Mortgages for Commercial Properties: Agricultural Land and Buildings

Financial Services > Mortgages > Commercial > Commercial Property: Agricultural Land and Buildings

It usually makes sense to borrow as much as much as possible because income gained from the land can offset against tax. However, just how good an investment the land or property will be will depend on whether the intention is to use the it as a primary residence and business or not.

If the purchase is not intended to be a working commercial enterprise, then it may even be a good idea to attempt to get a residential mortgage on the property, which is likely to be cheaper thanks to more competitive loan rates. However, after the Second World War, many rural properties were given planning permission on the condition that they were subject to an Agricultural Planning Restriction. This covenant stipulates that the property must be occupied by those involved in agriculture or horticulture within 30 miles of the property, or be retired from these occupations, or that the land attached to the property provides their main source of income. However, it may be possible to submit an application for a covenanted restriction to be lifted or modified, either through the courts or the local planning authorities.

Alternatively, if the intention is to buy agricultural land or buildings as a business with a commercial mortgage, interest rates are likely to be between 1% and 3% above the Bank of England base rate (more expensive than a residential mortgage). If the land is currently tenanted, then this may affect the viability of the mortgage. Land with vacant possession is likely to be more valuable.