Water & Leisure Property – your questions answered
Whether you require professional advice on buying, selling or building a fishery or waterside property, our experienced Chartered Surveyors, Martin Freeman and Tom Good, can guide you through the process. In our January newsletter, we introduced you to our dedicated Water & Leisure team who specialise in this sector and work throughout the UK, following on with this theme, we delve a little deeper and answer your frequently asked questions.
How do you value fisheries?
We have extensive records of various fisheries that have been sold both on and off market going back over 20 years. This enables us to value fisheries based on comparable evidence (as houses are valued). Where a fishery is producing an income, or has the potential to, this will be taken into account and valued along investment principles.
Other factors such as prevailing economic conditions, the attractiveness of a site or the value of the different components (house, holiday lets, farmland, woodland etc) will be taken into account. Salmon rivers are usually valued on a value per fish basis.
How do I sell a fishery?
Get in touch with the experts at Fenn Wright, and we will arrange to visit your property and give our honest opinion on the price at which it should be placed on the market. We are professional in the advice we give: we won’t give you a hyper-inflated value of what we think it is worth just to get your instruction. In some cases, after visiting a site we make recommendations that certain improvements are carried out and the property put on the market at a later date.
If you are serious about selling, it is essential to be well prepared before putting your fishery on the market. Full information needs to be available including any planning issues and preferably three years audited accounts.
How much can I borrow against a fishery?
Generally speaking if you are able to service the loan through outside income and the business you may be able to borrow up to 60% of the market value of the property.
Lenders only provide finance on a commercial basis, which is usually more expensive than a residential mortgage.
How do I raise the finance for a fishery?
Specialist skills and knowledge are often required to successfully raise finance on fisheries.
Many people try to raise the finance themselves through high street lenders. Often, they find that these lenders view fisheries as an unknown entity and may be reluctant to lend substantial sums against them, as they have no specific credit policy guidelines on this sector.
It is important to approach the right lenders in order to access underwriters who have knowledge of, and are comfortable in funding, fisheries.
We have found that the funding of fisheries is usually a much smoother process where applicants use the services of professionals who have specialist skills and knowledge of raising fishery finance. We have ongoing relationships with certain such professionals and will be pleased to put you in touch.
Can you send me the accounts of a business?
Where a fishery or business has been trading and there are a set of accounts, these will be made available to seriously interested parties. This will usually mean that you have visited the property and met either the owner or our team.
Building a Fishery
Wouldn’t it be cheaper to buy some land and dig a lake? Possibly, but coming across land on the market with the right potential is very difficult.
The land has to be suitable physically i.e. able to hold water and have the benefit of a suitable water supply. It also has to be in a place where planning permission for the construction of a lake will be granted. The planners will examine issues such as the scale of the project, access, highways and how the proposal fits with stated local objectives. Furthermore, you must obtain consent from the Environment Agency.
Even once you had purchased the land and received the necessary permission you would still have considerable construction costs and stocking costs and it could be several years before the site generated an income.
What about lakes built without planning permission?
There have been lakes which have been dug without first obtaining planning permission. Often these lakes evolved over the years gradually and at a time when commercial fisheries were not as popular as they are now. If this is the case, a Certificate of Lawful Existing Use or Development (CLEUD) can be applied for, if the fishery has existed in its current form for long enough.
CLEUD cases are decided on the balance of probability and therefore factual information submitted with the application is required. If you have a fishery that was built without planning permission and would now like to develop the fishery further, borrow money against the fishery or sell the fishery you should consider the need to obtain a certificate.
Can I build a house on a fishery?
Most lakes are located in the countryside where there is a strong presumption against any residential development away from established settlement boundaries (as defined in the relevant Local Plan, copies of which are usually in the local library or on the local council’s website). However, planning law allows for certain exceptions to this.
Do I need planning permission for a caravan on site?
A common misconception is that living in a caravan or log cabin does not require planning permission. Any building used as a dwelling requires planning permission. Even a structure which is not a building but is used for residential purposes requires permission (the planning system controls not only the erection of building, but also any change of use of land and buildings). i.e. if you live in a caravan you have changed the use of that land away from a rural use to a residential use.
What is an Agricultural Occupancy Condition?
Although there is a presumption against new residential development in the countryside the planners recognise that some workers need to be housed in the countryside in order to carry out their job. Historically such properties were designated with an Agricultural Occupancy Condition (“Ag. Tag”) meaning that the occupant of that house had to be employed in agriculture.
In the past, some fisheries described their activity as fish farming and come with “Ag Tag” properties. Now, however, under Planning Policy Statement 7, Sustainable Development in Rural Areas, the agricultural dwellings provision has been extended to include ‘other occupational dwellings’. Other occupational dwellings can now include dwellings on livery yards and managers’ dwellings on caravan parks and fisheries.
For new dwellings to be given permission under these rules two criteria must be satisfied, the functional test and the financial test.
What is a Section 106 Agreement?
This is a legally binding agreement, under the terms of Part III (Control of Development), section 106 of The Town and Country Planning Act , between the owner of a property and the planners. When quoted in reference to a dwelling the effect is usually the same as having an “Ag Tag” but the proviso might state that the dwelling could not be sold off separately from the rest of the property.