In a lot of rural areas, the planning department will not grant planning permission for the development of residential properties. Historically when farms were subdivided, some farmers did not buy a farmhouse to live in and could not provide accommodation for farm workers. The introduction of Agricultural Occupancy Conditions (AOC) as planning conditions meant that a Local Authority could grant planning permission for a residential property to be built whilst also protecting agricultural property from development and ensuring that agricultural workers can secure low-cost accommodation near to where they work.
An AOC is a tool that is used to limit who can occupy a dwelling and usually requires the occupier of the house to be employed in the locality in agriculture or forestry or a dependent of the agricultural worker. For example, the continued residence of a widow or widower of an agricultural worker in the property would not usually be in breach of the AOC.
The key effect that an AOC has concerns the value of the property. In general, the property will be valued at 10-40% below the market value of the property because of the AOC. This is particularly important in transactions which are funded by mortgage finance, as the disclosure of an AOC can result in the lender withdrawing a mortgage offer or the lenders valuation being adversely affected.
It is important that when considering refinancing an agriculturally tied property that you ensure that the reduction in value of the property is considered when looking at whether it provides sufficient security for the loan.
We thus highly recommend that in rural property transactions to commission a Local Search and review all planning permissions connected with the property at the beginning to identify if an AOC applies.
If an occupier fails to comply with an AOC, the local authority may serve an enforcement notice which will require compliance with the planning condition within a set timeframe. Once served, it applies indefinitely to the property meaning that if the notice is initially complied with but then there is a breach, the enforcement notice will be reactivated.
The local authority usually needs to take enforcement action within 10 years from the date of the breach, but they do sometimes have powers to extend this period.
If an individual desires to avoid the adverse effects of an AOC, they have two options.
- Application to remove a planning condition
The applicant must demonstrate that there is no longer a requirement for the property to be reserved for agricultural purpose.
- Certificate of lawful established use
A CLEUD confirms that an existing use is lawful and prevents enforcement action. If the AOC has continually been breached for 10 years, then an application for a CLEUD can be made. It must contain sufficient evidence that the breach has been continuous over the 10-year period.
It is vital to remember that if the AOC is complied with after the CLEUD is obtained, the AOC will come back into force. The AOC is not removed from the property even if a CLEUD is successfully obtained and you should still consider applying to remove or vary the planning condition.
If you would like to discuss any points in this article further or are looking for legal advice relating Agricultural Occupancy Conditions, please contact Spire Solicitors LLP Agriculture Team on 01603 677077.