Two hundred or more years ago many landowners and rural estates began to invest in providing accommodation for their workers. This may have been in villages (the whole of which might belong to one estate) or near to the employee’s work: by the farm buildings, to facilitate care for livestock; in the woods, to manage the trees and ‘keeper’ wildlife and its habitat; in the open countryside, where cattle still roamed across tracts of pasture land. The accommodation may have been basic (no piped water, electricity or heating in those days!) but such dwellings would have been a great improvement on what the workers and their families had before – possibly a hovel or even the loft of a farm building, shared with others. In those days there was no ‘security of tenure’, so despite the benefit this accommodation brought to an estate and its people, it also meant that, if the employment ended, the worker or his family were likely to be evicted – causing inevitable hardship. It was not until the latter part of the twentieth century that the law in England and Wales changed, giving security to all residential tenants – a good thing. But the restriction on the property owner caused a decline in the supply of houses for farm workers. Service Tenancies
Before security of tenure came in, the common arrangement was to offer the cottage as part of a contract of employment. A Service Tenancy had the advantage of attracting more candidates for the job, and also ensured the worker was ‘on site’ to perform his duties in the optimum way. Unfortunately (in my view), the law changed, meaning an agricultural worker could, in some circumstances, stay in a cottage even if his employment changed or he left to work on a farm elsewhere. And the worker’s family could legally remain in the cottage if he died. A resolution to this came in the form of the Assured Shorthold Tenancy, introduced in the 1980s, which gave more flexibility and clarity to both landlord and tenant. Maintenance, repair and improvements
Many of the original cottages on farms and estates were pretty basic - four walls and a roof and not much else! But gradually modern standards and facilities became the norm, and if a landowner could afford it, he would do the work to bring his houses up to scratch. However, many farm cottages were quite isolated, and sometimes the cost of these upgrades was prohibitive, eg if water and electric had to come a distance. As a result, these dwellings were left to fall down or were demolished. Ironic, as today there is a great demand for isolated dwellings and with new technology (eg borehole pumps, solar power and satellite communication) modern conveniences can be brought to the most rural location.
Agricultural Occupancy Conditions
These started to appear in the 1960’s (or a little earlier) and are known familiarly as an ‘Ag-Tie’. They are imposed by local planning authorities when considering and granting permission for a new dwelling for a farm worker in the countryside. Before the Town & Country Planning Acts in 1947, houses could be built almost anywhere with no permission required. Then controls on development arrived, resulting in policies that discouraged new houses in rural locations. Farms were an exception, but they had to prove their need (eg the welfare of livestock). If the planners were satisfied, then the dwelling was allowed, on condition that it was occupied by a worker on the farm, doing the job that justified the accommodation. Despite the decline in demand for farm workers – fewer livestock farmers and more mechanisation - new dwellings for agricultural workers are still being sought and approved in 2021. In some areas the demand remains low, so existing tied cottages are found to be excess to a farm’s requirements. Some are sold off, even though they make a discounted price because the ‘Ag-Tie’ restricts their use. Oddly, this can make them attractive to buyers who see a cottage in a desirable location going much cheaper than its ‘unrestricted’ counterparts. Buyers of Ag-Tie cottages can be actual farm workers with resources; people ‘associated’ with farming – particularly if some land is sold with the cottage enabling an agricultural activity to be continued; members of the farmer’s family, if still living at home, and even retired farmers may be eligible. Finding out whether an Ag-Tie exists is not as straightforward as you might expect, and the occupancy ‘history’ attached to the dwelling may be relevant. Quite often, the owner may seek consent to get an Ag-Tie lifted. It is not an easy or certain process. The planning authority needs to be convinced that the circumstances have changed enough - and permanently. A compromise might be to vary the condition so a different one applies; this enables the property to be usefully occupied, yet still not entirely ‘free’ of its restrictive use. There is a need for caution, however, as the local authority can take enforcement action if they consider there is a breach of the planning condition. Diversification
With the change in farming practices over recent decades, farm dwellings can be put to new use. For houses built before the planning laws came in, there may not be any need to gain consent as long as the residential use still continues. Open market residential tenancies offer higher rental income than an agricultural occupant could afford, so cottages have become an important source of new income, particularly for smaller farms. Holiday lets bring an even higher income, but the owner needs to manage and operate the enterprise as an authentic business – arranging the bookings, cleaning the property, providing the complete contents, changing the sheets and doing the laundry.
Ownership
For an owner / occupier of the farm or estate, this is obviously straightforward. It may be a little more complicated for a Landlord and Tenant – even if the two parties have a link, eg where a family Trust owns the farm that is run by the family company. The farmer (occupier) may be the one who has the justification for a new cottage on which the ‘Ag tie’ may be attached. But the planning consent will attach to the land rather than the occupier, and who then pays for the cost of building? Agricultural Law does provide the basis for an agreement between the parties, but it is just another important detail to settle before either landlord or tenant goes to the considerable expense of providing an ‘improvement’ which may or may not then retain value. And, another point, can the landowner still make use of the cottage, with its ‘Ag tie’, should a change occur in the tenant’s farming enterprise or tenure? Careful consideration and discussion in advance should ensure a practical and fair solution is reached.
Taxation
Like many assets, properties generally will be affected by tax when considering their future and farm cottages are no exception. Income Tax, Capital Gains Tax, Inheritance Tax and VAT are the immediate ones that come to mind. The value and the use of the property may influence these assessments, and changes in either will have some consequences. This article is not going into these details, and the subject is merely raised as a reminder for you to seek professional advice on such matters.