Getting a mortgage for a property with an agricultural tie

You’ve found the perfect property – it’s in a rural location with no immediate neighbours, some development potential and a bit of land, and it’s a good price.

But, when you get into the detail you find the property has an agricultural tie. What is that and how will it affect your chances of getting a mortgage?

What is an agricultural tie?

An agricultural tie, also known as an agricultural occupancy condition (AOC) or ag tie, is a legal restriction that limits the occupancy of a property. There are many different versions but the main ones we see typically restrict the occupancy of a dwelling to a person who is principally employed or last employed in agriculture or in the locality in agriculture.

Agricultural ties were introduced to enable farms to get planning permission for dwellings on their land for family or farm workers, which may otherwise have not been approved under normal planning policies, for example in a green belt.

They are legally enforceable conditions placed on a property by the local council on granting planning permission for such properties. If you are found in breach of the condition, the local council can issue fines and enforcement notices.

Depending on when the dwelling was built, or the condition placed on the dwelling, the condition will usually refer to the Town and Country Planning Act of 1948, 1971 or 1990. For example, it will usually say similar to “the occupation of the dwelling shall be limited to a person solely or mainly employed, or last employed, in the locality in agriculture as defined by section 290 (1) of the Town and Country Planning Act, 1971, or in forestry or in any industry mainly dependent on agriculture (including any dependants of such a person residing with him), or a widow or widower of such a person.”

“Agriculture" is defined in Section 290 (1) of the Town and Country Planning Act (TCPA) 1971  includes horticulture, fruit growing, seed growing, dairy farming, the breeding and keeping of livestock (including any creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of land), the use of land as grazing land, meadow land, osier land, market gardens and nursery grounds, and the use of land for woodlands where that use is ancillary to the farming of land for other agricultural purposes.

Some employment conditions are more restrictive than this broad term of agriculture, and we have even seen cases where the occupant must be employed on the farm where the property was built. We’ve also helped clients purchase properties with equestrian ties, where the occupant must work with horses.

What effect does it have on the property?

A property with an agricultural tie can be around 20-30% below the market value for a similar property without an occupancy condition, so they look attractive at first.

However, as the conditions are often difficult to meet, an agricultural tied property can often be difficult to sell. For this reason, it makes it difficult to find a mortgage for such a property as banks and lenders do not want to be encumbered with a unsellable property if the mortgage defaults.

How can you get a mortgage for a property with an agricultural tie?

If you meet the conditions, then a mortgage for an agricultural tie is straightforward, provided you find the right lender who understands such properties. There are only a limited number of lenders who are prepared to take on agricultural tie properties.

You will often need confirmation from the local planning authority (LPA) that they accept your employment type meets the conditions.

It may be possible to remove an agricultural tie, but you will need to take appropriate professional advice.

Case study examples

1. Bungalow with agricultural tie and 22 acres - Pippins Farm has a bungalow, 22 acres of pasture, three stables, a tack room and a timber agricultural building. The bungalow has an agricultural tie. It was being bought by a family to use as a base for a fire and security alarm business and to develop apple, livestock and equestrian enterprises. R&BS sought confirmation that the activity complies with the occupancy condition and a commercial mortgage was found from a high street bank.
2. Self-build with an equestrian tie – our clients (a married couple) had lived in a park style home on their 15-acre site with stables for 7 years. They ran an equestrian business on the site as well as both working in the food industry. They achieved planning permission to build a house with an equestrian occupancy condition, but they couldn’t find a lender who would help them fund the build because of the equestrian tie – until R&BS were asked to help, and we quickly found a lender to support them.
3. House with agricultural tie – our client found her dream refurbishment property on a rural estate and approached her current lender for a mortgage. This was approved in principle. However, when the valuation was done the valuer found it the house had an agricultural tie. Her current lender would no longer fund the purchase. She came to R&BS and we found her two mortgage offers from lenders who we knew would be happy to support the client.