The property and planning regulations diversifying farmers need to know

11

Dec

2025

From earning income from grazing, to selling parcels of land and leasing farm buildings, there are a number of ways in which farm businesses can generate additional income from their existing assets. Shilpa Unarkat, partner in Sydney Mitchell’s Commercial Property team provided a round-up of the considerations for this type of diversification when speaking at the firm’s Succession and Diversification seminar in November.

Grazing

Allowing other farmers or stockholders to use land for grazing is a sensible way to earn income by letting others graze livestock on unused pasture without selling the land. However, it is important to have a legal agreement in place.

Proper legal documentation is essential to formalise grazing licences and protect the interests of all parties. Grazing licences are a practical way to safeguard this type of diversification and to extend the farm’s income, while preserving agricultural land use and biodiversity goals.

Land sales

Selling parcels of farmland provides capital for reinvestment, debt reduction, or strategic farm restructuring.

It’s important to remember there is value – often high value – in land that is most suited to agricultural use, which is protected by its high agricultural value as well as by planning policies.

This is why it is important to consult with both legal and environmental experts to get the very best, most comprehensive strategic planning advice to ensure compliance and long-term viability. Approach these discussions before making any decisions on whether to sell, and which parts to sell, and then only once considering and establishing access to the land, any restrictions necessary on its use in order to protect any adjacent land that is retained, and of course the environmental impact for the land parcel itself and surrounding areas as a whole.

Leasing farm buildings for storage

Leasing farm buildings for agricultural and non-agricultural storage certainly delivers income potential. For unused farm buildings, or even land for open storage, a good rental income can be generated, which for farmers represents a steady additional income stream, as well as a way to maximise asset utilisation.

But there are laws governing land use. Ensuring compliance with land rights as well as local planning regulations is critical for storage leasing enterprises.

Similarly, if leasing unused farm buildings to third parties for them to use for storage requires the potential tenant to establish and ensure that the intended use for the building complies with all planning requirements and that the proper authorisations are in place. For both parties, this should extend to assessing a building’s integrity, its accessibility, and suitability for safe storage whether agricultural or non-agricultural items.

A properly drawn up lease agreement is a must. This needs to clearly define the terms of the lease (including the rent, the length of term and permitted use) and any maintenance responsibilities applicable to both parties in order to avoid any future issues or disputes.

Land uses

Agricultural land certainly presents scope for multi-income streams, whether this is to use it for renewables for example, or perhaps for hospitality or recreational events or activities. It enhances farm resilience, financial performance, and supports sustainable land management practices. However, farmers and landowners must realise that as well as income, any diversification of land use can risk the agricultural reliefs available to them. All are subject to planning regulations and laws, and an environmental risk assessment should also be completed. Engaging stakeholders and experts ensures legal compliance and alignment with business goals for effective strategy execution.

The ‘Succession and diversification - protecting the next generation’ event was hosted by Sydney Mitchell at Becketts Farm, one of the West Midlands agri business diversification success stories, and a fourth generation family business, in November. 2025.