Diversifying your estate - top 5 questions to ask yourself before embarking on a new project
There is a full spectrum of diversification projects for you to consider if you wish to enhance your rural property portfolio. But before you embark on this process, here are our top five questions to consider.
- What are your reasons for undertaking the project?
The most common reason for diversifying is to increase your income stream, unlock funds or to add value to your farm or estate. It’s key to set out your aims and objectives before you embark on a new project and it’s equally crucial to play to your strengths and identify any weaknesses to help streamline your project’s development. Consult diversification specialists, operators, and consultants who can help guide you through your journey.
- Who is involved in your farm or estate?
Who are the decision makers now and who will they be in the future? Carefully consider how the diversification of your rural assets fit in with your business or family’s succession planning. These questions need to be answered before you commit to diversifying your property portfolio.
- Think about what’s core to you
For us, we often find that the family home and the land directly surrounding the house are the most precious elements of our clients’ farms and estates. If you have some outbuildings 10 feet from your back door, is an Airbnb or commercial use property really going to be right for you there? In reality, this will affect the enjoyment of your home. Consider how the project will fit in with your existing business and properties.
Through categorising your different assets, you can also think about your low hanging fruit. Think about those redundant farm buildings or any land that might be perfect for diversification without impacting on your home or farm business.
Future proofing your property through diversification is an invaluable tool, it’s important that you take a helicopter view of your estate before embarking on the diversification journey. Think about its longevity. How will the project work in 5, 10, 15 years’ time?
- What’s the market like for your new venture?
Diversification schemes need to be considered carefully in the context of your location and the local markets. For example, glamping is likely to work well in a picturesque location with close transport links to London or other major towns and cities, but it is less likely to be successful in a particularly remote location without a unique selling point.
Equally, the rent achievable from a let building will vary considerably depending on location, access, services, internet speed and so on.
It is really important to undertake market research at the early stages to ensure your project will deliver the income required and to enable it to remain a viable business into the future.
Furthermore, a often forgotten element of rural development and diversification is the management costs. Not only do you need to consider cost of management repairs, but also the cost of building it and then maintaining it once it is up and running.
- Do I need Planning permission?
The majority of diversification projects will require some form of planning consent, be that through a full planning application or through the use of permitted development rights. As such, planning will be essential to most schemes.
It is really important to consider the chances of achieving planning consent and to undertake the relevant applications before investing further in the project. Make sure you are aware of any site-specific constraints, such as land designations (e.g. Green Belt, AONB etc.), listed buildings, highways, landscape and so on, and how these could impact on what can be achieved at the site.
Some schemes can potentially be undertaken without any planning at all, such as temporary events. However, at the time of writing, from January 2022, the amount of days you can undertake a temporary use on land without needing planning permission is reducing from 56 to 28 days.
Make sure you’ve engaged with your Local Planning Authority or with a consultant to ensure you’ve got all the appropriate permissions in place before investing in a new development.
So now you’ve answered the questions to get yourself started, here are a few examples of the different areas you could diversify into:
A great source of income, holiday lets are one of the most popular forms of development. When looking at the range of projects we have worked on over the years, holiday accommodation has increased in popularity as a result of lockdown and subsequent travel restrictions, but there was an upward trend in ‘staycations’ even prior to the pandemic.
Let’s look at an example of a successful diversification project. Situated close to London in Kent, Goodnestone’s mansion house was renovated into high end holiday accommodation. We obtained planning and listed building consent for the works. Our project management team were able to oversee the renovation. The house now features 12 beautiful rooms, which are available for weekend and weekly stays. Since being featured in The Times, the House consistently brings in visitors and has encouraged the estate to convert other outbuildings to boost their income.
Similar to holiday lets, glamping and camping holidays have soared in popularity as a result of the pandemic. Even if the glamping site structure itself is temporary, you will need to secure planning permission if the glamping site is going to be set up for more than 28 days of the year. Do make sure that you’ve engaged with your local planning authority or with a consultant, to ensure you’ve got all of the appropriate permissions in place before investing in this.
It is also important to make sure you have considered how the site will be managed, e.g. will you bring in an operator or will you be managing it in hand? The busy season for glamping inevitably clashes with harvest, so you may not be best placed to take on the scheme without help or a willing family member.
If you wish to offer year-round unique accommodation, but don’t want anything sat on your doorstep, in your farmyard, or within your existing = buildings, building treehouse accommodation provides a unique space which is perfect for people who are looking to take a short weekend break away.
As well as being better for the environment, buying local has become trendy. There’s been a real boom in sourcing food locally, particularly in visiting = traditional farm shops. Farm shops can complement your business really well and become a bit more of a destination and draw people into what you have to offer.
Additionally, farm shops also provide you with the option of branching out to have more services and retail offerings. However, if you are looking to expand, you will need to secure planning permission.
Redundant or even derelict barns can offer unique opportunities to provide wedding and event spaces. Particularly if they are a permanent structure, planning consent for change of use can be easily attained.
Transforming barns into wedding venues has become increasingly popular. If you’re struggling to make a profit running your event space yourself, we would recommend finding a specialist operator so they can use their expertise to turn your venue around. By leasing the space to the operator, you will receive rental income, you wouldn’t have to expose yourself to the fluctuating market, and you will have round an amazing use for your redundant farm building.
However, you don’t need a barn to provide an attractive venue. Areas of woodland, open grassland or indeed walled gardens can all offer a great space for weddings and events.
Other potential uses include festivals, outdoor cinemas, sporting events and county shows. These types of uses can be run in-house if you have someone who is both willing and experienced to do that. But you may want to source a third-party operator to rent the site from you.
There is a wealth of opportunity for diversification schemes on farms and estates. However, it is important that your ideas are tailored to your site, and that the appropriate planning consents are in place (if required) to ensure the project will be viable. Please consult a diversification expert before embarking on your journey so that you can make the process as smooth and streamlined as possible.