The Agriculture Act 2020 brought many changes to the system of rural grants and payments for farmers. As a result, our farming clients have had to plan for the future and change the way in which they work in order to adapt to the new system. James Goddard, Commercial Property Partner in our Agriculture department, outlines some of the changes and recent cases the team has dealt with as a result of the Act.
Converting Farm Buildings
The Basic Payment Scheme (a system of rural grants and payments that support the farming industry) will be phased out by 2027. Therefore, in order to replace this and provide a new revenue stream and to reduce long term operating costs, we have seen an increase in demand for changes to planning use. This has led to more farm buildings being used for commercial purposes. For example, we have recently acted for a landowner in the re-mortgage of a farm in order to release capital for refurbishment of former farm buildings for commercial use, as well as to release funds to invest in technology.
Leasing of Farmland
Due to the COVID-19 pandemic, tourism took a hit, and many people chose not to continue to let their farm buildings for residential purposes. Instead, landowners saw an opportunity to lease their farm buildings or land to companies. For example, we recently acted for a landowner in the grant of an option agreement, which permitted a solar company to lease part of the farm to use as a solar park. This provided a potential increase in value due to the rental income; we worked with our client’s land agent and accountants to structure the ownership of the solar park and remaining farm in the most tax efficient manner.
Sale of Farm Buildings
The sale of unused farm buildings enables the landowner to invest the proceeds into the farm and create more revenue for the business. Our team of agricultural specialists acted for a landowner in the sale of their farm buildings, including planning permission to convert the farm buildings for residential use. Furthermore, rights for the seller to occupy the redundant farm buildings for agricultural use from completion of the sale up until implementation of the planning permission were incorporated.
Our team of agricultural experts take a holistic approach and work closely with other professionals to structure transactions and ensure they are on the best commercial terms, all with the benefit of tax advice.