All tied up? Section 106 Agreements Preventing Disposal of Agricultural Holdings unless Sold as a Whole

There has been a recent shift in the Government

's approach to agricultural ties. Where it was previously acceptable for Local Planning Authorities ("LPA") to impose planning obligations which restricted the sale of agricultural holdings, unless otherwise disposed as a whole, this may no longer be required. New tests and guidance may make a development acceptable in planning terms. 

Where an LPA grants planning permission for a new rural worker's dwelling the Council will impose conditions to ensure that the dwelling remains available for those employed in agriculture. In some instances LPAs will also additionally require the imposition of a planning obligation - contained within a section 106 agreement - preventing sale of the agricultural holding unless it is sold in its entirety.

This prevents the sale of individual fields and buildings on the farm and therefore restricts the owner's ability to sell of land, where for example this is no longer required. These obligations can also have implications for VAT exemptions and the ability of the business to borrow money. This type of obligation can also prevent the downsizing of agricultural holdings when a farming family for example approaches retirement.

What would the obligation look like?

The planning obligation in the section 106 agreement can take many different forms, but will normally be similar to the following:

"not to sell, mortgage, charge or otherwise dispose of the land (including the development and/or buildings and structures on the land) except as a whole."

Why was it imposed?

The now outdated Planning Policy Guidance 7 set out that in appropriate circumstances an LPA may request a planning obligation to tie a farmhouse to adjacent farm buildings or to the agricultural land of the unit to prevent it being sold separately in order to make it acceptable in planning terms and ultimately to halt the potential proliferation of dwellings being built in the countryside were the agricultural holding to be split in the future.

What has changed?

Such advice, however, was not carried over into Planning Policy Statement 7 nor has it reappeared in the National Planning Policy Framework introduced in 2012. The Planning Practice Guidance is also silent on the issue.

Some LPAs may have updated their local plans to reflect national planning policy and no longer require this planning obligation. Where a site is subject to such an obligation the owners may want to consider making an application to the LPA to remove the planning obligation.

Some LPAs may still rely on out of date local plans to impose this, but any planning obligation imposed would have to meet the test that it is necessary to make the development acceptable in planning terms, is directly related to the development, and is fairly and reasonably related in scale and kind. Whether or not this is appropriate will depend on the circumstances of each proposal.

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