The hidden legal traps when turning farm buildings into holiday lets: By Joseph Fletcher-Hunt, Partner in the Real Estate team at Aaron & Partners. 

Turning an old barn or unused farm building into holiday accommodation can be an attractive way to bring in extra income. It is also the kind of project where it is easy to get quite a long way down the road before discovering a big problem that really stops you in your tracks.

 Planning will often be high on that list. Changing a building's use from agricultural to something else will more often than not need permission, although there are permitted development rights which can apply to some projects in England. The rules depend on exactly what you want to do with the building. Some routes still require prior approval from the local authority.

 There are also several property issues worth checking before spending money on plans or building work.

Start with the deeds

 It sounds obvious, but start by checking what you can actually do with the property.

 Farmland and buildings can be impacted by old restrictions which were of little concern during their use as agriculture. A restrictive covenant might limit the land to agricultural use, for example, or require somebody else's consent before it can be developed. That becomes much more important when a quiet farm building is about to have holidaymakers coming and going every week.

 Be aware that finding a restriction does not necessarily mean the project is over. Depending on the circumstances, there may be solutions to deal with it.

It is worth checking if there are  any overage, clawback or uplift provisions in play. These are often put in place when land is sold, gifted or restructured, and they can last for 20 or 30 years. They may be triggered by planning permission, a change of use, or an increase in value. Families can easily be caught out, where land has been inherited and nobody has gone back through the old paperwork.

Can your guests actually get there?

 Access is another area where assumptions can cause trouble. It is absolutely vital to check it early.

 Many farms use private roads and tracks, sometimes crossing land owned by somebody else. You might have used that route for tractors and farm vehicles for years, but the legal right to use it could be limited to agricultural purposes.

 That could become a problem if the same track suddenly has a regular flow of paying guests.

 Think about the practical side too. Where will guests park? Is there enough room for cars to turn around? Who maintains the track? Are there any restrictions on how often it can be used? Could poor weather make access difficult?

 The important thing is to check that the access you have on the ground matches the access you have on paper.

Check your mortgage and tenancy

 If there is a mortgage on the farm, speak to the lender before pressing ahead. Their consent may be needed for a change of use or development of the property.

 Tenant farmers need to be particularly cautious. An agricultural tenancy may restrict what the land and buildings can be used for, and diversification plans may need the landlord's agreement. Government guidance also makes clear that whether a Farm Business Tenancy allows diversification will depend on the terms of the agreement.

 The same goes for any other leases or agreements affecting the farm, so check what is already in place before assuming a building is free to be converted.

Remember water, power and broadband

 A barn may have had electricity and water for agricultural use for decades. Holiday accommodation brings very different demands.

 You may need new or upgraded supplies for water, electricity, drainage and broadband. If pipes, cables or drains need to cross somebody else's land, make sure you have the proper legal rights to put them there and keep access to them for repairs.

 Informal arrangements between neighbouring farms can work perfectly well for years. But once you're investing money in a commercial venture, relying on a handshake becomes much riskier.

Do not forget tax & compliance

 Tax is another area where it is easy to can also be caught out. A new holiday let may impact the council tax or business rates. It depends on how it is used and occupied.... It can also impact wider consequences for capital gains tax and inheritance tax, particularly where agricultural land or buildings are being taken out of farming use.

 Depending on the wider ownership structure, it may also even affect future purchases, because an additional residential property can have stamp duty land tax consequences for future purchases. Particularly for younger owners and business partners.

 Holiday accommodation brings a different level of safety side should not be underestimated either Fire risk assessments, gas and electrical safety, smoke and carbon monoxide alarms, insurance, energy performance, building regulations and guest safety may all need to be dealt with.

 Again, it is much better to know what will be required at the start than to find discover late in the day that the building cannot safely or lawfully be used as planned.  Who will do the cleaning?

Do the checks before spending the money

 There are good reasons why more farms are looking at diversification. Holiday accommodation can give an unused building a new purpose and create another source of income for the wider farm business. But before appointing builders or getting too far into the project, it is worth spending  time checking the basics.

 Look at the deeds. Check the access. Speak to your lender or landlord where necessary. Work out how the services will reach the building. Take tax advice. Make sure the building can meet the necessary safety and building regulation requirements. Sorting those points early is generally much easier than discovering them halfway through a conversion. Forewarned is forearmed.