Business Clinic: Can I cut an agricultural tie on a small farm?

Farmers Weekly’s Business Clinic experts offer free advice on legal, finance, tax, insurance, farm management and land issues.

Here Alex Madden, partner at Thrings – offers guidance on how one might go about releasing an agricultural occupancy condition (AOC).

Q: I farm a small acreage growing, processing and marketing fruit. I lacked capital to rent/purchase land so my first orchard was established on 0.12ha owned and previously cultivated by my parents (this land totals 0.75ha). An AOC ties my parents’ house to two fields, on part of which my orchard is established.

My parents are retired, over 65 and in declining health. I would like to remove the AOC – if this is possible then the two fields could be subdivided from the house and sold by my parents to my business.

My parents can then choose to sell the house if they wish, without devastating my fledgling business. I do not have the funds to purchase the property outright.

I understand there might be case law where AOCs have been removed from properties smaller than 2ha as it is deemed that you cannot earn a living from such a small area.

Second, one could consider that even the RPA deems less than 5ha to not be an “active farmer”.

See also: How to deal with farm partnership breakdown

I could expand the orchard, but only by 0.05ha, however the business has orchards established elsewhere totalling 1.75ha.

The AOC says: “This single horticultural unit administered from the dwelling shall not fall beneath the acreage specified as at the date of this permission.”

Could one argue that 0.75ha is now too small a holding to satisfy the condition stated in the AOC?

Alex Madden, partner, Thrings

A: The first point to consider is whether your parents have complied with the AOC.

For instance, in this case, if the unit administered from the dwelling has fallen below the acreage specified at the date of the permission then there may well be an argument that the condition has been breached.

More generally, it is important to review the specific wording of the AOC as this can differ between local planning authorities (LPAs).

If the AOC has been breached for a continuous period of 10 years, the breach may have become immune from enforcement action and you can apply to the LPA for a Certificate of Lawfulness (CoL).

For this to be granted, you need to prove the breach has continued for 10 years without interruption. If you have been living with your parents at the property, the AOC may have been complied with as, depending on its wording, you are likely to be considered a “dependent” of your parents.

If this option is not open to you, you need to consider whether the AOC can be lifted through a detailed planning application.

Assuming the property is in England, while there is no guidance on the use and removal of AOCs in the National Planning Policy Framework, there will be a local planning policy that deals with the same.

This is likely to require the applicant to demonstrate there is no need for the dwelling in the locality.

LPAs often issue their own guidance on AOCs, and you should consult this where available.

However, generally, to demonstrate the above you would need to market the property at a price reflecting any decrease in its value as a result of the AOC for a certain period of time, which can be anything upwards of six months depending on the wording of the local planning policy or the LPA’s requirements.

You should take professional advice here and have an independent valuation carried out by a suitably qualified valuer with experience of the local rural housing market before marketing the property. The marketing exercise will need to be vigorous and genuine to avoid any suggestion it was a sham exercise to bring about a “no sale” result.

In relation to smaller holdings – as in your case – you still need to apply to the LPA for the condition to be lifted in the normal way and, as part of the application, need to carry out a proper marketing exercise as above. If your application is refused by the LPA, you may appeal to the secretary of state.

Here an independent inspector would review the arguments submitted by both you and the LPA.

This is likely to involve a detailed consideration of the demand for any agricultural-tied dwelling in the locality.

If it can be shown that the land is insufficient to support a resident farmer who could continue to comply with the condition, this would suggest there are grounds for the removal of the condition.

There are a number of appeal decisions involving very small parcels of land and these indicate that your parents’ holding may well be considered too small to generate the necessary income for someone to be “employed” on the holding.

One issue that will need to be addressed is your need for a rural worker’s dwelling. The LPA or the inspector on appeal would need to consider this in detail – they would be loathe to lift the agricultural tie, allowing the dwelling to be sold on the open market only for you to submit a subsequent application, for a rural worker’s dwelling to meet the essential need of your business.

Evidence is key to lifting an AOC and you may wish to seek further advice on the likely requirements.

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