11 replies to this topic

[whoknows]

I am wondering if going for a large piece of land (if you can afford it) help with building the case that it's not really a hobby rather a serious business.

So for example if I could buy 50 acre vs 12.5 minimum required will it strengthen the case to eventually get full planning permission.

[Greenbeast]

The money might be better spent on building the business on 12.5 rather than spent on 37.5 extra acres

To be fair, we've gon through full planning anyway, and we're on 15 acres. so the 12.5 threshold hasn't really meant much, although no doubt there'll be structures we'll need in future that will come under GPDO

[whoknows]

Thanks for sharing and well done with your planning, I also checked out your website and your hogs look lovely and healthy

Building business vs return on investment just because of land price appreciation also needs to be considered. Many of farming the enterprises yield less than land price appreciation potential which comes without all the effort, on the other hand successful business is necessary to meet the viability test, so I can see where you are coming from.

[adrian007]

I wouldn't consider land appreciation as part of the business plan. It has appreciated immensely over the past 7 or 8 years, it has levelled off now. It will likely grow more sometime in the future, but it may well fall again in the meantime.

 

I would say if it goes up in value, it is nice, but that's the extent of it. You can't rely on it.

 

On the other hand, the better the farm you build, the better the increase. You will build a better farm with more available cash.

 

So - do you want a rubbiush farm on a big plot, or a fabulous farm on a smaller plot?

 

Unless, money is no object... if money is no object, then fire away! Although, then you are looking at an investment, and if your investment is all tied up in land, that is not very diversified and a very poor investment strategy.

[bramblebasher]

My appeal inspector insisted that the business plan needs to factor in original purchase price of land and 'marked me down' on that basis.

So if you plan to only do a certain number of livestock to meet functional need there's little point in having unproductive land sitting about and it may hurt you at appeal? However I suppose you could just rent out spare as long as rent was proportionate the the original expenditure.

I've spoken to the Inspectorste about this and that basically said "err there's no rules its up to the inspector." Great, so helpful.

I was under the impression that to be on the safe side the purchase of land has to be figured into the business plan as a theoretical rent, perhaps it's safer to express it as a theoretical mortgage repayment so like 15 acres @ £10 000 an acre = £150 000 divided by 30 years = £5000 per annum? That may screw up some people's business plans so best be prepared.

Adrian you clearly know your financial stuff (technical term) what's your thoughts on this?

B

[billie]

If 90% of farms in this country factored in the cost of the land their business plans would look pretty dire, average farm size 382 acres @ £7,000 per acre  2.6 million  over 30 years about  £,000 just in repayments 

[tonydockers]

My opinion is that good land is a good investment and if you can buy linked land at a sensible price and still have enough money to invest in your farming enterprise then you should do it.

 

I do not believe having extra land will make your farm more serious, if that were the case they would stipulate all farms need 50 acres to be considered a farm, blah blah

 

i very much think it will come down to your actions and a robust business plan that cannot be unpicked by an agri consultant for the council

 

factoring in a theoretical rent for the land would seem to make sense if you can make it stack up or otherwise you simply refer to it in the business plan as cash investment no mortgage repayments needed therefore no burden on the business....obviously worded better

 

god luck with your journey

[shepie]

I

[bramblebasher]

"There was also no inclusion of a capital cost element related to the original purchase of the land."

 

The above is a direct quote from the inspectors decision in my case. 

 

Maybe it's like you say Shepie, it must be made clear to the inspector/council that there was NO CAPITAL COST TO THE BUSINESS. What I mean by that is that YOU purchased the land and not THE BUSINESS. So therefore perhaps it is correct to RENT the land to the BUSINESS to cover ones arse?

 

In my case he made this a negative and I should have explained it as a positive right from the start, hopefully this information may be of some use to others who struggle to pay for a consultant. It is something I will probably end up taking a small loan out to pay for as I can't risk missing something obvious again!

 

What's others opinion on interpreting the top quote?

[tonydockers]

could you not simply put the following in any design statement of business statement

 

The capital cost of purchasing the land was £125,000.00 which was funded by a Directors/owners loan to the business which is loaned interest free and is payable from the proceeds from any future sale of the land and is covered by a legal agreement of the same, which is included the annex numbered xxxx

 

or similar

 

who is to say that an interest free loan to a business is not allowed or fair

[bramblebasher]

Tony I really like this and will be using it, thank you very much.

 

Anyone have any other thoughts on this?

[shepie]

O