More people are looking to buy property and land in the rural areas of Britain. There are a number of issues to consider, in addition to the normal conveyancing checks, when buying any type of rural property. These are just a few.
Access to land or property may not be directly off the publicly adopted highway. This may have occurred where old conveyancing plans marked a boundary hedge leading in from the road towards the field opening or gate. The small area of land between the adopted highway and the field gate may be unregistered and the owner unknown. This creates a risk of access being denied if someone can prove ownership. Typically mortgage lenders require an indemnity policy backed up by a declaration sworn by the seller that they have never been challenged or had to pay for the right to access that area.
If another landowner owns the access and grants a right of way over it, possibly shared with other properties, remember that this may include use by agricultural vehicles and be prepared to pay a contribution to upkeep of the access. Check also that the right is adequate for your planned use of the property.
Mains sewers often do not reach rural properties, so that they must be served by septic tanks or cesspits. These are regulated to ensure that the equipment is sufficient for the property’s use and that outflows are clean and do not cause a risk of contamination to watercourses. Outflows may run onto farmland. It is important to check the route of outflows and that these systems are up to date and comply with current regulations.
Rural boundaries often consist of trees or hedges which can grow out or change direction over time, or streams which silt up and change direction, making it difficult to establish the exact boundary line. The basic rule for ditches and hedges is that, unless proved otherwise, the ditch belongs to the landowner who owns the hedge, on the assumption that the soil taken from the ditch was used to plant the hedge. This assumption can, however, be rebutted.
Grazing agreements are very common in rural areas. If you are buying a house with land attached that is subject to an existing agreement, it is important to establish the type of agreement and to know which to use if you wish to continue the arrangement. Licences are easier to terminate, but tenancies allow a grazier to acquire certain rights over the land, which can affect how much notice must be given to remove the grazier.
There are a number of different types of grazing agreements according to the nature of the grazing – agricultural, commercial or personal. For instance, grazing horses in most cases will not be agricultural. If the horses are linked to a livery business, the use will be treated as commercial, and it is important to check the notice periods to terminate the arrangement. If the land is used for grazing privately owned horses (such as a pony paddock) then this will be treated as a residential amenity and the licence must be drafted as a personal licence and not commercial or agricultural. This may also affect the tax treatment (see below).
The most common sort of agricultural grazing is for livestock. These can be simple grazing licences whereby the farmer does not have exclusive occupation or control, occupying the land for short periods. However the farmer may have a tenancy (which may not be a written agreement) whereby the farmer has used the land for many years and has acquired certain legal rights. These commonly require 12 months’ notice to get possession of the land. In some cases under the Agricultural Holding Act 1986 the tenant farmer has rights to continue to occupy the land with succession rights for his family.
Sporting and other rights
The land may be subject to sporting rights granted to neighbouring landowners or groups who have e.g. the right to shoot and take wildfowl from the land or to fish from rivers. Such rights can be granted as a long term legal interest, or under a short term lease that can be terminated more easily, but subject to notice periods.
The land may be subject to separate mineral rights, owned by another person who has the right of access to the minerals lying beneath the land, such as sand and gravel, valuable for construction. The Crown has absolute legal rights to most minerals (coal, gas, oil and to precious metals). Manorial rights (old rights reserved to a lordship of manor under the old feudal system) can no longer be created and are rare, but may need to be checked if possible.
The land may also be subject to farming subsidy and environmental grant schemes currently awarded to farmers. If you are buying land which is subject to these schemes you will need to check whether you have any ongoing obligations connected to them. With the impact of Brexit, these subsidies and grant schemes are being phased out and replaced by a new Environmental Land Management Scheme - grants awarded to land owners for ‘capital or public goods’, such as flood management, re-wilding, woodland planting. If you wish to benefit you may need specialist advice to check the viability of schemes available to the land you are buying.
Stamp Duty Land Tax
Finally the rate of Stamp Duty Land Tax will depend on the type of property and its use. Fields attached to a residential building e.g. a farmhouse, may be pasture used for grazing. The tax treatment of such properties can be complicated. If the property can be treated as mixed use (i.e. a mixture of residential and commercial/agricultural use) then the lower mixed use rate will apply. This may apply if there are other cottages or dwellings on the land that you might be intending to rent out commercially as holiday lets. However HMRC is looking carefully at such purchases to expose any loopholes. Remember also that if you are buying a residential property which is not your principal place of residence, then the additional 3% surcharge will apply.
We strongly advise clients to speak to a specialist tax advisor in such cases. Look at our article on SDLT - https://www.ts-p.co.uk/news/applying-stamp-duty-land-tax-sdlt-rates-for-mixed-use-properties-in-england.