What is an Agricultural Restriction?
An Agricultural Restriction is a condition imposed by a Planning Authority, when granting planning consent for the building of a dwelling, usually in an area where otherwise development would not be allowed. The typical scenario is an agricultural worker’s dwelling, where the development has been granted in response to a need for accommodation and this can often happen in family situations where a son works on a farm and where it can help to ensure succession and operational efficiency.
They are sometimes referred to as Agricultural Ties, Agricultural Occupancy Conditions, shortened to aoc’s or colloquially as ag tags.
Sometimes an agricultural restriction is wrapped up as part of a section 106 (of the Planning Act 1990) agreement (of which more later). The process begins with an application for planning consent or permission to build a dwelling. The Local Planning Authority (LPA) may grant planning consent but, in cases where development might not usually be given (such as in the country), the LPA may seek to restrict the type of person entitled to occupy the property in an attempt to limit usage to what the property was initially planned for. Were the planners not to adopt this policy, any person would seek to develop green belt land and so, in my view, there is every justification for occupancy conditions.
A typical wording might be “the occupation of the dwelling shall be limited to a person solely or mainly employed or last employed in the locality in agriculture as defined in section 336(i) of the Town and Country Planning Act 1990 or in forestry, or a widow or widower of such a person (including any dependents of such a person, residing with them).” However, I have seen variations on this theme and some conditions have been far more restrictive than this. Not only farms are affected by planning conditions, such as Agricultural Restrictions and just about any property that has land with it, or any property that was formerly part of a larger property with land might be affected. If the dwelling was built after 1949, when the planning rules came in, it might be sensible to check this out with the LPA.
It is useful at this point to look at the definition of agriculture contained within section 336(i) of the 1990 Act which states:
“agriculture” includes horticulture, fruit growing, seed growing, dairy farming, the breeding and keeping of livestock (including any creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of land), the use of land as grazing land, meadow land, osier land, market gardens and nursery grounds, and the use of land for woodlands where that use is ancillary to the farming of land for other agricultural purposes, and “agricultural” shall be construed accordingly;
Over the years I have seen situations where planning restrictions limit occupation of a dwelling to employment in a specific business or in association with activities carried on the land, part of which comprises the dwelling. These are more restrictive in the sense that the ability to occupy a dwelling is dependent upon the fortunes of a business. If the business goes bust, the question would be one of who could then buy the dwelling?
The effect of a planning restriction is to limit those persons who are entitled to occupy a property and this in turn limits the market to which the property may be sold. As a result, the values of properties with restrictions are almost certain to be less than properties without, by anything up to 30%. I have seen more and less than this figure.
A planning restriction will have an impact on mortgage availability:
a) There will be fewer lenders around willing to advance a mortgage on it and;
b) A restriction will have an impact on valuation.
It is therefore important to approach a specialist finance broker, like Farm and Country Finance, to arrange finance.
Section 106 agreement
The planning system underwent a number of alterations, which were consolidated in the Town and Country Planning Act 1990. Section 106 substantially re-wrote Section 52 of the 1947 Act, settling the concept of agreements (known as “planning obligation agreements,” or more commonly “Section 106 agreements”), under which the developer is subject to detailed arrangements and restrictions beyond those that a planning condition could impose, or by which he makes agreed financial contributions beyond the immediate building works to offset development effects on the local community. This was soon amended to allow a developer to self-impose obligations to preempt objections to planning permission. This prevents the planning authority from blocking permission by merely failing to negotiate.
Section 106 of the Act allows a local planning authority (LPA) to enter into agreements, which are legally binding, with a person or persons who want to develop land. Agreements are by deed and can cover almost any relevant issue with often, if not always, an emphasis on placing restrictions or obligations on developers. The objective is usually to minimize the impact of a development on the local area and community and/or to the carrying out of obligations, which will provide community benefits.
Possible examples of matters that might be included are:
- Transferring an area of land (e.g. woodland) to the LPA with a suitable fee for maintenance.
- Restrictions on the development of an area of land, or permission only for certain operations to be carried out on it in the future – this is where the LPA may impose the Agricultural Restriction.
- Creation of something for the benefit of the community such as a nature reserve or schemes for the planting of trees.
These are only limited examples of what might be included in one of these agreements but, once again, as the emphasis may be on restriction of use, such agreements may limit the market to which a property may be sold and may have an impact on valuation.
Basically, if the LPA is looking for a section 106 agreement or to impose an occupancy restriction, it will be because the type of development would not normally be allowed. This is typical in rural areas.
- Removal of an Agricultural Restriction,
- Borrowing and
- Buying a property with an Agricultural Restriction.
If you own a property with a restriction, you may have considered having the condition removed which is not an easy process and requires expert advice from a planning consultant. The two routes will usually be by making a planning application for variation of the earlier consent, or by an application for a Certificate of Lawfulness. The latter is used where there has been a sustained breach of a planning condition for a period exceeding ten years and where the LPA has not served an Enforcement Notice. A breach of the condition might be where persons who are not in agriculture, as defined by the Planning Acts, have occupied the property for more than ten years. However, this can be a minefield and any sort of application should only be made with expert advice. Where an LPA becomes aware of a breach in planning, it may serve an Enforcement Notice seeking compliance with the conditions; anyone receiving one of these needs to consult an expert. Whether you seek to remove an agricultural restriction or vary an earlier permission, you will need expert guidance. In selecting a planning consultant, the firm should be familiar with the LPA in whose jurisdiction the property is situated. Such firms will usually be local rural chartered surveying practices – there are firms with a national presence, though you should ensure they have an office or persons local to the LPA area in which the property is situated.
The number of lenders are less in number than for situations where there are no planning restrictions or conditions. In many of the cases I see, persons have already been to lenders, often through other brokers who (with respect) might not understand the implications of them.
In terms of getting a mortgage, again the number of lenders is limited. However, when buying there are other considerations to take into account. One of our website case studies exemplifies what can happen without an experienced specialist finance intermediary involved; in this case mortgage brokers missed the signs that a property might be the subject of a restriction and thus made no enquiries – this is the link: http://www.farmandcountryfinance.co.uk/case_studies.html and the relevant case study is number 11 which you will find by scrolling down the page.
The money involved with missing a possible restriction can be substantial. If you intend to live in a property for the duration, buying a property with an Agricultural Restriction is not a bad thing because you would generally pay less for it than you might, for the same property, where there is no restriction. Bear in mind though, that you will need to comply with the restriction, which generally means that you will have to be engaged in agriculture or similar activities as set out within the definition of agriculture. You may get away with running a secondary business by running a few sheep or poultry but the interpretation of the condition is all important. If you get it wrong and the LPA gets wind that you occupy the property, in breach of a planning condition, you may be served with an Enforcement Notice which can be onerous.
So, if you’re buying a property: –
- If the property is in the country or has land with it, do not rely on what the selling agents or the seller tell you. If the property was built after 1949, get in touch with the LPA (often available online) and ask for a planning history, and get copies of the relevant decision notices. Even lawyers can fail to pick this sort of thing up and even if they do, they will come across it via their local search, which may be carried out after you have already spent money on valuations, and searches. A little research yourself is a low cost option. Remember that even what appears to be a normal modern house can be subject to a restriction. I have come across what appeared to be a modern house, in the country, with just a good garden, which ordinarily would not be expected to have a planning restriction. When I made enquiries I found out it had one – it had been part of a farm and had been sold off. Incidentally, the current owners were aware of this and had taken the risk of occupying for the time needed to apply for a Certificate of Lawfulness. I stopped them from making the application, as they were within the ten year period and would have alerted the LPA to their breach of the restriction.
- If enquiries turn up a planning restriction of any kind and the seller has not told you about it, your first inclination might be to withdraw from the purchase. At the very least, renegotiate the price under the basic concept that the restriction will have an impact on the valuation and if the seller will not drop the price, then would be the time to withdraw. In the case study, I referred to earlier, the vendor would not drop the price and my customers walked away and later found a far better property, though an Enforcement Notice had been served in respect of that property and had to be sorted out as well.
- If you already know there is a restriction, or come across one, you need to interpret it carefully to ensure that when you occupy the property you can comply with it. You can take a risk, occupy, and hope to go ten years without the LPA being aware and then apply for your Certificate of Lawfulness, which effectively removes the restriction. I have seen this happen successfully, but I have also seen the reverse, with serious consequences. Keeping on the right side of the planners is in my view, generally the right way to approach any dealings with them. The reality is that the planners can and do issue enforcement notices.
Mark Bracegirdle FCCA FMAAT