Diversification: Check your assets

The Agriculture Bill is passing through Parliament and indicates a move away from direct agricultural support to payments for a wide range of public goods. This will affect us all and we should not delay making plans for the future. Now is a good time to look at all the assets you have and assess their income earning potential without agricultural support. 

If you are a landowner you should check there no restrictions in the conveyance over use, or any wayleaves or easements, and also of course whether you own the sporting and mineral rights. If your land is owned in conjunction with other family members you may have their aspirations to consider too, and if it is owned by a trust there will be duties that a trustee owes to the beneficiary. 

What is your vision for the main house? Can this be used to generate additional income, or do you want to maintain your exclusive use and privacy? If you have other houses or cottages you need to consider funding streams for the maintance and improvement of these into the future.

Take into account all your buildings, and most importantly the outlying buildings, disused or dilapidated buildings which could be brought into a new use without impacting on your existing businesses. But do not forget buildings that are in use but require a lot of ongoing maintenance or those where the current use yields little financially.

What are your aspirations for your land, especially that which is no longer economic for agricultural production? Are there other things that it would lend itself too – woodland planting, tourism or leisure, for example?

You need to consider whether your land and buildings have any immediate or long-term development potential for housing, employment or mineral use. The process to getting consent can arduous but with the right approach it may be achievable. When applying for planning consent always stress the wider benefits to the community and the locality.

You need to look at all your tenancy agreements – whether you are the landowner or the tenant. Are they Landlord and Tenant Act, Agricultural Holdings Act, Farm Business Tenancies, Assured Shorthold or one of the many Housing Act tenancies? There may be some licences as well. What restrictions do they carry, what is the termination date, are there any break clauses, what is the rent and what are the notice periods? Is this land yielding sufficient or could it be managed differently and how that might be achieved? Tenancies are often a sensitive subject but early conversations between landlord and the tenant can often be helpful in gaining a better understanding.

From the outset you need to consider tax implications. A departure from agriculture will impact on agricultural property relief, but will the resulting asset qualify for business property relief? Will the income generated by the new use be classed as income from a business or investment income? Will you establish the new business as a separate partnership or company and how will it be dealt with administratively? Taxation advice needs to be taken at the very start of any diversification project.

Then you need to consider planning. Can you use any permitted development rights (PDRs) to build new agricultural buildings or reservoirs? However, be aware that PDRs, while easier than a planning application, are in themselves quite restrictive, and do not apply everywhere, so make sure that you or your advisers are fully aware of the regulations. Remember that PDRs for conversion of existing buildings into housing or employment do not apply in Wales.    If you a submitting a planning application make sure to provide the planning authority with as much information as it requires to make the decision. Above all remember to plan protected species and habitat surveys so that they can be undertaken at the right time of year, but as close to the submission of the planning application as possible.   

Taking time to do a proper audit of all your assets is always worthwhile. It is not just identifying disused land and buildings, it’s asking yourself: “Could any of my assets be earning more in the future than they are today, and how best can I plan to achieve that?”   

For advice on all aspects of diversification, contact your regional CLA office.

 

The CLA’s advisory handbook ‘CLA 73 – a Guide to Developing a Business Plan’ provides advice and guidelines on how to set out a comprehensive business plan. It is available to members at £36. To buy the handbook log in to My CLA on the CLA website and go to the online shop or call 020 7460 7969

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