What are they and when do they apply?

An agricultural or other occupancy condition is often imposed on new rural properties to limit the use and occupation of the property to either those specified within the condition or to others who can comply with it. Such restrictions are generally aimed at ensuring that the property remains available to the business; failing that the wider agricultural community or to anyone else that may be able to comply with it.

The implications of these conditions have a major impact on;

  • Value;
  • Saleability; and
  • Flexibility

Typically, problems occur for existing owners when they want to release equity from the property or re-mortgage as the occupancy restrictions can reduce the overall value of the property by at least 30% and also limit the number of lenders that are willing to provide borrowing against it. Owners also find that their market for future purchasers is also severely limited as new purchasers will experience the same difficulties with valuation and lending as existing owners. As a result, many owners may seek to rent out the property and receive a regular income. However, the restrictions will also apply to any future tenants which again further restricts the properties rental income and rental potential.

Why should you get them removed?

By removing the restrictions you can raise the value of the existing property by at least 30% or more. This increase in value could then be realised through equity release or through adding asset value to the farm or business. It also opens up the market to additional lenders if you are looking to re-mortgage which may allow for a better mortgage deal or interest rate thereby helping to lower your monthly repayments.

By removing the restrictions you not only achieve full market value for the property but you also open the property up to a wider market of potential purchasers and lenders. This will help to sell the property easily and quickly whilst at the same time getting the best price as possible.

Additional Property
By removing the restriction there is also the opportunity to apply for a new property which would then be subject to a new occupancy condition in lieu of the one that has been removed. This new property would ensure permanent accommodation is available for the farm or business. The result would mean that you would be free to dispose of the unrestricted property and realise its full value should you wish.

By removing the restrictions you could also then rent the property to provide an additional monthly income at a market rent and to a wider market of potential tenants. You could also consider taking out a buy to let mortgage on the property to free up additional equity.

What are your options?

Removal of condition
This is done through a planning application with proof that there is no longer any need for the property at the farm, business or in the locality. This is demonstrated by the failure of an extended marketing campaign to find a buyer for the property who is able to comply with the condition.

Non-compliance with a condition
Non-compliance with a condition is unenforceable if sufficient time has passed such that the local
authority can no longer take any action. In the case of occupancy conditions, this is usually 10 years but can be as little as 4 years. If non-compliance has occurred continuously for at least 4 years or more, a Certificate of Lawful Existing Use or Development (CLEUD) could be applied for and would then allow for occupation without complying with the condition.

Amending the condition
It is possible to amend a condition, for example, to bring it into line with modern wording or to add
other uses. This also has to be done by a planning application to the local authority.

If a property you own has, or even may have, an occupancy condition, then please get in touch for a free review and we will determine which option is best for you.

Contact Craig Ross 01665 600163 / 07808 761908 or Amanda Devereux 01665 511994