Agricultural Occupancy Conditions – considerations for landowners and buyers of rural property

What are they?

An Agricultural Occupancy Condition (AOC), also known as an ‘agricultural tie’, is a planning condition imposed by the Local Planning Authority (LPA). This condition enables an LPA to set aside their resistance to granting planning permission for residential dwellings in rural areas. AOCs are used where there is a need to provide homes, at or near the place of work, for those employed or most recently employed in agriculture or forestry (together with their dependents). Further occupancy restrictions may be imposed by the LPA. The terms of an AOC are generally not standardised, and they vary in complexity. Although an AOC is normally applied at initial planning consent stage, it can be part of a separate planning obligation, such as a section 106 Agreement. In either case, an AOC can last indefinitely.

What problems arise from an AOC?

Although the concept of an AOC is simple, it can raise several complex issues. As farming practices continue to evolve, requiring less labour and/or resulting in greater business diversification, landowners may come to regard an AOC as redundant. They may struggle to comply with its terms and might want it lifted to avoid being in breach, since to do so is an offence which can attract an unlimited fine. A residential property would be easier to sell at market value without the encumbrance, since its existence reduces the pool of potential buyers. Similarly, new owners/recipients of property may find compliance difficult. This includes where property subject to an AOC is inherited, and the beneficiaries may wish to reside in the property, but face problems because they are not employed in or connected with agriculture.

Prospective buyers may find a ‘dream home in the country’ marketed at an attractively low price, unaware that this is because of its tied status. A farming estate could also include several cottages subject to AOCs, which might make the estate less marketable as a whole. A failure to undertake early checks for any AOCs could result in serious problems later. Although in principle anyone can own such a property, they may find they are ineligible to live in it themselves. Prospective buyers in need of a mortgage may have trouble arranging finance for such a property, as lenders may be unwilling to lend if they think the property would be difficult to sell if the mortgage defaulted.  A specialist lender may need to be engaged who is likely to require evidence that the buyer can comply with the AOC. A failure to fully disclose occupancy conditions to a lender may also result in a mortgage offer being revalued or revoked.

What can be done about them?

There are two ways to make an AOC ineffective, but neither are easy nor guaranteed to succeed:

• Planning Application: An AOC can be varied or removed by making a ‘section 73 planning application’. Removal of an AOC can be sought on the grounds that there is no demand for occupancy by agricultural workers and it is no longer useful. However, the LPA will be reluctant to remove an AOC unless the applicant provides evidence of a lack of demand for the property. The applicant must conduct a sustained marketing campaign to sell or rent the property out, supported by an independent market assessment. The LPA can refuse an application where it considers the marketing campaign to be inadequate, such as a failure to sufficiently reduce the sale price to reflect the AOC. It would be automatically refused if an eligible purchaser or tenant came forward with an offer. If there is ultimately no interest in the property, the AOC may be removed as it is no longer needed.
• Certificate of Lawfulness: An AOC may be suspended following a continuous breach of the condition for ten years or more. Following this, a landowner may apply for a Certificate of Lawfulness of Existing Use or Development (CLEUD) which must be supported by evidence from current and previous owners. If it is successful, the AOC will be suspended for as long as no subsequent occupant moves in and complies with its terms. There is a risk of enforcement action by the council at any time during the qualifying period, or after refusing an application. However, this approach may be expedient where the breach is longstanding, and the position needs regularising. It is not uncommon for councils to grant an application to remove an AOC once a CLEUD has been granted.

Although we can discuss the above issues with you as part of a proposed property disposal, you should obtain specialist planning advice before attempting to lift an AOC.

Dealing with property transactions that may be affected.

When buying or selling a rural property, or planning a future sale, it is important to seek appropriate legal advice at an early stage, in order to anticipate any difficulties if an AOC is identified. Field Seymour Parkes LLPs’ Agriculture and Rural Land team can assist you by undertaking relevant enquiries to identify and clarify the full extent of any conditions that exist.  Our specialist team are therefore well placed to advise on the potential impact of an AOC. This may include helping to establish if a buyer is likely to satisfy the occupancy condition which may prove crucial to securing finance and the sale advancing. Such advice helps to facilitate timely negotiations between a buyer and seller and informed decision-making by clients prior to exchange. For example, a seller may decide to consider the possibility of getting an AOC lifted or varied before proceeding with a sale.

If you would like further advice or information on this matter please contact Hazel Eccles.