The pandemic has seen a shift in people’s habits, from spending more time in the countryside enjoying the outdoors to buying more local produce and supporting smaller, independent businesses. As a result, British attitudes towards ‘farm to fork’ have never been greater and people have started to take more notice of where their food is coming from and the journey it has taken.
These lifestyle changes, alongside a greater appreciation for agriculture, have meant purchasing a farm has become more lucrative. And while the purchase of farmland has long been considered a secure investment, we are seeing increased demand for high quality assets.
Like all property transactions, however, there are common pitfalls to be aware of. Here are the five key legal things you should consider when purchasing farmland.
1. Unregistered land
Traditionally, farmland has been passed through families over generations and as such farms often remain unregistered with the Land Registry.
If the land is not registered, a compulsory first registration will be triggered at the Land Registry when you buy the property. Title deeds are needed to prove original ownership, so it is important to ask the seller to register the land before a sale process begins. The bigger the farm, the more complex the process may be as the land is often made up of different titles of ownership. Comparing the physical land with how the titles are documented can help to understand who owns what.
It is essential to ensure the correct registration is in place before buying a farm. This crucial step will confirm the legal owner of the land up front and prevent any potential disputes further down the line.
2. Permitted development rights
Permitted development rights determine how changes can be made to the land. Location often plays a substantial role in what restrictions there are. For example, properties in national parks often have more restrictions.
Checking the status of the buildings, for example if a farmhouse is a listed property, is key – particularly for those with plans to renovate. Speaking to a specialist planning consultant before purchase can help buyers understand what options are available.
Redevelopment plans could also be affected by the covenants within the title of the land, for example it may state that the land can only be used for agricultural purposes. In some instances, it is possible to obtain insurance against an adjoining owner seeking to enforce a covenant.
Rural properties are far more likely to be located off the publicly adopted highway network, with access often along private or shared roads or tracks. It is vital to understand who maintains these private roads and who is required to contribute towards their maintenance and repair.
On top of this, a slither of verge dividing an access track with the public highway owned by someone else can mean the property has no legal access and be used as a form of ransom strip by that party to demand high premiums for the right to cross it – this is more of a regular occurrence than you would think. Acquiring all necessary licences before exchanging contracts can save thousands in legal fees.
It’s also important to look out for who else may have access to the farmland and understand how they access it, for example through public rights of way across a field. Searching for evidence at the property, such as gates and gaps in hedges, will help buyers to identify this before they make a purchase and ensure they are aware of what to expect should the sale complete.
Occupancies of farmland are the land uses of the property, for example tenants of cottages within the grounds or sporting arrangements that take place on the land.
Tenants’ rights and protections in relation to the property are determined by their type of tenancy and consequently, their rights on eviction and compensation for improvements. If there are employees at the property, such as gardeners or farmworkers, this will also need to be considered.
Occupancies may also exist on informal grounds, for example when using the land for sports such as hunting or fishing. Often owners have good relationships with those using the land but informal arrangements can make it tricky to adapt how the land is used if circumstances change. An added complication can arise if sporting rights are held by a party different to the new landowner, for example they could remain the rights of the seller, and this can cause complications if new owners want to make changes.
5. Drainage and utilities
Rural properties are far less likely to be connected to services such as mains drainage, mains water or power supplies. Water and other utilities may be fed along stretches of unadopted pipes or cables, which are not the responsibility of the utility company. It is important to check this in order to understand how utilities are billed and who maintains this infrastructure.
Farms often have their own private drainage systems. The laws on private drainage systems have recently changed and if they do not comply or are not considered exempt from the rules then the whole system requires upgrading. Depending on the size of the farm, and where the drains need to go, this can be a very expensive job.
Buying and selling farms can be tricky and there are lots of considerations to make. As the buyer, its crucial to ensure all paperwork is in place and meets expectations before completing a purchase to ensure hurdles can be overcome and so legal disputes do not develop. This due diligence will not only give buyers peace of mind, it will afford them more time to enjoy what they have made the move for.
How Moore Barlow can help you
If you’re considering buying a farm or rural land and require expert advice and services, please contact our team today.