Rural Rented Property


You may have noticed that the Government recently published its White Paper aiming to solve the “UK’s broken housing market”. Within it there were many fine words, some of which made very encouraging noises about the need for rented housing in rural areas and the need for provision by local authorities and the private sector.

That must sound encouraging to those of you who have provided such properties for many years due to the property-rich nature of most Northumbrian farms. However, as so often, while one part of Government plays sweet music, another is busy putting the boot in. While there are many ways in which government, both central and local, preys upon the good nature of rural housing landlords, possibly the most pressing is the issue of Energy Performance Certificates (EPCs).

This regulation was introduced back in 2004, coming into effect in 2007 when EPCs became mandatory when residential property was either let or sold. The EPC process grades the property from A to G, with A being the most energy efficient. This was rather a nuisance for owners, and not of great interest to most tenants or purchasers, but the regulations are soon going to bite. From the 1st April 2018 it will become illegal to let a property with an EPC rating of less than E. From 1st April 2020, this will apply to all existing tenancies. So time is running out to commission an EPC and undertake any recommended work.

There are some exemptions from the EPC requirements, such as Listed buildings and places of worship, but generally expenditure will be required to ensure that traditionally constructed cottages make grade E.

Ownership, or an interest in the ownership, of a let farm cottage may have another nasty surprise due to the imposition of an additional 3% Stamp Duty Land Tax on the purchase of a “second home”. This may not be an issue for the farmer residing in the farmhouse, but it may have implications if the farm is in joint ownership, such as a partnership.

It is possible that a partner, perhaps the son or daughter, may seek to purchase their first main residence outside of the farm partnership. If the farm contains let residential properties, it is likely that it will be held that the partner has a material interest in residential property and thus the new purchase will count as a “second home” and attract an additional 3% SDLT. How does that sound for helping rural families get on the housing ladder?

If you would like any further information or to discuss any rural related matter, please contact Tom Wills, head of the agriculture & estates department at Sintons.


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