Often, the go to diversification on farm is commercial rentals. Many farms have under-utilised buildings no longer required for the agricultural operation. But how do you ensure the conversion and rental of these buildings remains legal and above board? Read on for an insight!
Is commercial lettings the right enterprise for you and your farm? Use our Diversification Discovery Assistant which will help you answer this question.
Firstly, to use a building for commercial rental purposes, that is currently considered as under “agricultural use”, it is highly likely planning permission must be attained. Likely planning considerations include:
- Type of planning application necessary – permitted development, prior approval or full planning applications
- Change of use – from agricultural to the intended use class if used for other purposes for more than 28 days per year – even where no physical alterations are made to the building
Your local planning authority will indicate whether planning permission is necessary. We work closely with planning consultants to ensure applications are thorough and successful.
For a building to be let out as per a commercial rental enterprise, the consumer (potential tenant) must be provided with the necessary information required to make a transactional decision. This could be:
- Pricing (rent)
- Payment terms
- Tenancy terms (Terms of Agreement)
Your building must also be of an adequate finish and quality for its end purpose and ultimately, the tenants expectations. Facilities, services and equipment provided within the rental agreement must be safe to use and secure from theft. All facilities and services must be as advertised.
Fire and Health & safety
If you decide to let a building out for commercial use, you will be responsible as the landlord for the health & safety. This responsibility will include having to maintain the safety of not only the building, but also:
- Fittings and fixtures included within the rented property
- Services and utilities
- Fire safety services and equipment
Alongside this, you are also responsible for the wider health & safety of the business environment and those who are present. This is because staff, tenants and the general public alike could be affected by your business operations, particularly pertinent on a working farm. As such risk assessments and health & safety reviews must be conducted, PPE must be provided and equipment and plant maintained.
Contractual Tenancy Agreements
It is important for the security of both yourself and the tenant, that a formal tenancy agreement is written up and signed, whereby the terms of agreement have been carefully considered. This must be approved by a solicitor to ensure its legal suitability and credibility. Similar to most tenancy agreements, this will likely include:
- Terms of agreement – detail the responsibilities of both the landlord and tenant with regards to maintenance, health and safety, security etc.
- Tenancy duration, rent reviews and break clauses
It is important to mention that all information regarding the tenancy and the tenants business is confidential and as such, falls under GDPR guidance.
Think your farm has commercial diversification opportunities? Unsure whether its the right venture for you? Use our free diversification discovery assistant. Simply fill out the short questionnaire and receive a free review of what diversifications will suit you and your business.
Need further advice on things to consider or how exactly to implement your own commercial enterprise? Contact us today for a no obligation consultation, to see how we can help guide you through the process.