Legal considerations in rural business diversification

Author: Gail Clarke, Associate, Murray Snell WS

 

At the beginning of 2020, it was estimated that over 50% of UK farmers and farm businesses were considering diversification. With Brexit on the horizon and the transition period coming to an end on 31 December 2020, this heralded the need for many farmers to identify and develop new streams of income. Many have been spurred into action as a result of the coronavirus pandemic, which has presented another set of challenges for rural businesses.

Social distancing rules have forced many businesses to think creatively and devise innovative ways of continuing or adapting their existing ventures, or start up new ones. For example, farm cafés and coffee shops have opened takeaway or mobile off-shoots, rural wedding venues have been offering “exclusive-hire” socially-distanced wedding packages, and rural B&B businesses have adapted accommodation to provide self-catering eco pods or wigwams.

Keeping on the right side of the law

With innovation and adaptability, however, comes the need to consider not only the financial implications, but also the legal implications of any proposed diversification scheme.

For example, changing the type of let accommodation might require a building warrant and planning permission, licences, lenders’ consent, change of use documentation and health and safety checks and safeguards. Offering exclusive hire of wedding venues may require changes to customer contracts, such as revised clauses for possible COVID-19 related cancellation, re-payment of deposits and postponement.

Alternative types of farming, such as deer, buffalo and alpaca, also bring additional legal considerations in the form of animal welfare regulations. Fish farms also require compliance with licensing laws, water use and extraction rules, and public health regulations.

While planting grants are available for forestry diversification, these may have certain conditions which need to be complied with. Harvesting trees will need felling licences and re-stocking obligations could apply.

Agricultural tenants looking to diversify their business may need to follow strict procedures under the agricultural legislation depending on the terms and type of their lease. One often overlooked point is whether the title deeds to a property restrict its use and if so, what options are available to legally overcome that.

Our team has advised many clients in their diversification projects, and we can testify that being forewarned is forearmed. Please get in touch with our team if you would like to discuss your diversification projects or any of the points covered in this article.

 

Gail Clarke is an Associate and forestry specialist within Murray Snell’s Estates, Forestry, Agricultural & Rural team and can be contacted by e-mail or by telephone on 0131 625 6625.

Murray Snell WS is part of the MacRoberts Group.

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