The Agricultural Building-Conversion Rules – Effective at Increasing Housing?

Converting agricultural structures to homes will provide additional housing in rural and suburban areas. But a true dent in the housing shortage will come by other means.

Then Planning Minister Nick Boles announced in March 2014 that owners of redundant agricultural buildings will have an easier go at permitted development of those buildings into residences. The ruling was made effective almost immediately. So an immediate follow-up question might be: what effect on the housing crisis in the UK might this have? Will farm families replace strategic land investment firms as the developers who solve the housing shortage problem?

The answer is “not likely.” Within Boles’ ministerial statement are the limitations on these expanded development rights for owners of agricultural properties: up to three dwellings may be created up to a maximum of 150 square metres per house (I.e., a building up to 450 square meters may be converted). The prior agricultural use of the buildings had to be agricultural on and before 20 March 2013 (I.e., nothing built since or in use for another purpose other than farming).

Additionally, note this is not a free-for-all, as it is still subject to local planning authorities. Builders can place doors and windows where they chose, and even replace a portion of the building if a wall or roof or other element is deteriorated. But LPAs can still examine several factors to determine if the introduction of new residences has a material impact on local transportation and highways, if it will increase noise, or if flooding risks or ground contamination might make residential use impractical. Planning authorities can also rule if the design or external appearance of the building is acceptable or not, or if siting/location factors simply make the conversion impractical for residential use.

Given the shortage of housing in the UK, and the requirements of the National Planning Policy Framework (NPPF) for local councils to identify means to expand housing stock where possible and needed, one imagines those authorities would be somewhat predisposed to approvals.

As to the degree to which this addresses the UK’s housing crisis, there are some points worthy of consideration:

• Need is important for aging farmers and rural workers – While they are not a large segment of the overall UK population, in agricultural areas an expansion of housing options can be beneficial to retired farmers who wish to stay near children now running the operation. Agricultural workers also need housing that is affordable and nearest to their places of employment.

• Knowledge workers might prefer country living – The Country Land and Business Association (CLA) published a report in 2013 that included enthusiastic support for these extended permitted development rights. Their reasons include how “to work effectively as a member of the knowledge economy, you no longer have to live in an urban location.” But to make that truly possible, the CLA argues that transport policy and rural broadband delivery be increased.

• Peripheral locations may benefit – Some farming areas are in close enough proximity to developing industries. This is where residential development is most needed, and those locations therefore can help meet that need.

• Good supplementary income to farmers – According to, the revised rules on agricultural building conversions can provide new streams of income to farms where redundant buildings have otherwise become a maintenance liability and cost.

But the overall UK housing shortage is of a scale where three residences per project in rural settings is not likely to make a huge difference to the national problem of too-few houses. The Home Builders Federation says that based on the seminal 2004 Monetary Policy Committee report by Kate Barker, the country is now short of one million homes. Where 220,000 houses should be built each year to achieve an adequate supply by the year 2021, only 115,000 have been built annually since 2004.

Another approach that achieves a larger volume is by way of strategic land developers. This is where investors join in real asset funds to buy raw land, get use permission changes from local planning authorities, then develop infrastructure that allows homebuilders to buy sites and build what the market calls for. Instead of three new dwellings, these ventures can provide 30 or 300 or 3,000 more homes.

Individuals who invest in housing-related joint venture partnerships are strongly encouraged to work with independent financial advisors. Factors relating to other components of a wealth portfolio need to be taken into consideration along with the risks and rewards of the investment itself.

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