid is the whole game. A battery site takes power from the network and returns it, so without a connection it has no business at all, and battery projects made up most of the ready capacity left out when the queue was reordered, as described below.

A battery lease sits on the land as a solar lease does, so what follows on tax, the end of the lease and homes applies to both.

Until 2025 connections were offered on a first come, first served basis. Ofgem's impact assessment of April 2025 describes the old process as prioritising projects based on the date they accepted their connection offer, and records that by February 2025 there were 765 gigawatts of projects holding connection contracts, 587 gigawatts at transmission level and 178 gigawatts on the local distribution networks.

Ofgem's decision, published on 15 April 2025, approved a package of reforms known as TMO4+. Under it, a project needs both readiness, which includes land rights or planning consent, and strategic alignment, chiefly with the government's Clean Power 2030 plan, to receive firm connection terms, called Gate 2. Projects that do not meet the ready and needed tests are moved to the Gate 1 queue.

The outcome was hard on some technologies. NESO, the National Energy System Operator, reported in December 2025 that 217 gigawatts of projects that were ready were not prioritised because they were not strategically aligned, of which about 153 gigawatts was batteries and about 35.9 gigawatts solar. It set out two phases of connection dates, 2026 to 2030 and 2031 to 2035.

For a landowner this has three practical effects. An option for a solar or battery scheme can run for years before anything is built, because the developer is waiting on the grid. A project that lost its place may never reach the lease stage at all, and the option then ends without the rent ever starting. And the location of spare capacity, which differs from one area of the network to another, decides which fields energy developers want next.

Yes. A solar farm or battery site is development and needs consent, and the size of a solar scheme decides who gives it. The Infrastructure Planning (Onshore Wind and Solar Generation) Order 2025, made on 9 June 2025, raised the threshold for solar from 50 to 100 megawatts from 31 December 2025. Solar schemes in England of more than 100 megawatts are nationally significant infrastructure projects and need a development consent order under the Planning Act 2008. Smaller schemes apply to the council for planning permission under the Town and Country Planning Act 1990. A solar scheme of 50 to 100 megawatts whose application for a development consent order had already been accepted before 31 December 2025 continues under the 2008 Act.

National policy leans firmly towards renewable energy. Policy W3 of the National Planning Policy Framework, the government's planning rules for England in the version of August 2026, asks decision makers to give substantial weight to the benefits for energy security, economic development and the move to net zero, and states that applicants should not be required to demonstrate the need for renewable or low carbon energy development. Where a scheme is time-limited, as a solar farm is, the same policy asks for proposals for decommissioning and site restoration to come with the application.

Best and Most Versatile Land

Farmland in England is graded from 1 to 5 under the Agricultural Land Classification, and the best and most versatile land is grades 1, 2 and 3a. On 15 May 2024 the then Secretary of State for Energy Security and Net Zero, Claire Coutinho, made a written ministerial statement, reference HCWS466, saying that due weight needs to be given to the proposed use of best and most versatile land when deciding solar applications, that the highest quality land is least appropriate for solar, and that the cumulative effect of several schemes in one area should be considered, not only each scheme on its own. The August 2026 framework makes the general point for all development in policies N1 and N2: the quality of agricultural land is taken into account, and where significant development of farmland is necessary, areas of poorer quality land are used where possible.

• Up to 100 megawatts, in England: a planning application to the council, decided against the local plan and national policy.
• Over 100 megawatts: a development consent order, examined under the Planning Act 2008.
• On grades 1, 2 and 3a: a weight against the scheme that the developer has to answer, usually with a soil survey and a case for the site.
• For a time-limited scheme: a decommissioning and restoration plan with the application, under policy W3.

The same grading applies to housing. A field of grade 2 land at the edge of a village is weighed in the same way when homes are proposed, and our guide can my land be built on? sets out how the farmland grade sits alongside the other planning tests for homes.

Agricultural property relief, or APR, reduces inheritance tax on land used for farming. Savills explained the effect of a solar lease plainly in its November 2022 research: letting the land for solar means it is no longer used for agricultural purposes, so eligibility for APR is lost. Keeping the freehold does not save the relief, because Savills tied the loss to how the land is used, not to who owns it.

Business property relief, or BPR, is the other relief that can apply to a farm, but it does not usually step in. On Savills' analysis, for the let land alone the lease makes it an investment asset, which does not qualify, although relief may be available if the landlord's overall business is judged to be a trading business. Whether a particular farm meets that test turns on the whole business, and that is a question for the family's tax adviser.

The 2026 changes raise the stakes. HMRC's policy paper on the reforms states that from 6 April 2026 a £2.5 million allowance applies to the combined value of property that qualifies for 100% agricultural and business property relief, with relief at 50% on qualifying property above it, and that unused allowance can pass to a surviving spouse or civil partner. Land that has dropped out of relief because it is under a solar lease gets no benefit from the allowance.

A sale of land for homes is taxed differently again, through capital gains tax on the gain, and agricultural property relief has only ever covered the farming value of land. Both points are covered in our guide to tax when selling land for development.

Decommissioning Bonds and Reinstatement

Taking a solar farm apart costs money, and the developer that built it may not be the company holding the lease forty years later. Leases deal with this through a decommissioning bond, a fund built up during the lease to pay for removal and reinstatement if the tenant cannot. Savills listed arrangements for a decommissioning bond among the things the initial contract should include, so the bond is settled before the panels go in. For batteries, Carter Jonas described yearly payments into the fund with five-yearly reviews as standard, with the fund fully in place by year 15.

Reinstatement is measured against the condition of the land when the scheme started. Savills described an agreed record of condition, drawn up before the works begin, with the developer obliged to return the land to that condition at the end. The restoration plan required with the planning application, described above, sits alongside it.

Security of Tenure

A lease of land for a business can give the tenant a legal right to a new lease when the term ends, under Part 2 of the Landlord and Tenant Act 1954. Section 38A of the Act allows the landlord and tenant of a lease for a fixed term to agree that the renewal provisions, sections 24 to 28, shall be excluded in relation to that tenancy, which is known as contracting out. The agreement is void unless the landlord has served the prescribed notice on the tenant before the lease is granted and the other statutory requirements are met.

• A lease that has been contracted out ends when its term ends, or at a break date, and the land comes back.
• A lease that has not can carry a right to renew, and the landlord can then only recover the land on one of the grounds in the Act.
• Rights to extend written into the lease itself work separately, and can lengthen the term whatever the position under the Act.

Our guide to tenancies and vacant possession explains how the renewal rights work in practice for business tenancies and other lettings on a farm.

A purchase of land for homes completes with vacant possession, meaning the land is handed over free of any occupier, and under an option that happens on the completion date. A field let to an energy company for decades cannot be handed over that way while the lease runs, so it cannot sensibly be put forward for homes in that time. Savills described a contract with a renewable energy developer as locking the land into a use for a prolonged period, and listed the possibility that competing land uses could outperform renewable energy during the contracted period as one of the points to weigh.

A solar field does not always leave farming entirely. Solar Energy UK's March 2025 report notes that farmers can graze livestock among the panels, and grazing commonly continues on solar sites. The field is still let to the energy company for the whole term, though, so the grazing fits around the panels rather than the other way round.

Timing cuts both ways. An option for solar ties the field up before any lease, while the developer waits for its grid connection and planning, and many options run for several years. A field committed to an energy developer under an option is not free to be committed to anyone else in the meantime, and the same is true the other way round: under an option agreement for homes, a long tenancy or new rights such as a wayleave over the land are things to talk to the option holder about first, because they would affect the purchase.

A Holding With Room for Both

Many farms have land well away from any village and land touching one. The distant block, if it is close to a grid connection, may suit an energy developer. The field on the village edge may be the one with a housing case, because the planning system looks for homes on land well related to a settlement and served by infrastructure. Our guide to what a settlement boundary is explains how the line on the council's map is drawn and why it matters for homes. Looking at both questions before any field is committed is the way to keep both open.

1. A free desktop review. We look at the land from public records and maps: the title plan, mapping, flood maps, designations, the council's local plan and its housing figures and past planning applications nearby. Nobody visits, and we do not contact the council, your neighbours or anyone else about your land without your agreement.
2. A written price. We agree a purchase price with you under an option agreement, set above what your land is worth today in its current use. The heads of terms set out the price, any option fee, the land included and how your legal and agent fees are covered.
3. Your own advisers. We contribute to the fees of your own solicitor and land agent, so it costs you nothing to get it done properly.
4. The planning work. We fund and manage all of it, at our own cost and risk: surveys, design, applications and, if needed, appeals. On a larger site that can reach £300,000, and none of it is deducted from your price.
5. Carry on using the land. You keep owning and using it, whether farming, grazing or letting, right up to completion.
6. Completion. If planning permission is granted, we complete the purchase and you receive the agreed price. If planning is not achieved, you keep your land and owe nothing.

Where a holding has an energy approach on one part and a possible housing case on another, a desktop review answers the housing half of the question: whether the field by the village has a realistic case, roughly how many homes it might take and what the main hurdles would be. Our guide to option agreements explains the agreement in full, and a free desktop review of your land is the simplest way to get a straight answer about your own field.