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It is believed that the increase in Stamp Duty Land Tax (SDLT) on second homes (implemented last year by the Government) is largely behind the decline, as the substantial increase in SDLT will affect everyone who already owns a home, and is converting a barn or building on their land into a residential property.
It is also thought that planning restrictions are impeding conversion rates. Even though under current permitted development rights it is possible to convert an agricultural barn into a dwelling, it has been asserted by the National Farmers Union (NFU) that agricultural land is often subject to additional ties and restrictions, which complicate development and discourage lenders from agreeing to fund the build.
Traditionally, agricultural conversion would be contracted by small to medium-sized building firms and developers, and as we are all aware, lenders have now substantially tightened their funding criteria post-recession, which has resulted in significant hurdles to obtaining funding.
The NFU are of the opinion that the lack of conversion last year is a clear sign that easier conversion rules are required, together with alternative ways of getting more homes built on farmland.
The current Class Q rules state that agricultural barns can be converted into dwellings under permitted development rights, provided that the following criteria are adhered to:
• each holding can create up to 3 dwellings with a total maximum floor space of 450 sqm
• the rules don’t apply to holdings in areas consisting of Sites of Special Scientific Interest, Safety Hazard Areas, National Parks, Conservation Areas or Wold Heritage Sites
• if the site was not used solely for agriculture as part of an established agricultural unit as of 20 March 2013 (or if previously, the date it was last used), development is not permitted
• if the site is occupied under an agricultural tenancy, development will require the consent of the landlord and tenant
However, many experts are of the opinion that the Class Q rules are too complex and restrictive as they stand, resulting in at least half the applications submitted to planning authorities being dismissed.
To address this issue, the NFU has complied a submission for the Rural Planning Review suggesting the following improvements to the Class Q rules:
• more consistent decision making by local authorities
• better guidance to be provided as to what exactly is permitted development
• a need for additional flexibility, to allow for more demolition and greater practical conversion
In the uncertain post-Brexit climate, farmers may consider barn conversion as an alternative income stream and it is hoped that the government will address the difficulties inherent in barn conversions in the pending Housing White Paper due to be published at the end of this month, resulting in a greater delivery of homes from rural farms.
If clients have any queries regarding agricultural conversions and permitted development please don’t hesitate to contact our agricltural department at Myerson Solicitors on 0161 941 4000, who will be happy to help with your enquiry.