Farm buildings to dwellings simpkins edwards, stags and peter, peter & wright

‘Farm Buildings to Dwellings’
Agricultural Update for Farmers and Landowners
Holsworthy Golf Club, Holsworthy
Wednesday 1st October 2014

Jo Maynard BSc (Hons) MRICS FAAV
Nicola Palfrey BSc (Hons)
Permitted Development
The West Country is Stags Country
stags.co.uk

stags.co.uk
Town and Country Planning (General Permitted Development) (Amendment and Consequential Provisions) (England) Order 2014
•6th April 2014
•Agricultural buildings to dwellings, up to 3 units (their combined floor area must not exceed 450m2)

stags.co.uk
•Prior Approval for Change of Use - Class MB(a)
•Prior Approval for Building Operations - Class MB(b)
However this can be done through ONE application
One application can include all 3 buildings

Process:
-56 days from receipt of application to consider and approve or refuse
-No decision = deemed consent
-Right to appeal a refusal
stags.co.uk

stags.co.uk
The Exclusions
Designations
Conservation Area
Area of Outstanding Natural Beauty (AONB)
National Park
World Heritage Site
Statutory Listing
Site of Special Scientific Interest (SSSI)
Safety Hazard Area or Military Explosives Storage Area
Scheduled Monument

stags.co.uk
Building must pre-date 20th March 2013
Building must have been in agricultural use on 20th March 2013 or last used for agricultural purposes
Maximum internal footprint to be converted = 450m2
3 Dwellings per established agricultural holding
10 year bar on erecting new buildings under PDR
Partial demolition

stags.co.uk
Areas to be addressed:
•Transport and highways impacts;
•Noise impact;
•Contamination risk;
•Flooding risk;
•Location and siting needs to be practical and desirable;
•Garden size.

stags.co.uk
Other Issues
Community Infrastructure Levy (CIL)
S.106 Legal Agreements
Planning Conditions

The Scenario
Mervyn
Janet
Chris
Chloe
Lauren
stags.co.uk

•Mother and Father own a 300 acre dairy farm. They live in the farmhouse.
•Son, Chris, farms in partnership with his Mother and Father but owns nothing in his own right. He rents a small cottage in the local village with his pregnant wife, Lauren.
•Daughter, Chloe, is a Nurse and lives in town with her fiancé.
stags.co.uk
The Scenario

Map of the farm
Farm Lane
Building B
Farmhouse
Building C
Building D
Slurry Store
Modern Agricultural Buildings & Parlour
Building A
stags.co.uk

stags.co.uk
Building A
No apparent
major issues.
Note: Every time when considering a barn for conversion, your overall objectives are key.
Do you want to sell it away or rent it out or is it for a family member or worker to be nearer the farm?

stags.co.uk
Building B
Issues:
–Location: close to the farmhouse (possible depreciation in value to both due to close neighbours, wouldn’t split easily).

stags.co.uk
Inspiration?

stags.co.uk
Building C
Issues:
–Transport and highways

stags.co.uk
APPROVED!

stags.co.uk
Building D
Issues:
–Noise
–Practical or desirable location and siting.

stags.co.uk
The possibilities are endless…

stags.co.uk
Thank you for listening.
Jo Maynard BSc (Hons) MRICS FAAV
Launceston: 01566 771808
professional.launceston@stags.co.uk
Andrew Ranson MRICS FAAV
Truro: 01872 279911
professional.truro@stags.co.uk
Nicola Palfrey BSc (Hons)
Launceston: 01566 771808
professional.launceston@stags.co.uk

Mary Jane Campbell
Partner, Simpkins Edwards LLP

Tax and properties
Tax and planning / planning for tax
What do you want to achieve?
Convert to residential properties where possible?
Provide on-farm accommodation for Chris?
Provide for Chloe?
Timing?

Tax planning
About maximising reliefs
Be clear who owns what
How much did the assets cost (CGT)
What have they been used for / by whom?
Planning changes – think tax as well as practical aspects

Taxes
Taxes (and reliefs) to consider
Capital gains tax (rollover, holdover, PPR, ER)
Inheritance tax (APR, BPR)
VAT
SDLT
Income Tax (?)

On-site accommodation for Chris
Develop building B for Chris?
Give Chris farmhouse and develop building B for Mervyn and Janet?
Gift building B to Chris (claim holdover relief)
Chris uses DIY house builders scheme to recover VAT
IHT – Potential Exempt Transfer (7 year clock)
No consideration: No SDLT

On-site accommodation for Chris
If subsequent house swap:
No capital gains tax if PPR relief applies
Potential SDLT charge for both properties(?)
APR relief on farmhouse can be maintained
No VAT implications

Providing for Chloe
Needs to be practical – assume Chloe not interested in a building next to a slurry store!
Might be interested in building A? Let’s say she doesn’t want to live on the farm.
Challenging to find a way of making gifts without compromising farm.
More of Chloe later………

Financing
How to finance the developments and / or gifts?
Can you borrow against future rental income?
Sell an asset – e.g. building A for 3rd party sale?
Sell as a plot or develop?

Develop building A for sale
Partial Exemption VAT scheme
Ability to recover input VAT on exempt supplies
Limited to £7,500 or maximum of 50% of VAT
Reduced rate VAT (5%) for work and materials supplied by a building contractor.
Who will do the building work?

Develop building A for sale
CGT – payable
Currently 2 partners therefore 2 x Annual Exemptions (£11,000)?
Partnership asset first? (extra AE)
But – implications of trading
Sell plot prior to development

Rollover
Gain made on disposal of building A prior to development
Re-invest in developing building D for farm-workers accommodation or C as a FHL?
Is conversion of building D
commercially sensible?

Convert building C to FHL
Who will run the FHL?
When to transfer to Chloe? If before conversion could gift cash to pay costs
Outright gift or use a trust?
Control of assets
No IHT on death if survive gift(s) by seven years

Succession planning
Retain assets or gift during lifetime
Should Chloe get assets or cash/ when? Plan now – especially for cash option.
Will current favourable IHT reliefs remain in place?
Lifetime transfer into trust could “bank” reliefs without losing control.

Mary Jane Campbell
Partner, Simpkins Edwards LLP
mjcampbell@simpkinsedwards.co.uk
01392 211233

Michael Miller
Agricultural Property Department
Peter, Peter & Wright
“Farm buildings to dwellings”
1.Ownership
2.Transfer
3.Funding
4.Practicalities

1. Ownership
oPartnership Asset – Mervyn / Janet
oJoint name = x 2 CGT allowances
oPartnership Act 1890 – verbal agreement
oWritten Partnership Agreement – why have one?
oShare in capital profits
oPartner accommodation
oIHT + APR

2. Transfer
oWhy? When? How?
oDeclaration of Trust beforehand
oOnce Planning Permission granted
oGifts to Chris & Lauren – CGT Holdover Relief
oExisting Wills - PET
oExisting Mortgagee
oSDLT + HMLR reg fee

3. Funding
oBorrowings – specialist mortgage v general farm borrowing
oPartnership asset v Lauren’s future home
oBalance Sheet
oReview Wills once conversion cost known – Chloe’s inheritance

4. Practicalities
oWhich barn?
oServices / utilities
oOngoing maintenance contribution
oPrivate water meter
oSeptic tank and garden
oRestrictive covenants
oCuckoo in the nest v Agricultural need
oELES
oOption to buy back

Farm buildings to dwellings simpkins edwards, stags and peter, peter & wright

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