Written evidence submitted by the Country Land and Business Association [HOP 008]

The CLA

The Country Land and Business Association (CLA) represents landowners, farmers and other rural businesses. We represent over 33,000 members who own and manage more than half the rural land in England and Wales.

Introduction

1. Agriculture has an ageing workforce. In the United Kingdom, around a third of all holders were over the typical retirement age of 65 years, while the proportion of young people aged less than 35 years was around 3per cent. In 2013 the median age for holders in the UK was 59 years old, unchanged from 2010.[1]

2. In contrast to many other professions in contemporary society, farming remains a largely inherited occupation and one in which the transfer of business control and ownership to the next generation is one of the most critical stages in the development of the business.

3. Succession and retirement can put financial and emotional stress on farm households and can have a sizeable impact on the business. Research has shown that farm business performance and farm development can be both positively and negatively influenced by succession. The relationship between succession and farm business development is therefore important for both the social and economic sustainability of the family farm and the economy and community in which it operates.

4. Various organisations and Government commissioned papers[2] have raised concerns regarding the future accommodation needs of farming families and the support required to assist them in this transition. For farming families forced to cease farming or seeking a way to retire and enable the next generation to take on the farm business, access to housing is important.

5. The uncertainty caused by the UK leaving the EU and the impact this may have on the agricultural sector is causing some to consider retirement, with survey work from Scotland finding one in five Scottish farmers and crofters fear they may have to take early retirement due to post-Brexit business uncertainty.[3]

6. The shortage of rural housing is well documented and holds back many young people and families as they pursue careers in the countryside. Having access to housing close to the family farm or near enough to other employment opportunities to supplement their farm income is important to sustain and develop to a thriving rural economy in the future.

7. While there are more important behavioural and economic reasons that explain the challenges surrounding succession, policies do exist in other home nation countries that target this specific issue, such as Policy HOU 10 in Northern Ireland and Rural Enterprise Dwellings in Wales, the details of which are set out in the annex to this paper.

Farm demographics

8. The UK farming population is getting older. In 2000 only 5 per cent of “agricultural holders” were under 35 years old, compared to 7 per cent in 1990. Farmers are older than people in other self employed occupations. 52per cent of farmers are 55 or older, compared to 27per cent of rural self employed and 22per cent of urban self employed. The rates of entry and exit are both low for farming compared to other sectors. But the entry rate (2per cent over the last 5 years) is much lower than the exit rate (18per cent over the last 5 years) as the total numbers of farmers and farm businesses are declining.[4]

Family farm holdings in the UK

9. In the United Kingdom, families are responsible for most farms and much of the farmed land. A survey of 255 farmers in six areas of England found that 84 percent operated “established family farms” (that is, farms run by operators who are at least the second generation of their family to be farming the same farm or nearby farm), and were responsible for managing 86 percent of the area covered by the survey.[5]

10. Given the retirement age of farmers is demonstrably higher than that of other professions, the development of a dwelling would remove one of the barriers to succession, but would also have other benefits, such as sustaining a family link for provision of care for an elderly farmer or for the retired farmer to continue to provide advice and support.

Why is the provision of housing important for succession?

11. Research indicates that farming has low retirement rates. For many, this is driven by a desire to farm long-term as a lifestyle choice; however pension provision and the lack of housing for the retiree or the successor are also issues that impact decision making.

12. Succession is not a single event but is (or should be) a process that takes place over an extended period of time. Succession is the process of transferring the management of business assets. For our purposes, we are focussing solely on the transfer of the management of the “home farm” to a successor (or multiple successors), rather than the transfer of capital to establish a new farm business. For a scenario such as this, where succession may take months or years, an additional home can play an important role in easing this transition.

The rural housing context

13. It is well recorded that house prices in rural England are significantly higher than those in urban areas. The latest DEFRA statistics are shown below. In addition to the average sale price of houses in rural areas outstripping other parts of the country, affordable housing comprises a smaller proportion of rural housing stock compared to other areas, with only 12% of housing classified as affordable in rural areas, compared to 19% in urban areas.

14. As can be seen in table 1, the most expensive properties are those in rural villages and hamlets, this has implications for those considering retiring and handing on their agricultural business. The prospect of having to move away from their area and potentially struggling to afford a new home may compel individuals to remain in the sector for longer than they otherwise would.

              Data source: DEFRA statistical release

Current policy framework

15. Government policy in recent years has been to reduce the level of prescription in national planning policy. Whereas prior to the National Planning Policy Framework (NPPF), Planning Policy Statement (PPS) 7 set out in some detail the conditions an application would be required to meet in order to be approved, the NPPF has this to say on building homes in the open countryside: 

16. Local planning authorities should avoid new isolated homes in the countryside unless there are special circumstances such as the essential need for a rural worker to live permanently at or near their place of work in the countryside

17. Local Authorities are able to set out more detailed policies in their local plans, and for many, this means reproducing the old planning policy statements such as PPS7 in supplementary planning guidance. These documents then constitute a material consideration, even if they do not form a part of the development plan.  More engaged local planning authorities are able to be more innovative through use of these documents.

18. While feeding in to the development of every local plan and encouraging a policy similar to HOU10 in supplementary planning guidance would be one way to ensure policies were adopted to assist succession, it is not feasible or guaranteed to succeed. A preferred route would be to have a reference to the needs of retiring farmers in the NPPF.

19. This could either take the form of an additional paragraph in the NPPF, an amendment to an existing paragraph or a combination of an amendment to an existing paragraph with more detail set out in the glossary of the NPPF or National Planning Policy Guidance (NPPG).

20.                     The construction of isolated rural homes in the countryside is actively discouraged by national planning policy (with certain caveats), reducing the opportunity for new homes to built for those retiring from agriculture.

Policies adopted by other home nations

21. As has been stated, other home nations have national policies concerned with succession on farms. Wales has Rural Enterprise Dwellings, Northern Ireland has HOU10 and many Scottish Local Authorities have specific policies in their supplementary planning guidance that set out conditions an application must meet in order for planning permission to be granted for a home to enable succession of a farming business.

Rural Enterprise Dwellings

22. Current guidance for the development of dwellings in the open countryside in Wales is contained in Planning Policy Wales and in Technical Advice Note (TAN) 6: Agricultural and Rural Development (2000). The policies within these documents are very similar to those provided by the old PPS7 in England, i.e. “isolated new houses in the open countryside require special justification, for example, where they are essential to enable farm or forestry workers to live at or close to their place of work in the absence of nearby accommodation”.

23. However draft TAN6: Planning for Sustainable Rural Communities was published in the summer of 2009. This document introduced ‘Rural Enterprise Dwellings’ albeit these are essentially a new name for agricultural / forestry workers’ dwellings.

24. In addition to setting out parameters to be met for approval to be granted for a dwelling to accommodate a new farm worker it also recognises that a new property can help to aid succession. It states:

•         “a second dwelling on an established farm, which is financially sustainable, to facilitate the progressive handover of the management of the farm business to a new farmer within 5 years of planning consent for the rural enterprise dwelling being granted”; and

•         “A second dwelling on an established farm, which is financially sustainable, where there is a functional need for a further 0.5 or more of a full time worker and at least 50% of the workers income, is obtained from the farm business”.

25. While the policy is in many respects similar to the rural worker policy in place in England, the acknowledgement that the construction of a new dwelling can play a role in handover of a farm is something English policies currently lack.
26. As can be seen from table 2, the Rural Enterprise Dwelling policy has not resulted in significant development in the countryside over the last six years. Given it is essentially an amalgamation of a number of different rural worker policies, we would not envisage a similar model being adopted in England to have a significant impact on the countryside. 

              Data source: Welsh Government

CLA Proposal

27. Our assessment is that an addition to paragraph 55 of the NPPF would be the most sensible step to have national policy recognise the important role that housing can play in assisting succession within agriculture. A reference to this being permissible could then be supported with more detailed conditions in the NPPG or left for Local Authorities to individually interpret in supplementary planning guidance.  Paragraph 55 is copied out below, complete with new suggested wording:

Annex – Policies adopted by other home nations

Northern Ireland: Policy HOU 10 Retirement from farming 

Planning permission may be granted for a dwelling house on a farm in a Green Belt or Countryside Policy Area, for a farmer retiring from farming, or for the widow or widower of a farmer, to facilitate the orderly transfer or sale of the farm.

Where a farmer is retiring from agriculture or dies, planning permission may be granted for a house on the farm, to enable the farmer or widow/widower to continue to live on that land, provided the application fulfils the following criteria:

•                the applicant last worked mainly as a farmer, or is the widow or widower of someone who last worked mainly as a farmer;
•                the applicant is of retirement age and has recently retired or is about to retire; or has to retire prematurely from farming because of ill-health; or is a widow or widower, as in the above criterion
•                the siting of the house is on the land which the applicant, or, in the case of a widow or widower, her or his spouse, farmed until retirement;
•                the farm is viable and therefore capable of supporting a farmer in full-time employment;
•                the farm holding, is being sold or transferred as a going concern;
•                the existing farmhouse will continue to be used as the main farmhouse on the farm l there are no existing alternative development opportunities available on the farm - see Policy HOU 9;
•                no houses or housing development sites have been "sold off" from the holding; and
•                the site meets the planning and environmental criteria set out in policies· HOU 8 & HOU 9;

Information on the farming activities and the applicant's or deceased's part in them will be required. It will not be sufficient to have been involved in farming on a part-time basis, in the evening and at week-ends, or to have received the main income from fulltime employment outside agriculture.

Retirement in itself will not justify an additional dwelling on a farm holding. The future of the holding and the existing farmhouse are important considerations. It must be demonstrated that there is need for an additional house.

It will not be necessary for a new dwelling, granted on retirement from farming, to be integrated with the existing farm buildings, although, on some occasions, this can be an acceptable solution, particularly when a farm is being transferred within the family and the farmer wishes to retain a working link with the holding.

All approvals under this policy will be subject to an agricultural occupancy condition - see Policy HOU 9.

CLA Note: HOU8 and HOU9 are policies that outline conditions for the construction of homes in the open countryside and the construction of homes for farm workers.

Wales: Rural Enterprise Dwellings

4.3.1 One of the few circumstances in which new isolated residential development in the open countryside may be justified is when accommodation is required to enable rural enterprise workers to live at, or close to, their place of work.

Whether this is essential in any particular case will depend on the needs of the rural enterprise concerned and not on the personal preference or circumstances of any of the individuals involved. Applications for planning permission for new rural enterprise dwellings should be carefully assessed by the planning authority to ensure that a departure from the usual policy of restricting development in the open countryside can be fully justified by reference to robust supporting evidence. Rural enterprise dwellings include:

• A new dwelling on an established rural enterprise (including farms) where there is a functional need for a full time worker and the business case demonstrates that the employment is likely to remain financially sustainable. (See paragraph 4.4.1).

• A second dwelling on an established farm which is financially sustainable, to facilitate the handover of the management of the farm business to a younger farmer. (See paragraphs 4.5.1 - 4.5.3).

• A second dwelling on an established farm which is financially sustainable, where there is a functional need for a further 0.5 or more of a full time worker and at least 50% of a Grade 2 Standard Worker salary, as defined by the latest version of the Agricultural Wages Order, is obtained from the farm business. (See paragraphs 4.5.1 - 4.5.3).

• A new dwelling on a new rural enterprise where there is a functional need for a full time worker and the criteria in paragraphs 4.5.3 a-e are fully evidenced. (See paragraphs 4.6.1 - 4.6.2).

4.5 Second dwellings on established farms

4.5.1 The Assembly Government wishes to encourage younger people to manage farm businesses and promote the diversification of established farms. To support this policy objective it may be appropriate to allow a second dwelling on established farms that are financially sustainable where the criteria set out in paragraph 4.4.1 cannot be fully satisfied. The two exceptions to the policy are:

• Where there are secure and legally binding arrangements in place to demonstrate that management of the farm business has been transferred to a person younger than the person currently responsible for management, or, that transfer of management is only conditional upon grant of planning permission for the dwelling. The younger person should demonstrate majority control over the farm business and be the decision maker for the farm business; or,

• There is an existing functional need for an additional 0.5 or more of a full time worker and that person obtains at least 50% of a Grade 2 Standard Worker salary, (as defined by the latest version of the Agricultural Wages Order), from the farm business. Technical Advice Note 6: Planning for Sustainable Rural Communities 19

4.5.2 In these circumstances a rural enterprise dwelling may be considered favourably provided the criteria set out above and in paragraph 4.4.1 are met. These special policy exceptions will only apply to the first additional dwelling to be attached to an established farm after this TAN comes into force and not to subsequent dwellings.

4.5.3 It must also be demonstrated that the management successor or part time worker is critical to the continued success of the farm business, and that the need cannot be met in any other reasonable way, e.g. through the re-organisation of labour responsibilities. In addition, where all the criteria specified above are met the planning authority should ensure that the new dwelling is tied to the holding by way of a legal agreement.

Full text: Technical Advice Note 6: Planning for Sustainable Rural Communities

September 2017