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THE LEGAL CONSIDERATIONS
OF FARM DIVERSIFICATION
By Sarah Jordan, landed estate lawyer and partner at top-100 law firm Moore Barlow.
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When seeking to diversify your farm, there is a range of legal considerations you must take into account when drawing up and implementing your plans. Listed below are the most pressing concerns for any rural diversification scheme. One of the first big hurdles that landowners seeking to diversify come up against is planning law. Planning is a major consideration, and it is important to check whether you need planning approval to pursue your objectives, or whether you can diversify without any consents from your local authority. You must also always check your property’s title deeds and consult your lawyer to ensure that they don't restrict you in any way from implementing your plans. It is not uncommon for property titles to contain covenants and obligations to prevent changes in use. Examples include restricting the conversion of private residential buildings to commercial business premises or preventing certain areas from being used to store trailers and caravans, making it impossible to use the land as a storage site or caravan park.
The question of funding is also a vital consideration. Although the Government has reduced the basic payment scheme (BPS) and is phasing de-linked payments out over the next three years, alternative sources of funding are available. A whole host of grants and schemes for environmentally focused rural businesses has been set up in recent years, and farms seeking to diversify are well advised to consult an agent to learn more about their potential options. Another major factor in successfully diversifying is to have a clear understanding of who will be managing the diversification scheme and of any structural changes that might be needed. Is the rural business set up in a partnership? If so, have the partners established what their respective roles and responsibilities will be? Do they require new business entities to implement diversification? Is it necessary to set up a new business structure? It is crucial to have clarity at this ‘nuts and bolts’ level when embarking on any new rural business venture. To answer these key questions and run a
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DECEMBER 2024 | WWW.SOUTHEASTFARMER.NET
successfully diversified rural business, it can pay dividends to have a team of professional advisers in place to help you with establishing and then operating your commercial venture in the long term. Ideally, this team should include an accountant, buying agent, managing agent, banker, financial adviser and lawyer, all with relevant experience of the unique challenges and opportunities that come with a rural business venture. As part of such a team, your legal adviser will draft and review legal contracts, advise on title deeds and planning law and provide guidance on business structure, to name but a few key aspects. Although landowners will often consult a lawyer at a later stage in the diversification planning process, it can be a good idea to seek holistic legal advice from the outset, as lawyers with the relevant expertise are well placed to assess your current situation and your proposed diversification plans in the round. They can then help you to assemble your adviser team accordingly, giving you a greater chance of success in your new business venture.