Agricultural ties as conditions or obligations.
Agricultural ties as conditions or obligations - is there an affect on property value?
Agricultural restrictions on the occupancy of buildings are most commonly seen as planning conditions in the England and Wales. The affect on property value is negative and a generally accepted rule of thumb is that value drops by circa 30%. The onerous nature of trying to remove an agricultural occupancy restriction was nowhere better highlighted than in the Upper Tribunal (Lands Chamber) case of Rasbridge Re Cefn Betingau Farm . Recently though we have seen a number of such restrictions imposed as an obligation in section 106 agreements by local planning authorities due to complex planning histories of the relevant properties.
Usually, restricted occupancy is a point of necessity for any local planning authority in granting the permission. Hence, the preference to impose via a condition. Additionally, the condition is more easily enforceable for the local planning authority whilst a person wishing to challenge the condition may utilise the mechanisms in planning statute without having to wait to make an application were the restriction imposed as an obligation. Moreover, a person in breach of such a condition may be able to claim immunity from enforcement action and manage risk that way.
So is there any benefit in having such a restriction as an obligation? Does the fact that a local planning authority has to enforce through contract instead of issuing a breach of condition notice reduce the risk of enforcement action and consequently mean property value is less affected?
Our experience suggests the answer would appear to be that there is no effect on value, although every case has its own facts. It is a restriction, in whatever form, that will act to reduce the pool of potential purchasers, limit the use of the property, one that any prospective buyer will be concerned about and use to negotiate a lower price. However, the practice of pursuing such restrictions through conditions should continue to be the better mechanism for all parties.
It would be interesting to hear of any examples of effect on property value from estate agents, rural land agents or surveyors who have been involved in similar cases.