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COVID-19: Challenges and opportunities for farms, farming and landowners

COVID-19: Challenges and opportunities for farms, farming and landowners

The current COVID-19 situation is proving to be a challenge for everyone, and particularly for farmers, at a time when they are already having to adapt to the prospect of reduced support payments as the basic payment scheme is phased out and replaced by the English Land Management Scheme (in England).

Immediate issues such as labour shortages for the horticulture, fruit and vegetable producers are putting massive pressure on those sectors with Prince Charles now adding his voice to those calling for a new ‘Land Army’ of British workers to do the picking and other work more recently associated with eastern EU seasonal workers.  At least garden centres are now able to open – an overdue measure, many would say, to benefit the producers and plant retailers and the population at large.

Such challenges may lead to agricultural landowners considering their long term options for their land, and the development opportunities that may be open to them.   However, this will bring into focus other considerations too, such as the potential tax implications and farm and land ownership.

What are the options available for agricultural land development?

Agricultural land is varied in terms of its suitability for development and as such the time frames for development are also wide ranging.  Land close to existing settlements could be considered for immediate development with a short term option or contract for sale being entered into with a developer.

For land that is some distance from existing settlements however, a more strategic approach is needed, enabling land to be brought forward for development whilst allowing farming uses to continue, protecting an income for the landowners, while any development proposals are progressed.

Residential development is often the aim for landowners but there are situations where land is just not suitable for residential development or doesn’t give the best return. Commercial development should not be discounted.  Depending on the location of the land, e.g. along the HS2 route or other infrastructure projects, this could be an attractive option.

Implications for your tax and wealth planning

Any changes to, and development of land, will have tax and wealth implications from a business and personal perspective and this should be part of the planning process at an early stage, which will shape your potential route to development.  Areas to consider include: how do you ensure that tax reliefs can be claimed on a sale of land with planning permission?  Could it be time to pass assets to the next generation? Who in the family is going to work on the farm, and who will be elsewhere?  As with many areas of tax legislation, guidance and reliefs are changing all the time.

Farm ownership

Strategic development of any land will, by its very nature, take time to come to fruition but deals can be delayed by existing farming arrangements and partnership agreements. To expedite any project it’s important to have clarity over ownership of the farm and other assets.

This can be overlooked until a disagreement arises or an event, such as a death occurs, at which point it can be very difficult to find agreement, especially when the values involved are high, as they usually are.  It is particularly important that the accounts are kept in accordance with the partnership agreement and if there is no written partnership agreement, now is the time to draw one up.

When considering land development there are many potential routes forward and many more implications of those decisions to be considered, to find the best approach to pursue.

Contact us
To help you navigate these challenges and discuss your available options and what is right for you, contact Peter Snodgrass, Joanna Deffley or Louise Ingram or another member of the agriculture and development team in your local office.

For legal support in relation to the coronavirus or any other matter, get in touch with your team today

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