A lack of affordable rural housing is stalling agricultural progress, with older farmers unable to retire and younger farmers struggling to get a foot on the ladder.
Measures to enable older farmers to retire with dignity and the young to step up to take their place are severely restricted, despite the fact that 84 per cent of UK farmers are now second generation.
This was the clear message of a new report, compiled by a number of organisations including the Central Association of Agricultural Valuers (CAAV) and the Prince’s Countryside Fund, which warned changes were urgently needed to allow the younger generation to drive the industry forward.
CAAV secretary and adviser Jeremy Moody went so far as to claim issues with rural housing were ‘limiting the progression of UK agriculture’.
He said: “Sufficient housing is needed by everyone in the sector, but it is frequently scarce and expensive in rural areas.
“Housing is one key obstacle to farmers when scaling down or retiring – whether through lack of availability or limitations in affording it.”
Solutions in the report include relaxing local planning rules for retiring or new farmers by allowing farm building conversions, introducing tax allowances and creating rural exception sites to develop affordable housing.
Mr Moody also said the industry needed to promote any opportunities offered by Government policy to provide housing for the next generation, ‘so the retiring farmer can stay in the house he has always lived in’.
Beef and sheep tenant farmer James Wright, West Sussex, agreed retiring farmers should be able to keep their homes and stay on the farm ‘for as long as possible’ because they are an ‘invaluable asset’ to the next generation, but pointed out doors needed to be opened for youngsters.
He spoke of his own experience of seeking a tenancy for more than four years, before being offered a contract with his wife by somebody who had heard of their struggles.
Mr Wright explained the biggest barrier for his family was housing.
He said: “There are not enough farms coming to market and, when they do, it either goes to the neighbour next door or there is more value in ripping the house out and renting it separately.
“For me, the number one thing is – particularly when you look at the South – there is more value in developing farm buildings and renting the farm house out to a banker in London.”
He suggested the Government should relax rules for new buildings on-farm, specifically for farmers or those entering into Farm Business Tenancies (FBTs).
Changing inheritance tax was another of his key asks, but previous talks with Farming Minister George Eustice ‘led nowhere’, he said.
“His cop out was the Treasury leads on inheritance tax changes,” said Mr Wright.
“If you have to farm to keep your inheritance tax and there is no-one to take over, you are not investing in the business, you are not trying new ideas, you are just keeping the business going.
“There is a reason why productivity in the UK is falling behind. I cannot wait for subsidy to go and for a lot of people not to be able to afford to farm, because it will give young people the opportunity.”
A former volunteer at the Farming Community Network (FCN) said the issues surrounding rural housing had been ongoing for some time, but because farms are so spread out, the numbers in any one area ‘appeared insignificant’.
FCN chief executive Charles Smith added the charity had been supporting tenant farmers who continue to farm long past ‘normal’ retirement age for many years.
“The harsh reality is the older these farmers get, the harder they find it to keep up with the physical demands of life on-farm,” he said.
“This then has a knock-on effect on their physical and mental well-being and puts their personal safety on the farm at risk.
“The lack of affordable housing makes it impossible for many of these farmers to leave the farm and pave the way for the younger generation to take over.”
Mr Smith also warned the demand from elderly farmers looking for rural retirement housing over the next few years was likely to significantly increase.
“It is difficult to see the situation improving for either generation without a significant change of approach to local planning and greatly increased provision of affordable rural housing,” he said.
CALL FOR URGENT STAMP DUTY REFORM
A REFORM in Stamp Duty Land Tax (SDLT), both for new entrants and retiring farmers, is urgently needed, according to the Tenant Farmers’ Association (TFA).
TFA chief executive George Dunn explained for those taking tenancies, SDLT is calculated on the net present value of the rental stream and has a built-in level of discrimination against longer term, more secure tenancies.
He said: “The TFA understands the SDLT scheme as we currently have it was introduced to tackle loss of taxation revenue from large urban developments; however, it is penalising good practice within a rural context.”
Instead, he suggested all agricultural tenancies should be assessed for SDLT on the basis that they are assumed to be twoyear agreements, regardless of their actual length of term.
Mr Dunn also claimed the operation of higher rate SDLT on purchases of second residences is a ‘major problem’ for those looking to purchase a property for their retirement.
“There is an inherent unfairness within the current regulations which needs to be corrected,” he said.
At present, an individual who is the owner-occupier of their principal place of residence is exempt from the higher rate of SDLT when purchasing a replacement dwelling for their current principal place of residence, regardless of how many other residential units they own.
But for individuals such as tenant farmers, who are required to live in accommodation provided by their tenancies, the exemption from higher rate SDLT does not apply when they give up living in the job-related accommodation either through retirement or at the end of tenancy.