Equestrian Properties: ‘Opportunities and Pitfalls’
Alongside my work as Head of Butler Sherborn’s Equestrian department, I also run a business competing event horses. The business ‘Team Way Eventing’ is based at home on the family farm in Warwickshire. My wife, Sarah, and I, compete around 30 horses for a number of different owners. Our horses range from 4 year olds, starting off their careers in the young horse classes, through to the older horses, which we compete at the very top of the sport. This practical insight, alongside my professional experience in sales, letting and formal valuation, gives me a good insight into all aspects of equestrian properties, the opportunities they can present, and the range of pitfalls and ‘grey areas’ that come with all things equestrian……
We have seen a good level of activity within the equestrian property market with both sales and lettings over the last twelve to twenty four months. In our experience, there continues to be a shortage of supply of equestrian properties, or those with land capable of being converted to equestrian use. This position, backed by fairly consistent demand, has resulted in some strong sales being achieved over the past 12 months. As ever, many of the rental transactions happen off market. Again, this is due to a shortage in supply, but also a small pool of somewhat specialist tenants. As a result, we have also seen an increase in rents being achieved, with some properties generating attractive yields. The opportunities for strong sale prices and attractive rental yields are among the positives for owning equestrian properties. However, on the flip side, there are plenty of pitfalls of which property owners need to be aware. Some of the most common are highlighted below.
Pitfalls or Issues to watch out for:
- Business Rates: The recent changes to the allocation of new funds generated from business rates have resulted in Local Authorities looking more closely at properties used for equestrian businesses, many of which have not previously been subject to non-domestic rates. Despite the threshold for Small Business Rates Relief (SBRR) increasing to provide 100% relief for properties with a rateable value up to £12,000, we have seen an increase in requests from clients to ‘check’ and ‘challenge’ recent business ratings, some of which have been backdated by the Valuation Office Agency (VOA)
- Planning Consent: Many properties with buildings originally used for agricultural purposed are now being put to equestrian use, without planning consent. Some of these uses may have been in place for many years, in which case Certificates of Lawful Use can be obtained. Planning authorities are also getting tougher on land being used for equestrian activities, and the requirements for Planning permission as a result.
As an agent, it can be very frustrating to have agreed a really good sale for a client, and to then find the conveyancing process is delayed, or a sale falls through, if it is discovered that there is a lack of planning consent for the current use, for certain facilities.
- Tenancy Agreements: There are still a surprising number of people occupying properties for the purposes of running an equestrian business without a formal tenancy agreement in place. Without a ‘contracted out’ tenancy agreement, there is a risk that the tenant may claim security of tenure, making it extremely difficult to regain vacant possession. This may compromise future sales or letting of the property. Formal tenancy agreements can be costly, however they can be worth their weight in gold if they prevent a tenant from claiming security of tenure.
- Employees: Good quality staff are essential for any sizeable equestrian business, however, they can present a plethora of issues: The often unsociable hours can easily fall foul of the minimum wage regulations. Those driving horseboxes, although sometimes viewed as non-commercial, can quickly breech the regulations regarding HGV driving hours and rest periods. Mobile homes which tend to be a popular and cost effective form of staff accommodation, are often put in place without the proper planning consents.
- Capital Investment: Any capital item with the word ‘equestrian’ connected with it seems to give manufacturers/suppliers the excuse to charge twice as much for it. This, along with a growing requirement for yards to have all the toys, results in some people getting carried away by putting in state of the art horse walkers, solariums, spa’s and indoor arena’s. However, it is important to take a step back to avoid over investing and to ensure you will be able to get a return on your capital expenditure.
In summary, utilising a property for equestrian purposes can generate some very attractive returns. However, where possible it is certainly advisable to get all the correct paperwork in place to avoid any potentially costly surprises further down the line.
Ben Way, Head of Butler Sherborn Equestrian