Latest / Host Planet: Airbnb, Holiday Let, and Vacation Rental Insights / Farm Diversification: Should You Start a Holiday Let?

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Farm Diversification: Should You Start a Holiday Let? · Host Planet: Airbnb, Holiday Let, and Vacation Rental Insights

• 0:00
  It's all about offering a novel experience, something that you
• 0:03
  can't get anywhere else, whether that be an off grid stay or a
• 0:08
  staying in a luxury tree house. It's about making it personal,
• 0:12
  thinking outside the box and creating a one off experience
• 0:16
  and making sure that you also know exactly what what your
• 0:19
  guests want. Holiday let's are becoming one
• 0:21
  of the most popular ways for farmers and rural land owners to
• 0:24
  diversify their income. But turning farmland, barns or
• 0:28
  cottages into a success successful short term rental
• 0:31
  business is not as simple as simply.
• 0:33
  Listing it on Airbnb planning permission, energy.
• 0:37
  Efficiency rules, estate strategy.
• 0:40
  There are some big decisions to get right before you even think
• 0:44
  about the guest experience you'll deliver.
• 0:46
  On today's show, we're chatting to someone who helps rural land
• 0:50
  owners navigate those challenges everyday.
• 0:53
  Emily Richardson. From the country.
• 0:55
  Land and Business Association joins us to explain why more
• 0:59
  farmers entering the holiday letting industry and what you
• 1:02
  need to know before starting. This is the House Planet podcast
• 1:06
  powered by Housefully. Emily, thank.
• 1:14
  You for joining us on the House Planet.
• 1:15
  Podcast Why are so many? Farmers diversifying into
• 1:20
  holiday letting. Well, I would say there's many
• 1:22
  reasons for why farmers are looking into diversifying in
• 1:27
  this way. But I would say that from the
• 1:30
  conversations that I have with our CLA members, what are their
• 1:33
  key concerns is about their business resilience.
• 1:37
  So looking at how they can boost business resilience and a lot of
• 1:42
  a lot of members are looking at basically using the assets that
• 1:46
  they have on their farming and estates in more in a more
• 1:50
  productive way so that they can generate more cash that can then
• 1:56
  support the the wider agricultural business.
• 2:01
  But I also would say interestingly, that another
• 2:04
  reason for diversifying into holiday letting is because
• 2:10
  members are are looking at how they can make their farming
• 2:15
  business more attractive to their potential successors.
• 2:20
  So for example, if their, if their daughters or their sons
• 2:25
  aren't interested in sheep farming, whatever it may be,
• 2:28
  then diversifying into holiday letting and trying to trying to
• 2:32
  create a, a side business into tourism might be a, a good
• 2:37
  opportunity for keeping their, their, their, their children in
• 2:42
  the family business and creating opportunities for them to, to,
• 2:47
  to work on the farm. So the kids don't want to be up
• 2:50
  at 4:00 AM shearing sheep, is that that's what it's all about?
• 2:53
  So so when a when? A farmer approaches you then for
• 2:56
  support. What?
• 2:58
  Are the main questions that they've got about holiday
• 3:00
  letting? So I say there's, we do get a
• 3:04
  lot of of planning questions. So that might range from the
• 3:09
  planning system in general, how to navigate it, what kind of
• 3:13
  consent they'll need. But it also might include
• 3:16
  questions specifically on permitted development rights.
• 3:20
  So for example, Class Q for conversion, but also we do get a
• 3:25
  lot of questions regarding taxation and the implications on
• 3:31
  of, of diversifying into holiday lot holiday cottages.
• 3:35
  So we have a tax team in, in London that can give really
• 3:39
  detailed advice on the IHT implications, for example, of,
• 3:44
  of diversifying into holiday cottages.
• 3:47
  Because the the key thing to remember is that it's likely to
• 3:51
  be considered an investment asset for inheritance tax
• 3:56
  purposes. But as an advisor, as a, a
• 3:59
  surveyor at the CLA, when I get questions about diversifying
• 4:05
  into holiday cottages and the conversation might be focused
• 4:11
  predominantly on planning, for example.
• 4:13
  It's also really important that I make sure that the member is
• 4:17
  aware of the the legislation that applies to holiday holiday
• 4:23
  letting so that they can enter that that sort of market fully
• 4:28
  prepared in terms of what to what the the requirements are of
• 4:32
  them when they're then operating in that market and, and and up
• 4:36
  and running so that they stay in accordance with the with the
• 4:40
  law. Quick pause before we continue.
• 4:43
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• 4:45
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• 4:48
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  guidebooks, Housefully helps you streamline operations.
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  And deliver a better guest experience.
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  like to learn more, simply scan the QR code on screen if you're
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  watching on YouTube or hit the link in the show notes to book.
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  A demo with. A huge friend of the show, Frank
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  And 30% off digital guidebooks for.
• 5:22
  Life. All right, back to it.
• 5:24
  Lots to think about then let's break this down into a few key
• 5:28
  areas. We'll discuss the planning
• 5:30
  process, estate planning and energy efficiency.
• 5:34
  And let's start with planning. So what are the typical planning
• 5:38
  considerations that rural land owners face regarding regarding
• 5:41
  holiday let's? So in terms of planning
• 5:45
  considerations, well, there's lots to think about.
• 5:49
  Firstly, people need to make sure that they check their
• 5:52
  decision notice for the original consent that was provided for
• 5:57
  the building that they may be looking to change the use of to
• 6:00
  go into the holiday letting. So there may be conditions in
• 6:06
  that decision notice, which means that additional consent
• 6:11
  would need to be provided from the local authority and so that
• 6:17
  before they they use the, the, the change the use.
• 6:21
  So that's always worth looking into.
• 6:25
  We guess a lot of questions about permitted development and
• 6:30
  class Q in particular. So there is the 10 year rule
• 6:35
  with class Q. So if, if the if a member, for
• 6:38
  example, put up an agricultural building using Class A or B of
• 6:43
  part six of the general permitted development order,
• 6:46
  then they'd have to wait 10 years until class Q is then
• 6:50
  available to them to then convert an agricultural building
• 6:54
  on their on their holding. So we're getting a lot of
• 6:57
  questions about that and how that works.
• 7:01
  And you know, often it's all about strategy at the end of the
• 7:06
  day. If a member's looking at doing a
• 7:12
  conversion for a holiday lesson business, but then also looking
• 7:17
  at growing their agricultural business, then it might be a
• 7:21
  discussion around when which of those projects, for which of
• 7:27
  those projects should you rely on committed development rights.
• 7:30
  So for agricultural buildings, planning policies generally are
• 7:35
  more supportive of of them over for example, a barn conversion.
• 7:40
  So to safeguard your class Q rights, maybe go through the
• 7:43
  full planning process for the agricultural building.
• 7:47
  So then then you've still got your Class Q rights under the
• 7:50
  permitted development. So yeah, getting quite technical
• 7:54
  there, but there's some of the sort of things to think about
• 7:58
  for for farmers and and estate owners.
• 8:01
  But it, it gets quite interesting when then you start
• 8:04
  looking into Article 4 directions and how they can then
• 8:08
  remove certain permitted development rights for for farms
• 8:13
  in certain areas. So it is, yeah, there's all
• 8:17
  sorts of things to to, to look into.
• 8:19
  And that's something that as a rural surveyor, we can at the
• 8:22
  CLA, we can definitely look into that for people and and make
• 8:27
  sure that they're navigating the process in the right way given
• 8:30
  their circumstances. Lots to think about.
• 8:32
  And that's just that's just planning.
• 8:35
  So. What?
• 8:36
  So what are the most? Common planning pitfalls that
• 8:39
  you see and and how can land owners potentially avoid these?
• 8:46
  Common pitfall unfortunately, is when people establish a business
• 8:51
  without getting the necessary consents in place before doing
• 8:55
  so. So I actually had a member the
• 8:58
  other day who unfortunately had converted one of their one of
• 9:03
  their one of their buildings to a holiday left without any
• 9:08
  permission in place. But also they hadn't checked
• 9:12
  their decision notice for for putting when they put that
• 9:15
  building up, which clearly stated that there would need to
• 9:18
  be additional consent obtained before doing before basically
• 9:22
  changing the use of that building, which was currently
• 9:25
  only the use of the building was only for any use associated with
• 9:32
  the main dwelling house. So in as a result of operating a
• 9:36
  holiday let in that building, they were actually going against
• 9:39
  that condition. So that's something that we see
• 9:42
  quite regularly, unfortunately, where they sort of already
• 9:46
  established a business that is doing well, but now they're
• 9:48
  having to regularize that and how what's the best way of doing
• 9:52
  it given their circumstances. But it can get again get quite
• 9:56
  complicated when you think about council tax and business rates.
• 10:00
  So again, this specific member, the original inquiry is, was
• 10:04
  about how to regularize going from council tax to business
• 10:10
  rates. Because with holiday letting, if
• 10:12
  you're available to let for over 140 days and you're actually let
• 10:17
  for 70 or more than you're eligible for business rates.
• 10:22
  But it's actually about dialing back and thinking, OK, well,
• 10:24
  hang on a minute, you haven't even got the right consent in
• 10:27
  place to, to legally be operating this business in the
• 10:30
  1st place. So my in my experience, it's
• 10:34
  often that people sort of jump the gun, get excited about an
• 10:37
  idea and go and do it without thinking things through and
• 10:40
  doing it properly. Yeah, I need to really need to
• 10:43
  speak to the experts first, by the sound of it.
• 10:46
  Let's move on then, to estate planning.
• 10:49
  So why might diversifying into holiday letting be a project
• 10:53
  worth considering for an estate owner?
• 10:57
  Well, I think as I've already said, a lot of people are
• 11:01
  looking to doing diversification projects to boost resilience,
• 11:05
  But I think it also forms part of an, an overall estate plan.
• 11:12
  Maybe by going into diversification into in this
• 11:15
  way, such as holiday letting, you're actually creating
• 11:19
  opportunities for other projects later down the line because
• 11:21
  you're getting people on site. And what that, what could that
• 11:24
  lead to? Could that lead to having a cafe
• 11:26
  on site as well? Obviously this is something that
• 11:31
  requires, you know, professional advice given people's different
• 11:35
  circumstances. But I think it's it's an
• 11:38
  interesting one because by diversifying in certain ways
• 11:43
  early on, it can actually lead to other projects in the future,
• 11:47
  which is is obviously crucial to them boosting resilience and and
• 11:52
  growing the business as a whole. So, yeah, interesting.
• 11:56
  Yeah, you see a lot of farm or what used to be farms, they're
• 12:00
  now farm shops or there's like a a big pumpkin patch or there's a
• 12:03
  kids play area. Like you say, there's a cafe.
• 12:05
  So, you know, a lot of people have been forced into this route
• 12:08
  and I guess it's because is. It is it mainly because like
• 12:10
  farming just doesn't pay like it used to?
• 12:13
  It's just a. Lot more difficult to make a
• 12:15
  living. Yeah, multiple reasons.
• 12:17
  So I'd say one of the main reasons, well there's a few, but
• 12:23
  to name a few would be the the removal of the basic payment
• 12:28
  scheme. So from as a result of coming
• 12:30
  away from the EU, that subsidy has left.
• 12:33
  That's, that was one of the the the main incomes for for many
• 12:37
  farms. So as a result, farmers are
• 12:40
  looking at how they can basically bridge that gap in
• 12:43
  terms of their income. I think as well, another main
• 12:46
  factor to take into account is the, the cost of production for
• 12:51
  farmers and, and, and you know, the, the dependence on, on good,
• 12:56
  good weather. It's, it's incredibly volatile
• 13:01
  when you're, when you're operating on or when you're
• 13:04
  running a business that is, is reliant on favourable
• 13:07
  conditions. And that's both, you know, in
• 13:09
  terms of weather, but then also you look over at what's
• 13:12
  happening in the Middle East at the moment and that's having an
• 13:15
  impact on fertilised prices. So that results in, in, in, in,
• 13:20
  in larger operating costs. So there's yeah, many reasons,
• 13:24
  but it it does make it all very difficult when for farmers and
• 13:28
  land owners that are trying to operate a a successful business.
• 13:33
  Yeah, having to think outside the box a lot more by the sound
• 13:36
  of it. If you want to learn more about
• 13:38
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• 13:40
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• 13:43
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• 13:50
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• 13:58
  Just staying on a stay planning then?
• 14:00
  I mean, what do estate owners need to be aware of before
• 14:04
  establishing a holiday LED business?
• 14:07
  Well, as I've said, the regulations that they'll need to
• 14:11
  be compliant with, so for example, fire risk assessments,
• 14:16
  having fire safe furniture, gas and safe gas safety
• 14:21
  certificates, electrical safety certificates in place.
• 14:25
  The tax implications, again, as I've mentioned, being aware of
• 14:29
  the implications in terms of yes, paying business rates and
• 14:32
  how and what the thresholds are for business rates, but then
• 14:35
  also the inheritance tax implications.
• 14:39
  So there's plenty to to be aware of.
• 14:42
  But I think as well it's also about the actual running of that
• 14:45
  business, how resource intensive it is, how are they going to
• 14:48
  manage that? Is it going to be in house in
• 14:52
  terms of the just going back to the requirements in terms of
• 14:59
  regulation, it's really important that people are aware
• 15:02
  that as of April 2026, there's going to be a national
• 15:06
  registration scheme. So being aware of of of how they
• 15:10
  can make sure that they register for to stay remit so that
• 15:14
  they're compliant in the future as well-being aware that that
• 15:19
  policy is constantly changing. Another example of that is the
• 15:22
  tourism tax. So I responded to the
• 15:26
  government's tourism levy consultation for on behalf of
• 15:30
  the CLA. If a tourism levy is
• 15:34
  implemented, you know, what impact is that going to have on
• 15:37
  your business? Is that going to result in less
• 15:40
  demand? How does that, you know, how can
• 15:44
  you forecast income if the data currently is based on current
• 15:51
  pricing without a tourism levy being charged to to tourists?
• 15:56
  So it's all quite, there's so much, so much to think about,
• 16:00
  but I think the key piece of advice is about forward-looking
• 16:02
  and how that can impact you and your business.
• 16:06
  Yeah. Yeah, a lot to think about and
• 16:08
  before you even get to the property management part, which
• 16:12
  is a lot of hard work in itself. What?
• 16:15
  What do? Estate owners need to know about
• 16:18
  energy performance certification and minimum energy efficiency
• 16:24
  standards regarding holiday letting.
• 16:26
  So there was a consultation that was launched by the government
• 16:31
  on both energy performance certificates and minimum energy
• 16:35
  efficiency standards. So the CLA responded to that, to
• 16:39
  those consultations. And we've been waiting for
• 16:42
  announcements from government. I think it was in January, the
• 16:46
  21st of January, they, the government did come back and
• 16:50
  they've, they've launched their warms home plan.
• 16:54
  There was a key headline in that that states that for short term,
• 16:57
  let's, there will be a requirement for an EPC currently
• 17:02
  and generally speaking, that's not the case.
• 17:06
  It's quite complex and there's, there's different sort of
• 17:08
  criteria that they would need to meet.
• 17:11
  But currently speaking, it's not required to have an EPC for a
• 17:14
  holiday cottage. But also the government said
• 17:18
  that minimum energy efficiency standards, which are currently
• 17:21
  in E proposed to go to C that's not the the holiday let holiday.
• 17:27
  Let's are not going to be required to meet that minimum
• 17:29
  rating. So that's, that's a big win for
• 17:33
  the sector. But yeah, important to be aware
• 17:36
  of that for sure. Definitely.
• 17:39
  So what key metrics should people look at?
• 17:41
  When they're. Forecasting income or assessing
• 17:45
  just the. Viability of a.
• 17:47
  Holiday letting project on a farm.
• 17:50
  Interesting question. So for income forecasts
• 17:55
  absolutely look at your the price of the accommodation on AI
• 17:59
  would do on a weekly basis. So you can take into account the
• 18:04
  differences in season, a seasonal pricing for example,
• 18:08
  you would look at the number of weeks that you expect to be
• 18:11
  occupied and you times that by your occupancy figures.
• 18:16
  Those occupancy rates are going to be based on the occupancy
• 18:22
  data that is obtained from by looking at your competitors.
• 18:25
  So there are websites out there that can help help people do
• 18:29
  that. And so that's, yeah, that that's
• 18:33
  going to be your, your, your, your income.
• 18:36
  And then, you know, obtaining really accurate estimates for,
• 18:40
  for both establishment costs, but then also variable costs.
• 18:45
  And when you're, I think it's also really important to
• 18:48
  understand that when you're up and running, there's a, there's
• 18:52
  a big requirement to have accurate data in place.
• 18:55
  So for example, it's not just about the income that you expect
• 19:00
  to get and how much you expect this business to to cost you
• 19:04
  when establishing it or to cost for running it.
• 19:08
  Use data to your advantage so that you can then operate in a
• 19:11
  really strategic way. So for example, know how far in
• 19:15
  advance guests book, because then you can you know when to
• 19:20
  drop prices. Because if if, if the guests
• 19:23
  book a booking later, which is typically the case, you know
• 19:26
  maybe not to to to lower your prices too too soon.
• 19:32
  Know how long people are staying for and also know where your
• 19:39
  booking bookings are coming from.
• 19:41
  Know which, which sites people are going to.
• 19:43
  So there's, there's so much data out there and there's lots of
• 19:47
  metrics, but I think it's really important to to use that to to
• 19:51
  your advantage and have a have a strategy so that you can operate
• 19:54
  as effectively as possible. Definitely do your research,
• 19:59
  take a look at our website, go to Host Planet.
• 20:01
  Lots of free downloads on there, loads of podcast episodes and
• 20:04
  lots of different partners who can help you with data and
• 20:06
  pricing and property management and everything else.
• 20:11
  What are the best holiday? Letting diversification examples
• 20:14
  you can share. From from your.
• 20:16
  Experience and what has made. These businesses, really.
• 20:19
  Stand out. I would say it's all about
• 20:22
  offering a novel experience, something that you can't get
• 20:26
  anywhere else or that that really pulls people towards your
• 20:30
  business and and what you have to offer.
• 20:32
  So whether that be an off off grid stay or staying in a luxury
• 20:38
  tree house or even I know we have members that offer farm
• 20:45
  tours for for people that are staying in their in their
• 20:48
  holiday holiday. Let's.
• 20:50
  So I think it's about making it personal, thinking outside the
• 20:54
  box and creating a one off experience that people feel like
• 20:57
  they can't get anywhere else. And and and making sure that you
• 21:01
  also know exactly what what your guests want and, and, and trying
• 21:05
  to build so that build your offering and build the
• 21:09
  experience so that that those boxes are ticked.
• 21:13
  Definitely, yeah, a unique guest experience will will go a long
• 21:17
  way to making sure that you're fully booked just.
• 21:20
  Before you go then, Emily, just tell us more about the country,
• 21:23
  land and business. Association and where people can
• 21:26
  find out more. Yes.
• 21:27
  So the Country London Business Association, also known as the
• 21:31
  CLA is a membership organisation for land owners, farmers, rural
• 21:37
  business, diversified businesses.
• 21:41
  So they can, people can find out more by going to www.cla.org.uk.
• 21:49
  We provide advice to, so I'm a surveyor, we provide advice to
• 21:54
  our members that she's all free. It's in the membership.
• 21:57
  We also have solicitors, as I already mentioned, tax advisers
• 22:01
  in London that can help. We also have people who are so
• 22:05
  policy advisers that are working on lobbying on behalf of our
• 22:09
  members. So they will, they're, they're
• 22:12
  at the forefront. They, they know what that what's
• 22:14
  going on in Parliament and what's been discussed.
• 22:17
  So yeah, do get in touch if you want to find out more.
• 22:21
  Brilliant. If you've got any land and
• 22:23
  you're interested in diversifying into Holly, that's
• 22:25
  contact the CLA get in touch with Emily.
• 22:27
  They'll they'll help you because by the sound of it, there's a
• 22:31
  lot to think about if you need to, if you need to diversify.
• 22:35
  Emily, it's been a real pleasure.
• 22:36
  Thanks for joining us on the Host Planet podcast.
• 22:39
  Thank you so much, James. Now we'd love to hear from you.
• 22:41
  If you're watching on YouTube, drop a comment and tell us.
• 22:44
  Have you ever considered starting a holiday let on your
• 22:48
  farm? And if you already run a rural
• 22:51
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• 22:54
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• 22:56
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