Kinloch Castle Study: Final report

Kinloch Castle – Frequency Asked Questions

Why does the castle need to be sold?

Kinloch Castle is a Category A listed building, with historical and cultural importance to the Isle of Rum and Scotland. It offers a unique opportunity to be part of Scotland’s heritage.

However, the castle requires significant investment, specialist input and regular maintenance to be brought back into use.

The castle has variable maintenance costs year on year ranging between £50,000 to £160,000 (with an average of £64,000), and has outstanding property maintenance requirements estimated in the tens of millions of pounds.

Whilst repair and redevelopment costs would need to be defined based on intended future use and a business case, they are likely to be in the £10s of millions.

Despite considerable investment over the years by the Scottish Government and NatureScot to maintain the fabric of the building, it has been clear for some time that a greater level of investment is required to secure a sustainable future for the castle.

Why is a private sale being considered?

The castle is currently owned by NatureScot, and has been under public ownership for an extended period. It is not currently open to visitors. As legal custodians of the castle, NatureScot have taken the operational decision that they have no use for it as part of their estate. They have been tasked with identifying a new beneficial owner to support its development, sustainable future and contribution to the wider island community. Private sale is considered the only feasible option to secure the necessary level of investment and deliver best value for the Scottish taxpayer.

Is community ownership an option?

Private sale and transfer to the community has been considered by NatureScot. This has not been achieved to date due to a lack of funding and capacity to restore and manage the castle.

Is managed decline an option?

The focus of Scottish Government policy and Historic Environment Scotland guidance is on future use and adaptation and to preserve the asset. The castle is regarded as an asset and the issue is to explore how it could be made to work.

Managed decline is not a term or process outlined in this policy context for Councils, as consent authorities, to follow in considering changes to listed buildings.

There is a policy test for demolition. This option would require substantial funding, and this is not available.

What options for the castle been considered?

A lot of work has been done already by different groups to explore options for Kinloch Castle, including:

• to establish a museum, residential and tourist accommodation within the castle building
• to restore the castle and provide visitor accommodation

All of these options have required substantial funding, and as this was not available, they have not been taken forward.

Kinloch Castle – Background

At the beginning of the Kinloch Castle Delphi Study, we reviewed previous reports on the castle and its future. A full list of reports can be found in Annex 1.

Summary of key points

• Repair and redevelopment costs are likely to now be in the £10s of millions. These would need to be specifically defined based on intended future use and a business case.
• Previous work has stated there are financial risks to engaging in further work on Kinloch Castle, in terms of raising expectations or undertaking costly studies and not being able to then deliver restoration schemes due to lack of funding.
• A range of options have been explored for Kinloch Castle by different organisations over the last 10-20 years, including:

  a) public uses, such as a museum, visitor or residential accommodation, training centre or wedding venue;

  b) private uses, such as a rehabilitation clinic or a private home.

• The option of a museum and accommodation of different types was identified as the most promising in meeting key objectives, including securing a financially viable future for the building and socio-economic development. This option was explored in detail in a feasibility study, and a business plan was developed. In 2016 the overall cost of the project, excluding major external works, was estimated to be nearly £13 million (excluding VAT).
• This report stated that there are significant issues associated with selling the Castle building and any return is likely to be very limited.
• This report also noted the costs of failure, and that a sustainable solution for Kinloch Castle can only be found by ensuring that everyone, including all stakeholders involved, remain focused on a successful outcome.

1. Background timeline

1897-1900 - Kinloch Castle built.

1957 - Kinloch Castle purchased by the Nature Conservancy Council, the predecessor of Scottish Natural Heritage, now NatureScot. Rum is owned and managed by Government conservation agencies and designated as a National Nature Reserve (NNR).

1982 - Rum is designated as a Special Protection Area for birds

1987 - Rum becomes a Site of Special Scientific Interest (SSSI)

1992 - Rum is passed from the Nature Conservancy Council to Scottish Natural Heritage

2004 - Kinloch Village Development Plan (Simpson and Brown Architects) recognises that Kinloch Castle could have a pivotal role to play in the future development of Rum in terms of its economic potential and contribution to public access and environmental education.

2007 - The Isle of Rum Community Trust (IRCT) is formed. Rum becomes a Special Area for Conservation (SAC) under the EU Habitats Directive

2009-10 - Asset Transfer of property in Kinloch Village to Isle of Rum Community Trust (IRCT)

2013 - Hostel business in the Castle closes due to health and safety concerns. Temporary Hostel operated outside of the castle.

2015 - Isle of Rum Community Land Use Plan, commissioned by Isle of Rum Community Trust.

2020 - Tours of Kinloch Castle stop due to the Coronavirus disease (COVID-19) pandemic.

2. Timeline of key work

2006-8 - Princes Regeneration Trust work on options for a sustainable future for Kinloch Castle

2007 - Research commissioned by the Scottish Government: ‘Assessment of Social Capital on Rum and the Small Isles’

2013 - NatureScot launches 10-year Conservation Plan (2013-23) to repair and maintain the Castle, and ‘Options for the future for Kinloch Castle project’, an options appraisal to review potential uses and ownership models

2014 - Princes Trust review their previous work and produce a report

2015 - Savills commissioned by NatureScot to prepare a business case for the favoured options

2016 - Kinloch Castle: Feasibility Report by Savills commissioned by NatureScot

2019-2021 - NatureScot produces 3 key objectives to assess expressions of interest:

1. Securing the conservation and preservation of the castle;

2. Contributing to the sustainability of the Rum community;

3. Enhancing nature on Rum, including promoting its enjoyment, and minimising the impact of the castle on the natural environment.

2024 - Kinloch Castle Delphi Study led by RESAS

3. Timeline of key decisions

2016 - NatureScot request summit meeting with the Cabinet Secretary and key stakeholders to discuss the future of Kinloch Castle

2017 - Cabinet Secretary agreed that further work is undertaken towards achieving a practical and affordable outcome for Kinloch Castle. ‘Notification of Plans to Advertise a Surplus Property on the Open Market’ placed on the Scottish Government website

2017 - Asset Transfer request under the Community Empowerment (Scotland) Act 2015 from The Kinloch Castle Friends Association. Over 2017-9 NatureScot work with the organisation but the request is rejected as it falls short of requirements

2019 - Scottish Government agree that NatureScot should move to seek a beneficial owner for the Castle. Between 2019-2021, over 100 expressions of interest are received and assessed

2021 - 14 proposals from potential beneficial owners received but no competent offer identified

2022 - Kinloch Castle purchase interest from private buyer

2023 - Sale intervention by Isle of Rum Community Trust. Offer withdrawn. Scottish Government Minister visits Isle of Rum in May, followed by letter to residents in June setting out plans for research by RESAS

2023 - NatureScot formally offers ownership of the castle to Historic Environment Scotland. Historic Environment Scotland reject the offer

Overview of three of the main reports

This section provides a longer overview of three of the main reports, in terms of when each was completed, the level of stakeholder engagement and work carried out. Each of these reports built on previous work, and aimed to support progress on the castle.

Social Capital on Rum and the Small Isles (Centre for Rural Economy Research, 2007)^[42]

Key point summary

• There are negative and positive aspects associated with the future potential of Rum for social and economic development;
• The community, as structured and constituted at the time, was too small and transient and lacked sufficient social and human capital, to assume more responsibility for the management of its own infrastructure;
• Whilst there is ample experience within the Small Isles of community based social and economic development, there were capacity and logistical constraints which limited the scope for any significant involvement on Rum.

The research team presented the findings to key stakeholders and to the Minister, and a ‘Rum Summit’ was held in Morar near Mallaig, where agreement was reached between stakeholders and members of the Rum community about the way forward for the Island.

Options for the future for Kinloch Castle (Scottish Natural Heritage, 2013)^[43]

Key point summary

• There are potential reputational and financial risks to engaging in further work, in terms of raising expectations or undertaking costly studies and not being able to then deliver restoration schemes due to lack of funding.
• The appraisal explored eight options for the castle, including both with and without a museum, and with residential, visitor or mixed accommodation. These were scored and ranked against key objectives:
  • securing a financially viable future for the building;
  • conserving and enhancing the heritage and public access to it;
  • supporting socio-economic development;
  • linking to the wider management of the island.
• Two options emerged as most promising in meeting the objectives:

  1. Retaining the museum and converting other parts of the building to visitor accommodation

  2. Retaining the museum and converting other parts of the building to a mix of visitor and residential accommodation

• The report recommended that these options be explored in detail and a business case developed. The next stage be practical, and focus on delivering the scheme, including: potential sources of funding for repairs; financial viability of the operation; ownership and delivery models; market testing of sale of all or parts of the building; other sources of long-term funding to support operation; identification of the current and potential socio-economic impacts of the castle;
• Stakeholders should continue to be closely involved in the process, particularly the Rum community, alongside a separate initiative to develop a new village plan.

Kinloch Castle Feasibility Report (Savills, 2016)

Key point summary

This second stage feasibility study on Kinloch Castle, undertaken by Savills, was commissioned by NatureScot to focus in on two previously identified options relating to the provision of a museum and residential accommodation of varying types.

The study considered the current situation, previous work on the castle and repairs carried out to the building, and the importance of addressing critical issues facing the island, including in terms of infrastructure, to allow the Castle project to proceed smoothly.

The overall cost of this option (see Box 1), excluding major external works, was nearly £13 Million (excluding VAT). The report noted that there were significant issues associated with selling the building and any return was likely to be very limited. Further conclusions were:

• A refurbished castle will help support the island and wider community, increasing economic activity and visitor numbers;
• There are a wide range of risks associated with achieving the objective of a restored and viable Castle but the option of ‘doing nothing’ could have significant negative effects on the island and wider area;
• The overriding objective must be to achieve a sustainable solution for the Castle and this can only be done by ensuring that everyone, including all stakeholders involved in the project, remain totally focussed on a successful outcome and are fully aware of the potential costs of failure to the island community and wider stakeholders.^[44]

Box 1. Option for Kinloch Castle from Kinloch Castle Feasibility Report (Savills, 2016)

• The study presented a potential, flexible arrangement to provide a range of residential accommodation (e.g. self-catering/hotel accommodation, taster accommodation for potential residents) designed to meet changing needs.
• The proposal noted the importance of the Castle in attracting visitors to the island and identified the key areas of the castle which should be retained as the museum, accessible to the public and partially open for event use.
• The report noted that the castle and its grounds have considerable potential for holding luxury, group and corporate events, making use of the wide range of accommodation and event spaces;
• The business plan developed demonstrated the financial viability of the project as well as pointing out the caveats. It showed how a number of models and scenarios could work for the proposed layout and lead to the longer-term generation of profit. It noted the critical important of marketing and maintaining standards in achieving success;
• The key funders were seen as the Heritage Lottery Fund and Historic Environment Scotland, with other public sector funding required to meet the full capital costs;
• Based on calculations made, it was estimated that the business would reach breakeven in year 5 of operation and generate an annual surplus of £50,000 by year 10. A cumulative financial subsidy of approximately £237,000 would be required to cover expected losses in the first four years of operation;
• The report noted that an endowment fund to generate interest and a continuing revenue stream would help reduce long term risks and provide a better chance of ensuring sustainability. Ongoing revenue funding from a variety of sources to help top up the costs of maintaining the Castle will always be difficult but if properly managed could achieve a degree of success;
• The preferred delivery vehicle was seen to be a building preservation trust with the appropriate stakeholders represented on its board. Its charitable status would provide fund-raising opportunities from a range of sources. It would be able to transition into a management trust to run the project once restoration and conversion was complete.