Farms and Estates Newsletter Spring/Summer 2019
Welcome to the Freeths’ Farms and Estates team’s Spring/Summer 2019 newsletter.
In this edition, Charlotte Digby explains why having a Will is imperative, especially for agricultural property owners, and why it is sensible to regularly revisit the content.
Then, Laura Czapski discusses how the freeholder of common land or a town or village green might continue to use the land by, for example, granting rights of way.
Next, Thomas Byard discusses the benefits of proactively registering unregistered land, particularly when a future sale is envisaged.
Finally, Robert Bruce provides an update on Vacant Buildings Credit for farm buildings in agricultural use and considers biodiversity net gain for new housing and commercial development.
One in three people die without making a Will and this can often cause problems and create uncertainty for those you leave behind. Will challenges and disputes among families with agricultural property are costly. These can destroy the business and damage family relationships. In recent years we have seen a general trend of increasing litigation and given this climate it is best to leave a clear Will for your executors and beneficiaries.
If you do not leave a Will, the law decides who will inherit and administer your estate. This may not have the result you intend or be what you, your family and friends want or expect. As owners of agricultural property or businesses you may need someone with specialist knowledge of your assets and experience within the agricultural sector to administer your estate. A Will allows you the flexibility to appoint the most appropriate people to deal with your assets.
If you own any kind of property, whether it is a house, savings or personal effects, it is natural for you to want to leave it to people you choose. If you own a farm or other business or agricultural assets, you may wish to protect the livelihoods of those who work or have an interest in the business. This can be problematic if you have children who are not involved in the business but whom you also wish to benefit from your estate.
Inheritance Tax may be payable following your death if your estate is worth more than the current basic nil rate band threshold (£325,000 for the 2018-2019 tax year) and the new residence nil rate band (‘RNRB’) (£125,000 for the 2018-2019 tax year, if applicable to your estate). Reviewing the structure of your affairs whilst making a Will means that changes can be made (if required) to mitigate the inheritance tax liability and protect the farm from claims from third parties e.g. in the event of divorce or bankruptcy.
You may wish to look at the farm or business as a whole and consider the availability of Agricultural Property relief (‘APR’) and/or Business Property Relief (‘BPR’) from inheritance tax. These reliefs can reduce the inheritance tax charged on agricultural and business assets by up to 100%.
Farming businesses are becoming more diverse, making assessment more complicated. For example, you may have a farm shop, buildings which are let out for business use, residential use or holidays, development land or barns which can be converted or land that is rented out and used for festivals or similar activities. You should obtain advice on what you can do to maximise the use of these reliefs, and where the tax liability will fall.
There may be succession issues that you require advice on and how you can achieve a balance between the benefits given to your children. A Trust structure may be an effective way of doing this.
Things you may need to consider could include:
- Who would run the farm/business in the event of your death and manage to pay staff and contractors
- Who would look after the livestock, plant and machinery
- Whether the farm business will continue or be sold
- Who are the most appropriate people to act as executors and trustees and to run the business is required
The Basic Payment has raised issues with Wills made before 2003. There is the possibility that basic Payments will be part of the residue of your estate and not pass to the person who inherits the farm business. If your Will pre-dates 2003, it may be that you need to review your existing Wills to ensure they are still in line with your wishes.
It sensible to review your Wills every five years or when you have experienced a particular change in your circumstances e.g. marriage, divorce, having children or a sale of a large part of the agricultural land or farming business.
There may also be partnership and company issues, land ownership and agricultural and farm business tenancies that present a number of issues that require specialist legal advice. For example, property owned by a partnership may attract 100% BPR but property owned by a partner and used by the partnership may only attract 50% BPR. Different types of tenancies qualify for different tax treatment.
If you are in partnership or own shares in a limited company, there may be something in the partnership agreement or the memorandum and articles of the company which affects how your interest may be left on death.
Owners of agricultural land and businesses often require specialist advice to help ensure the smooth succession of their business and to mitigate the inheritance tax liability on death. This advice will often need to be given in conjunction with agricultural property and commercial advice.
If you have any questions or concerns then please do not hesitate to get in touch.
0186 578 1119
We have received a number of queries as to how common land or a town or village green (TVG) can be used by a freehold owner and also whether a right of way can be granted over such land to benefit neighbouring properties.
“Common Land” describes all land subject to rights of “common”, which includes a TVG. A TVG is an area of open space which has been used by the inhabitants of the town, village or parish for the purposes of lawful sports and pastimes. In both cases, in order to be considered common land or a TVG, the land must be registered as such in accordance with the Commons Registration Act 1965 or the Commons Act 2006.
It is illegal to drive across common land to access other property unless you have the right to do so. In addition, it is a criminal offence to disturb or interfere with the use or enjoyment of a TVG. This restricts the freehold owner to some extent as development cannot be considered, however, we have set out below some options open to the freehold owner of common land or a TVG.
- A freeholder can grant a right of way, including a right of way for vehicles, over common land to access neighbouring properties. In relation to a TVG this right of way cannot interfere with its use and enjoyment. This option is often overlooked due to the fact, as mentioned above, that it is illegal to drive across common land however the key point to note is that it is only illegal “without lawful authority” and the grant of an easement by a freehold owner constitutes “lawful authority”.
- It may be possible for the freeholder owner to grant a right to park vehicles. Clearly this would depend on the extent to which the parking would impact on the use of the common land, especially if such land is a TVG. A large car park is unlikely to be acceptable but a few cars parking next to houses which adjoin the common land may not affect the use of the common land as a whole.
- In relation to common land (but not a TVG), it is possible to apply to the Secretary of State for consent to works to the land. The Secretary of State will have regard to the public interest, interests of the neighbourhood and interests of those who use the land so development is unlikely to be considered. It is possible to complete some works without consent eg to install cattle grids or temporary fencing to restrict animal movement.
- Common land can be used by the freeholder in the way it was used before the land was registered, so long as such use co-existed with the use for lawful sports and pastimes. For example, if the land was previously used as a golf course but at some times was also used to walk dogs or play other ball games then the freehold owner can continue to use the land as a golf course once the land has been registered as common land or a TVG. This is provided the use does not restrict the use by the local inhabitants so a freehold owner could not, for example, build new fencing or gates to restrict access.
In summary, registration of land as common land or as a TVG does not prevent the freehold owner from ever dealing with the land again but what use is acceptable largely depends on the precise facts and circumstances. If you are a freeholder looking to use common land or grant rights over it, we would recommend that you take legal advice into the matter before proceeding.
Please get in touch if you have any questions.
0186 578 1168
Within England and Wales there are two types of land ownership, that being registered and unregistered land. Whether the land that you own is registered or unregistered can have an impact on your day to day ownership of the land as well as when you come to sell or otherwise dispose of the land.
When it comes to proving your ownership of unregistered land you will be expected to show your ownership through an epitome of title showing a clear and good ‘root of title’ which needs to be at least fifteen years old. The ‘root of title’ may be a conveyance to you but where this is not the case the epitome of title may need to refer to earlier deeds so that good title can be established.
Once established, all of the deeds from the ‘root of title’ to the present day will need to be produced so that a full picture of your ownership and the associated rights and burdens can be ascertained. This can cause major problems where some deeds are missing or illegible therefore necessitating the need for indemnity insurance. It is therefore important that you keep all of the original deeds safe. Potential purchasers or tenants are also more likely to raise further enquiries when dealing with unregistered land, thereby lengthening the legal process and increasing costs.
There are a number of advantages of registering unregistered land with the Land Registry which can include:
- Transferring registered land is more streamlined and usually faster and simpler to achieve
- Buyers tend to prefer registered land and may request that it is registered prior to a potential purchase. Registering your land in good time can therefore help to prevent delays with a sale.
- Registered land assists in the prevention of fraud as the Land Registry will require proof of identity when accepting applications against a registered title.
- Ownership and the rights and reservations affecting land are clear and the Land Registry provides a guarantee of title.
- Third parties may find it harder to make a claim for adverse possession and the Land Registry are more likely to serve notice on you of any third party application against a registered title.
- Deeds may be lost or destroyed and therefore the Land Registry maintains a record of all registered land online which anyone can access. In certain circumstances, the Land Registry also keeps records of deeds and documents referred to on the title register and where this is not possible will replicate a relevant extract on the title register.
Overall registering your land provides you with additional certainty as to the land that you own whilst also ensuring that you are fully advised of any rights or privileges that you have or any matters that burden or restrict your use of the land.
If you own unregistered land and are looking to sell or otherwise dispose of the land, or you wish to regulate your ownership then please do feel free to contact the real estate team at Freeths who will be able to provide you with further guidance and assist with the registration process where necessary.
0186 578 1135
Vacant Buildings Credit for farm buildings in agricultural use – Appeal ref: APP/H1840/W/17/3188250
The appeal was made by William Morrison (Pershore) Ltd under s.78 Town and Country Planning Act 1990 against a refusal from Wychavon District Council to grant a planning permission. The proposed development was the demolition of existing modern farm buildings, the removal of hardstanding and the erection of 27 dwellings with associated landscaping enhancements.
The main issue the applicant faced was whether the Vacant Buildings Credit (VBC) was applicable to the site as it relates to farm buildings in agricultural use. In short, VBC introduces a mechanism for offsetting the existing floor area of vacant buildings against a percentage policy requirement for affordable housing, thus reducing the amount required. The appellant considered the land was “brownfield land” and therefore VBC applied. However, the local planning authority considered the land to be “previously developed land” and in the Revised National Planning Policy Framework it specifically excluded land occupied by agricultural or forestry buildings, and therefore VBC did not apply.
Despite the VBC issue, the inspector identified benefits such as the contribution to market and affordable housing as well as the improvement to the settings of designated heritage assets on the site as a result of the development and therefore the appeal was allowed.
Consultation on the government’s proposals to require a biodiversity net gain for new housing and commercial development in England
On 02 December the Department for Environment, Food and Rural Affairs (Defra) and the Ministry of Housing, Communities and Local Government (MHCLG) published a consultation on the government’s proposals to require a 25 year biodiversity net gain for new housing and commercial development in England.
When assessing the environmental impacts of a new development, the biodiversity net gain plan was viewed as being a tool to strengthen the position of local planning authorities by requiring developers to submit information on ‘biodiversity net gain’ when making planning applications. In summary, the surrounding environment such as wildlife habitats must be left in a measurably better state than before the development began. Developers would be required to assess the habitat and its condition before submitting plans, demonstrating how they are improving biodiversity – such as through the creation of green corridors, planting more trees, or forming local nature spaces. It will be mandatory for the developer to submit how their project will have a positive impact on the environment.
The consultation proposes a minimum 10% net gain in biodiversity for development and where it is not possible to achieve a compensatory tariff of between £9,000 and £15,000 per biodiversity unit is proposed.
It is hoped that this new mandatory approach will go hand in hand with the countrywide proposal to build 300,000 homes a year by the mid-2020’s by ensuring that all new developments improve the area and have a focus on environmental importance whilst still reaching the Government’s housing goals. In July 2018, Chapter 15 of the NPPF was updated to align with the 25 year plan’s aims for biodiversity.
If you have any questions or concerns then please contact Robert Bruce.
0845 128 6958
The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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