When you own land, you may want to sell it so that it can be developed for commercial, residential or industrial use, however, there are a number of legalities that you need to face in regard to how this works and whether there are any conditions on how the land can be developed.

This is particularly important in the world of agriculture where there is often the need or desire to change the use of an area of land and planning permission needs to be obtained. There are many factors affecting how agricultural land can be used, and so it is important to be aware of the legalities that apply. 

There are different ways that you can sell your land to a developer, so it is important to explore each one to be able to decide which one will work for you. There are overage agreements, conditional contracts and promotion agreements, which all require different levels of work, expense and risk. 

At Lovedays Solicitors, we have a lot of expertise in agricultural law and can advise you on all of the legalities relating to any proposed land development. We can help you to decide which path to take depending on your own individual circumstances, and can help to draft any subsequent agreements, ensuring that it all runs smoothly and without any surprises further down the line.

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Understanding Overage Agreements

When developing land, you are likely to have goals and timescales in mind. That is why overage agreements are often brought in as part of the process.

An overage agreement allows the seller to be paid extra if the specified events happen within a particular timescale. This could include the development of the land happening within a certain time period after the land has been sold which then significantly increases the value of the land.

Whilst each overage agreement is unique to the individual situation; they usually involve an additional payment on top of the purchase price which is paid when planning permission is granted. 

An overage clause can also be included in the sale agreement of a commercial property of land, to give the seller a greater share of the value when the trigger event occurs. Trigger events can take many forms, but they are most commonly associated with the granting of planning consent, the implementation of a development, or the completion of one. 

Calculating overage can be a tricky process, so it is important to seek professional advice. As part of the calculations the buyer will not expect inflation to be included and will also want to deduct any costs that they might have incurred in the process. It can also be difficult to work out if it is part of a larger development. 

These overage agreements can be particularly important to agricultural landowners. Obtaining planning permission can be a long, arduous and expensive task which many farmers are reticent to undertake. This can mean that they miss out on the full value that the sale of their land is able to achieve. Overage agreements ensure that they do not lose out and can still benefit from the added value without needing to undergo any of the hard work.

Exploring Conditional Contracts

A conditional contract is designed to include a specified condition that once met, must be completed by the developer. This is often related to vacant possession of the site or obtaining planning permission.

These conditions are put into place to ensure that the land is suitable for the needs of the developer before they commit to spending money on it. They can therefore go through the process of trying to obtain planning permission for the land without having to risk spending money on it first but knowing that it is secure should all things go to plan. 

It is important that the terms of the condition are clear, and that all parties know what is required to achieve them and what will happen once they have been reached. The developer may want to include their own conditions which could lead to them claiming that the planning permission that they were granted was not suitable and enables them to walk away from the deal. 

As the landowner, it can be beneficial to make the terms of the condition as broad as possible. This is because the contract will be deemed to be unconditional as soon as the condition has been met, and the developer will be bound to complete the purchase of the land as per the terms of the agreement. 

It is essential that a conditional contract is written properly, to ensure that all parties are treated fairly. Any conditions must be clear and achievable, and all parties must have agreed on the process that will occur once the conditions have been met. This means that it will be legally binding, and the developer will be held to their agreement if the conditions are met. 

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The Mechanics of Promotion Agreements

Sometimes an agreement can be put in place between a landowner and a land promoter which enables the landowner to benefit from the promoter's experience and resources. This can help to achieve certain things such obtaining planning permission for development on the land which can then significantly increase its value. 

A land promotion agreement will usually outline the requirements for a promoter to apply for planning permission on the land and market it for sale once this has been achieved. It is typical for the promoter to pay a financial premium to enter into the agreement, and they will fund the planning promotion and marketing costs out of their own pockets. However, if they fail to achieve the terms of the agreement, it will then be terminated and the premium and costs that have been incurred will not be reimbursed. 

The land promotion agreement will also state that once the planning application has been successful and the property has been sold then the landowner will be responsible for reimbursing the premium and the costs from the gross sale receipts and will pay a fee to the promoter, which is usually a percentage of the net sales receipts. 

This tends to be a popular choice for many agricultural landowners, as it allows them to minimise their risk and maximise their gains. As the promoter uses their own funds to achieve the aims of the agreement, and risks not being reimbursed if they are unsuccessful, then they are incentivised to achieve what they have set out to do. The landowner can make use of their knowledge and experience to achieve things that they might not otherwise be able to do and can therefore save them considerable time and money. 

A promotion agreement needs a lot of professional attention in order to get it right. It is important to be clear in all of the conditions of the agreement so that both parties know what needs to be achieved and the timescales for doing this, so that they can then determine whether the promoter has been successful.

It also helps to outline the payment that the promoter can expect to receive on completion of the sale and means that it is much easier for everyone to plan. By having your promotion agreement drafted by Lovedays Solicitors, you can be sure that it is not only in-depth and correct but also legally binding.

Strategic Considerations for Farmers

When entering into any kind of land development contract, it is important for farmers to consider all of the options that are open to them in order to determine what will be best for them. Factors such as planning permission are very important aspects of all land sales, and so you need to think carefully about what value this adds to your land, and how you can best achieve it. 

It is important to look at what overage agreements, conditional contracts and promotion agreements can work for you to achieve your aims. You also need to consider which ones will best protect your interests. The answers to these questions will be different for everyone, and so it is important that you weigh up your individual situation before committing to anything. 

The experts at Lovedays Solicitors can take you through each option in detail and can help you to decide which type of agreement will serve you best. We will use our years of experience in agricultural law to identify how you should proceed, what will bring you the best returns and how to work within any timescales that you may have in mind.

This professional legal advice can be very important, as it can prevent you from making costly mistakes or entering into agreements that are not beneficial to you. 

• Factors farmers should consider when entering land development contracts.
• How to protect interests in overage, conditional contracts, and promotion agreements.
• The role of legal advice in land development deals.

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Lovedays Solicitors: Your Partner in Land Development

We have spent years building up a professional team, with specialists in agricultural law and land development. Lovedays Solicitors have built up a great reputation throughout Derbyshire for our knowledge and expertise, as well as professionalism and friendly staff members. 

We can advise on all types of overage agreements, conditional contracts and promotion agreements, helping you to reach the best conclusions for your own personal situation. We will help you through every step of the process and can offer you informed and correct legal information throughout. We are always on hand to answer your questions and deal with other parties on your behalf, before drafting whichever agreement you have decided works best for you. 

At Lovedays Solicitors, we understand how important the sale of land for development can be to your personal interests as well as your business ones and so we will make sure that you receive the best possible legal advice at every turn.

Conclusion

All land and property agreements need specialist legal advice but this is particularly important in the case of land development. It can be a very technical area with a number of different situations that need to be carefully navigated, and you can do this with the expert legal advice available from Lovedays Solicitors. We understand how challenging the agricultural world can be, and so we are committed to supporting farmers and landowners to get the best advice possible, enabling them to maximise what they have available. We provide expert legal guidance and a friendly face to make the process as easy as possible for you.

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When two or more people come together to farm with the intention of making a profit, then they create a farming partnership. In order for this to work fairly and to help prevent any disputes, then a farming partnership agreement can be drafted, outlining all of the terms of the partnership. This can include details about how resources will be shared, efficiency and tax relief amongst many other things such as the ownership of assets. 

By putting this kind of agreement in place, farmers will find that their interests are better protected, and everyone can work together knowing exactly where they stand. The agreement ensures fair treatment for all parties and creates a transparent working environment that can grow and evolve in a healthy and positive way. 

At Lovedays Solicitors, our team of experienced agriculture lawyers can help to get your farming partnership off the ground by helping to put together a correct, thorough and legal agreement that everyone in the partnership can benefit from.

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The Necessity of a Written Farming Partnership Agreement

Whether you commit it to writing or not, a partnership is automatically created when two or more people decide to work together for the same purpose. A written agreement is not therefore required, and an oral partnership is then created instead. This dates back to 1890, when farming was a simpler way to make a living and people entered into agreements with far less to their names. Whilst an oral agreement may have been sufficient back then, it does not cover all of the complexities that a modern farmer now faces. 

A formal farming partnership agreement is a legally binding document that establishes all of the important points within a partnership. Each individual will enter the partnership with different assets such as land or equipment, and these will be set out in order to establish ownership, and the roles and responsibilities of each person can also be laid out. This gives each person the opportunity to think about how the partnership will work and can avoid misunderstandings or disputes further down the line. 

A written farming partnership will not refer to the day-to-day running of the farm, and instead it concerns itself with the more valuable factors of asset ownership and the line of succession for the business if it is part of a family. It can also detail how profits will be shared, what belongs to the partnership, and what will happen in the event of the death of a partner. 

This agreement is not just necessary for the partners themselves, but also for outside parties. For example, banks will want to see a written agreement for any security instructions, and lenders will want to know what is in place before they will agree to a loan or mortgage.

Key Components of a Farming Partnership Agreement

A farming partnership agreement should include as much detail as possible that covers the formation of the partnership, what happens during the duration of it and what will happen when it comes to an end. This means that all parties will always be clear on where they stand, and it can be much easier for a solicitor, arbitrator or court to come to an informed and correct decision if a dispute does arise. 

It is important to outline what assets each partner brings into the business, including property, land and equipment. This should be listed along with an approximate market value as well as any other tangible contributions. 

The partnership agreement should also look at how the money in the business will be dealt with. There should be clear plans in place for the management of capital profits and losses, as well as any income profit sharing modalities. This ensures that all partners know what they are responsible for and what they are entitled to receive from the partnership. 

Where finances are concerned, it is also important to outline who is responsible for different financial aspects. It should detail who will have access to bank accounts, and make loan applications amongst other things, and how these will be managed. 

At some point, the partnership will come to an end, whether this is through choice or through the death of one party. It is therefore important that there are clear rules on how this should be conducted. It will need to state how a partner will serve notice of their intention to leave the partnership and what will happen to it when this occurs.

All parties will need to agree on what will happen to the assets of the departing member, as well as their shares and profits. Usually, if a partner dies, then the partnership will be dissolved, and so provisions should be made within the agreement to override this and prevent any catastrophic consequences for the business. It can also define what will happen to their share and who it will be passed to. 

Sometimes, disputes can arise, and the agreement can be a good point of reference when it comes to dealing with them. It can also set out agreed dispute resolution methods to help get to the bottom of issues with as little distress as possible.

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Financial and Legal Benefits of a Formal Agreement

A formal agreement should be put in place for a number of reasons, but one of the most important ones is for the financial and legal benefits that it can provide.

Once written confirmation of the assets belonging to the partnership are recorded, it may be possible for the partnership to qualify for 100% Business Property Relief (BPR), or 50% is calculating the deceased’s assets for inheritance tax purposes.

BPR is important as it allows business owners to pass on assets at a reduced rate of Inheritance Tax whilst they are still alive or as a bequest in their Will if they have owned the assets for at least two years before death. 

BPR requires a farm to be a predominantly trading business, and so your farming partnership agreement can help to prove this. Shares in a mainly trading business are eligible for 100% BPR, land or buildings owned outside of the business but used for business purposes may only be eligible for 50% relief. An agreement can create a much clearer picture of what is owned by the business, and therefore what is eligible. 

Agricultural Property Relief (APR) is also an important factor to consider in relation to your Farming Partnership Agreement and your Inheritance Tax plans. APR gives farming families the opportunity to pass agricultural property on during their lifetime or in their Will at a reduced or 0% rate of Inheritance Tax. In order to be eligible for this, the land or relevant property must have been owned for at least seven years or occupied for at least two years. 

Agricultural Property Relief can be due at 50% or 100% but does not apply to farm equipment, machinery, derelict buildings, harvested crops or livestock. It does, however, cover growing crops, rearing animals or take the form of farm buildings, cottages and houses. 

By considering all of this as part of your farming partnership agreement, you can help to benefit the business and avoid a lot of turmoil in the event of the death of a partner. 

Managing Changes and Succession in Farming Partnerships

Eventually, the time will come for a partner to move on, either through retirement, incapacity or death, and these can lead to big changes in the partnership. These will need to be managed carefully, so it is important to set out instructions in advance through the farming partnership agreement.

If an agreement has not been put in place, then the law states that all partners have equal profit shares, equal interests in all assets and that all property bought with partnership money belongs to the partnership. An agreement can outline what all of this should be, so that a departing partner or their families, will receive what they are rightfully entitled to. 

In most cases, the value of the shares and assets of a partner will be valued at current market rates. It is important to remember that a partnership agreement will override anything that has been written in a Will and so partners cannot leave aspects of the business to their families that they are not rightfully entitled to. 

When considering what will happen in the event of a death within a partnership, it is also wise to look at succession planning.

As many farms are run as family businesses, it may be the intention to pass it down through the family, and so these wishes should be written into the agreement. This can help to prevent the dissolution of the partnership in the event of a death, and can also stop personal representatives insisting on the sale of partnership assets.

The succession plan can include details on how and when family members will be integrated into the business, what their entitlements will be and what they can expect from the partnership. This can help to ensure everyone understands their position during a typically difficult and emotional time, making it much easier for all concerned.

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Lovedays Solicitors: Your Partner in Drafting Partnership Agreements

Whilst many farmers have relied on oral agreements over the years, it is now clear that these can lead to some difficult situations. Putting a farming partnership agreement into writing not only helps the partners get off on the right foot, but it also allows them to plan and work together more effectively.

It is important to seek professional legal advice during this process in order to ensure that the agreement is fair and valid. This can not only be beneficial in navigating relationships within the business, but also in conducting formal affairs such as applying for loans and relief schemes. It also allows for proper succession planning and can have a number of tax benefits as well, if written properly. 

At Lovedays Solicitors, we have long standing experience within the agricultural sector, and are therefore in the best position to draft your farming partnership agreement for you. We can not only give you the best possible legal advice, but we can also collaborate with accountants and land agents to make sure that the agreement is comprehensive and understood by everyone involved. 

Drawing up a farming partnership agreement is likely to be one of the most important aspects of setting up and running your business so it is vital that it is done in the right way to prevent any pitfalls in the future.

Conclusion

Creating a Farming Partnership Agreement is the best way to protect your farming future. It ensures that all parties go into the partnership with full disclosure and transparency. It is also designed to make sure that all assets and interests are recognised and protected.

Disputes between partners usually occur because they have not received the proper advice when entering into the partnership, causing doubt or resentment to occur. By drawing up a Farming Partnership Agreement with Lovedays Solicitors, you can benefit from our extensive agricultural legal experience to ensure that all necessary details are covered. This helps to avoid disputes throughout the working partnership and can also ensure the smoothest possible transition when any party departs. 

Our friendly and professional team will work with all of the partners involved and any other professional advisors to ensure your agreement reflects your partnership accurately and can provide something which is legally binding for you all.

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A Farm Business Tenancy is a formal agreement between a landlord and a tenant who wishes to operate a farming business on that land. This can be a complicated leasing agreement, and there can be a wide range of terms and conditions within it that stipulate how the land can be used, and any legal obligations that might pertain to it.

That means you will need professional legal advice to navigate the process, and we at Lovedays Solicitors are experts in the world of agricultural law. It is important to understand how a Farm Business Tenancy works, and how it will affect you and your business plans in order to ensure that it is suitable for the parties involved.

We have therefore put together an essential guide of all the elements of a Farm Business Tenancy that you need to be aware of.

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What is a Farm Business Tenancy?

Farm Business Tenancies (FBTs) were created under the Agricultural Tenancies Act 1995 to set out an agreement between a landowner and a tenant who wishes to rent all or part of a farm for their business needs. This will give them the right to use the land primarily or wholly for agricultural purposes and will outline the obligations of both the tenant and the landlord.

The FBT can refer to the agricultural land or farm buildings required to run the business, but it will only qualify as a Farm Business Tenancy if at least some of the land is farmed during the tenancy. In most cases, there will be a formal Farm Business Tenancy agreement in place, however, an FBT can be inadvertently created if a Grazing Licence is extended beyond 12 months with the tenant having exclusive possession and maintenance of the land. 

Whilst the words ‘tenancy’ and ‘lease’ generally mean the same thing, there is a distinct difference between the two. Typically, a lease refers to a business lease and a tenancy is used in residential agreements, however, when an agricultural letting qualifies under the Agricultural Tenancies Act 1995, the lease is then referred to as a ‘farm business tenancy’. It is still a type of business lease, but it holds a different name for these purposes.

Qualifying Conditions for FBTs

As a Farm Business Tenancy is different from other types of leases, there are certain conditions that need to be met in order to qualify. Not only is it necessary for some of the land to be farmed throughout the life of the tenancy, but if the land is agricultural to start with, then notices can be exchanged between the landlord and tenant confirming that it will remain an FBT throughout but allowing the tenant to diversify away from agriculture if the rest of the agreement allows this.

Should these notices not be exchanged for the tenancy begins, then the tenancy business must be primarily agricultural in order for it to still be considered to be a Farm Business Tenancy. 

The land must be farmed for the purposes of trade or a business, but this can apply to ‘any agricultural activity’ and not exclusively farming. Whilst at least some of the land must be farmed for the duration of the tenancy, it does not have to be the same piece of land, and therefore a tenant can change the location of the farming within the land during the tenancy, for example, in line with the seasons, as long as the practise is continuous.

Key Features of FBTs

Each Farm Business Tenancy needs to have certain key features within it relating to matters such as the terms of agreement, notice requirements, rent and the review features. These terms must be met in order for the agreement to be legal and must be maintained to ensure that the agreement remains valid throughout the duration of the tenancy. 

The features of a Farm Business Tenancy are in place for a number of different reasons. They are not only designed to protect the landlord and tenant, and to ensure that the agreement is fair and reasonable for all parties, but also to protect the land itself and to maintain consistent farming practises in the area.

Agriculture can apply to many different things, such as horticulture, the growing of fruits and seeds, the breeding and keeping of livestock, dairy farming, using the land for grazing, meadow land, osier land, market gardens and nursery gardens, or for woodlands that are ancillary to the farming land for other agricultural purposes.

This means that no two Farm Business Tenancies will be the same, as no two areas of land are the same, and neither are the different business plans of tenants. That means that each Farm Business Tenancy must be unique to the situation and drafted professionally to ensure that all of the relevant areas have been covered thoroughly and correctly. 

A Farm Business Tenancy is different to many other types of lease as the land in question is exclusively possessed by the tenant, with only restricted rights and control given to the landlord. This is to allow greater levels of certainty and stability for the tenants over a much longer period of time, meaning that the land can be subject to much more sustained investment and development as a result.

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Term of Agreement and Notice Requirements

As part of any Farm Business Tenancy, there will need to be specific attention given to the terms of agreement. Fixed tenancies of less than two years will automatically expire at the end of the term, meaning that a notice to quit from either the landlord or the tenant is not required.

If the agreed term is for a longer period than this, written notice must be supplied at least one year in advance. IF this type of tenancy comes to an end without notice being given, then the tenancy will become a periodic one under the same terms until one year’s notice is given by either party. 

The Agricultural Tenancies Act 1995 states that the maximum period of notice that can be given is 24 months, but the Regulatory Reform (Agriculture Tenancies) (England and Wales) Order 2006 allows tenants and landlords to agree on whatever maximum notice period they wish in their own agreements. 

Break clauses can also be added to the agreement, which gives either party the option to break after a set amount of time, however, at least 12 months’ notice must be given before the break clause can be operated. A surrender of tenancy can also be negotiated by mutual agreement. A landlord also still has the option to obtain possession of the land if terms of the lease are breached, such as failing to pay the agreed rental sum.

Rent and Review Procedures in FBTs

An important part of any lease agreement is to set out the rent that is due to be paid. This should be agreed by both the landlord and the tenant and can include terms relating to any down payments or deposits that might also be required.

When agreeing on rental terms, the amount should be fair and reflective of the size and quality of the land, as well as any restrictions that it may be subject to. The agreement should stipulate not only the amount, but also how and when that rent should be paid. 

As well as the rent, any Farm Business Tenancy should also include the subject of rent reviews. This is because the lease can often be overtaken by increasing market rents, and therefore ensures that it remains fair and reflective of the current markets.

Rent reviews are usually favoured by landlords, particularly in the case of long-term leases, but these can be contracted out of the agreement if both parties agree, but they will still be able to choose for themselves how often reviews should take place.

They cannot agree to exclude the possibility of future rent reductions and either party can then demand a review every three years. 

There is a lot of flexibility available within Farm Business Tenancies with regard to rent reviews, so it is important to get proper legal advice on this subject, especially when leases are over a long period of time, to ensure that all parties are protected in a fair and transparent way. 

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Tenant’s Rights and Compensation for Improvements

During any Farm Business Tenancy, a tenant may want to make improvements to the land that they occupy. They are within their rights to do so, but if they are leaving the landlord in a better situation when they quit than they were originally, then the tenant may be entitled to compensation. This can apply to physical improvements that have been made as well as intangible ones. 

A physical improvement may refer to improvements to properties on the land or access, whilst intangible improvements can be things such as planning permission that was not taken advantage of before the tenancy ended or a milk quota that was acquired during the tenancy. Whatever the improvement in question, it is important to remember that no compensation will be payable if the landlord has not given consent to it. 

If the parties are not able to reach an agreement to consent, then the Agricultural Tenancies Act 1995 gives the tenant the right to demand arbitration if they have not already made a start on the improvements. The arbitrator can also determine the value of the improvement whilst taking into account any financial contributions from the landlord or any grants that have been applied. 

It is important to remember that a tenant will also make routine improvements during their tenancy, such as repairing fences, and these can be carried out before seeking consent if they are part of the normal course of farming. 

Any compensation that is paid to the tenant should be at the current value of the improvement when the tenant quits the property, therefore allowing them to benefit from the increase in capital value, and no agreement to the contrary can be made. This is something landlords should take into consideration when giving consent, and they may therefore prefer to undertake the work themselves.

Diversification and Non-Agricultural Use

A tenant may want to diversify what they do during the tine of their tenancy, but it is important that they seek the permission of the landlord first. This means that the tenant can change the use of the land to a non-agricultural business after the lease is granted if all of the right notices have been exchanged before it began. The Agricultural Tenancies Act 1995, does not state what limits there are on this kind of diversification, and it may become more complicated to prove that some of the land is still farmed. 

Nonetheless, it is permitted for tenants to run peripheral or additional business operations on the land alongside the agricultural purposes, and so they may choose to open a farm shop, put together a caravan or glamping site or use the land to graze horses (which do not count as livestock as part of the Act, as they are not used for the production of food, wool, skins or fur, or for the purposes of being used for the farming of land). 

If diversification goes far enough to no longer qualify as an FBT, then the tenancy will become regulated by the Landlord and Tenant Act 1954 like all other business leases.

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Lovedays Solicitors: Your Partner in Agricultural Land Transactions

Granting of Agricultural Tenancies

At Lovedays Solicitors, we have vast experience in dealing with all kinds of agricultural land transactions, and can advise you every step of the way, whether you are a landlord or a tenant. We understand the agricultural market and can therefore assist in putting together and granting agricultural tenancies.

As part of our role, we can help to draft your unique Farm Business Tenancy agreement and can ensure that all parties are happy with the terms within it, so that it represents something that can support your business and help it to flourish in what is a sometimes tricky landscape.

Our specialist team of agricultural lawyers will negotiate between parties to grant a tenancy that is fair to everyone and ensures the correct and legal farming of agricultural land for the duration of the agreement.

Advising on Agricultural Tenancies

As experts in the field of agricultural law, we can also advise on Farm Business Tenancies, by carrying out all necessary investigations and research. We can therefore provide sound and informed advice that takes the whole picture into consideration.

We can assist in explaining any terms of the agreement which are unclear, and our friendly and experienced team are always on hand to answer any questions that you may have. We can help with dealings between parties and with any governing bodies, as well as ensuring that all aspects of the Farm Business Tenancy fall within the rules set out in the Agricultural Tenancies Act 1995. 

Conclusion

Farm Business Tenancies are important in order to protect the interests of landlords and tenants in the world of agriculture. They are in place to ensure that the agriculture industry remains intact and that businesses within it can continue to grow.

Lovedays Solicitors have been representing their Derbyshire based clients since 1905 and have developed an in-depth understanding of the laws and challenges surrounding agricultural agreements.

We can therefore help with any Farm Business Tenancy queries, from drafting and granting an agreement, to dealing with extensions, notices to quit, rent reviews and compensation enquiries, so please get in touch with our friendly and professional team to see what we can do for you.

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When buying or selling agricultural land, the process can be a long and complicated one. There are a number of aspects that are involved, and so things such as conveyancing, deeds, titles, and boundary disputes all need to be taken into consideration. Unlike transactions involving domestic properties, there are some unique challenges involved in agricultural land changing hands.

It is therefore important to someone with expert knowledge involved to take you through each stage. At Lovedays Solicitors, we have experience in dealing with the sale and purchase of agricultural land and can make the entire process much easier and less stressful. We can provide specialist understanding to ensure that the transaction runs smoothly, and you can avoid any of the typical pitfalls. 

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Understanding Agricultural Land in the UK

In the UK, agricultural land refers to any bare land which is used for the purposes of agriculture. This can include land that is used for horticulture, fruit and seed growing, dairy farming, livestock breeding and keeping, grazing, meadow land, osier land, market grounds and nursery grounds. The term also applies to woodlands where the use is ancillary to the farming of land or other agricultural purposes. 

Agricultural land can cover a range of sizes from a commercial enterprise to a smallholding, and may include a house, outbuildings or other surrounding land. If there is woodland involved, this can be used for forestry purposes or as a natural wildlife habitat. Any land defined as farmland will refer to space that is used for things such as crop production, livestock grazing or horticulture. 

Before purchasing agricultural land, you need to carefully consider how you intend to use it. If you intend to change its primary purpose or any infrastructure that is in place, then you might need legal permission to do so. It is also important to consider restrictions or covenants on the land that might limit what you are allowed to do with it.

There may also be environmental regulations relating to water quality, soil conservation or wildlife protection and certain activities might require specialist licences or permits. It is therefore important that you understand your goals and aims for the land and get your solicitor to research the land in question to find out whether the land will be suitable for this. 

The majority of agricultural land in the UK is now registered, however, this does not apply to all of it. In order to purchase unregistered land, you will need to conduct some detailed research in order to ensure that the owner has the legal title to sell the land.

Steps to Buying Agricultural Land

When purchasing any agricultural land, it is important to check who owns the land and whether there are any legal considerations such as a right of way, or limits on building or altering property. You may find that there are more restrictions if the land falls within a protected area such as a National Park or Area of Outstanding Natural Beauty. 

You will also need to understand exactly where the boundary of the land lies. It is also important to understand factors such as the type of terrain, access restrictions, the soil quality and the drainage of the area, as this can all affect the way in which you plan to use it. In addition to this, you should be aware of any other aspects of the land that cannot be changed, such as power lines, cables, pylons or telegraph poles that you will be required to work around. 

As part of your research, you should also look into the past use of the land as well as the present. An Agricultural Land Search will allow you to see if there are restrictions on the crops you can grow or the animals that can graze in the area. You should also be aware of any planning applications that might affect the land. 

At Lovedays Solicitors, we can perform all of these checks for you to help build a full picture of the land that you are interested in. This helps you to have full transparency with regards to your purchase, and you can be confident that you are putting your money into land that will meet your requirements. 

The way in which you intend to finance the purchase of agricultural land also needs to be thought about, as it can be complex. Banks and lenders tend to be much stricter over the lending criteria for agricultural land than they are for residential property, and so they may require a much larger down payment, and in some cases, they can ask for evidence of your farming experience as well as your business plan and income details. 

Once this is all in order, we can ensure that all paperwork is brought together in order to complete the transaction. At Lovedays, we can put everything together for you, to ensure all of your searches and applications are completed professionally and correctly. This will help the purchase to run much more smoothly and with fewer delays.

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Key Legal Considerations in Purchasing

By law, all agricultural land must be registered on the Rural Land Register (RLR). The title deeds will also need to be registered with HM Land Registry. The title deeds will show the chain of ownership for the land and can include conveyances, contracts for sale, wills, mortgages and leases. This is now kept digitally, so it is not necessary for anyone to keep paper copies and they can be easily accessed should you need to show your ownership status, rights or boundaries. 

There are a number of environmental regulations which can apply to agricultural land, including Farming Rules for Water, Storage of Silage, Slurry and Fuel Oil (SSAFO) regulations and Nitrate Vulnerable Zones (NVZs). It is important that you are fully aware of which ones apply to your land and activities and how this will impact on your purchase. 

Agricultural land is also subject to planning regulations, which you will need to be aware of if you plan to build or extend any properties or fences. You also need to be aware of what the land is currently used for and whether there are any restrictions on changing this before you sign on the dotted line.

Selling Your Agricultural Land

When it comes to selling your agricultural land, you will need to show it in its best light. Where possible, ensure that it is in good condition, that all boundaries are intact and that gates are secure. You will need to agree what condition the land will be left in, such as having harvested crops or removed livestock. 

It can be difficult to put a value on agricultural land, as it presents such a wide number of possibilities. It is therefore important to not just take into consideration the current condition, size and use of the land, but also the future opportunities it can present, which may lead to an uplift in value. For example, the granting of planning permission to allow future development, may lead to the land holding a much greater value, and the price should therefore reflect that. 

When considering the value of the land, it is also important to think about any restriction on the space that may negatively impact its value. These may relate to its use, environmental restrictions or rights of way, as they could prove to be a barrier to some potential buyers.

The value of your land will also be determined by its productivity, commodity prices, any crop shares that may apply and the rate of return. By weighing up all possibilities, it is much easier for the experts at Lovedays Solicitors to help devise a fair value for all parties. 

Once the land is ready and the valuation has been set, you can then think about marketing the land. Make sure that your contract pack is in order so that interested buyers can have all the information that they need to make an informed decision.

You should ensure that some high-quality photographs are taken to show all that the land has to offer and create detailed plans of the land and any properties within it. You should also list all of the services and amenities that the land benefits from to ensure that you not only attract buyers, but the right type of buyers.

Legal Aspects of Selling Agricultural Land

When selling agricultural land, you will need to put together a contract for sale which sets out everything that has been agreed with the buyer. These special conditions could cover the treatment of grants, schemes and entitlements, what is included within the sale and whether the land and property is sold with vacant possession.

Leaving anything on the farm that has not been formally agreed, such as old machinery, livestock or rubbish may leave you in breach of giving vacant possession. The contract will also include standard elements such as the deposit that needs to be paid, the timing of the exchange and completion of contracts and any insurance that might be in place. 

It is important that you are fully aware of the tax implications that can come with selling agricultural land. In many cases, you may find that you are subject to Capital Gains Tax at a rate of 28% unless the seller qualifies for Entrepreneurs’ Relief. It is also important to consider the apportionment of the sale price between the house, if there is one, and the land in order to maximise the Principal Private Residence Relief (PPRR). 

When contracts have been exchanged, the transfer deed will need to be drafted and agreed between all parties. This is the formal document which will transfer the ownership of the land when the contract is completed and can be drafted by Lovedays Solicitors. 

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The Role of a Solicitor in Land Transactions

As the sale and purchase of agricultural land can be lengthy and complicated, it is important to seek professional legal advice every step of the way. This will help you to understand what factors will affect the transaction, and how regulations, covenants, rights and restrictions can all impact on the use and value of the land. An experienced solicitor can represent you through all of this and conduct any necessary research and searches on your behalf to ensure that you have the fullest possible picture at all times. 

Your contract will need to be very detailed, and so you will require a solicitor to draft this for you and review any changes that are made. This will help to ensure that it is correct and fair and will also guarantee that it is a legally binding contract. By seeking help and advice from a solicitor who is knowledgeable about the agricultural sector, you can also be confident that the land transaction will be compliant with any relevant agricultural law. 

The solicitor can also draft transfer deeds and liaise with lenders by carrying out due diligence checks. This means that any concerns can be raised, and plans can be put in place to help satisfy the lender. 

Once the sale has been completed, a solicitor can deal with the other formalities, including discharging all borrowing as well as any money owed to HM Revenue & Customs. They will also ensure that an application is made to the Land Registry to register the legal ownership of the property.

Lovedays Solicitors: Your Partner in Agricultural Land Transactions

At Lovedays Solicitors, we have many years of practical experience in dealing with agricultural land transactions. We have specialist agricultural lawyers on hand who can help you with the sale or purchase of any agricultural land, no matter what its size or type may be.

We have spent many years developing an in-depth knowledge of the sector, putting us in the best position to represent you effectively. We can offer expert advice and have a good understanding of the unique factors that can impact on the sale or purchase of agricultural land, including the restrictions and regulations that may be relevant. 

The sale of agricultural land is very different to any other, and so it requires specialist knowledge. We understand that no two sales are the same, which is why we pride ourselves on offering a personalised service that is tailored to your precise needs.

We will take the time to understand your needs and goals to help guide you through a transaction that is best suited to you. By having our friendly and experienced team on hand, you can avoid much of the stress that is often involved in an agricultural land transaction, and we can help to minimise any delays to ensure that the process runs as smoothly as possible.

Conclusion

Buying and selling agricultural land is not always straightforward, and that is why Lovedays Solicitors are here to help. We can help you to understand the regulations and restrictions that you might be subject to, conduct your searches and draft your paperwork to make sure that your transaction is dealt with by experienced and dedicated experts at all times.

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