Beware the informal arrangements which could turn sour
Many farmers will often let sheds or space to local businesses or neighbours. The situation is often that a conversation takes place in the pub, and a local plant hire firm, builders’ firm, and so on, take over a small section of the yard, often on an ad-hoc basis that can continue for years.
There are three areas that should be considered when looking at carrying out this type of activity, including security of tenure, the potential for business rates to be charged, and whether the use requires planning consent.
Accidentally giving a tenant security of tenure can have big implications and can be very damaging. If the correct documentation is not put in place, and neither a lease nor a licence is correctly entered into, then your tenant may obtain the right to stay in the premises for as long as they continue trading, unless you can remove them under the terms prescribed in the Landlord and Tenant Act 1954.
In most cases, to start with a landlord and tenant get along fine, but if financial troubles or any other type of problem affects the relationship, then matters can soon become very sour and suddenly the landlord finds he or she is in a position where they cannot remove the tenant.
This can be very disruptive if both landlord and tenant are operating out of the same yard daily. The correct documentation must be put in place to prevent this from happening.
Business rates also need some consideration and it is worth expressing to the tenant on day one, as well as correctly documenting this, that if rates do become applicable then the tenant will be picking up the rates bill, not the landlord.
Lastly and needless to say, planning is also a major consideration and, in many cases, this type of occupation starts on a very short term basis, often for less than a month, but continues where it will be in breach of planning.
It is worth nothing that a certificate of lawful use can be obtained if a continuous use can be proved for a 10-year period, but for a new use, planning consent for change of use is required.
If we can be of any assistance on the above, then please do not hesitate to contact us.
Duncan and Sarah Howie
Howie, Kent & Co Ltd