Buying properties with land – the key considerations

Purchasing an estate or a residential property with a substantial landholding can be an exciting and potentially profitable investment. However, it also involves complex legal considerations that, if overlooked, could lead to costly issues. Buyers should conduct thorough due diligence to ensure that they understand the rights and restrictions and can use the land as they wish. This article outlines the primary legal aspects to be aware of when purchasing such properties.

Title and ownership issues

Understanding the title to the property is fundamental to any property purchase. Title deeds confirm ownership, outline any restrictions or other encumbrances (such as mortgages or other debts), and detail any rights that may affect the land.

• Easements and rights of way: Estates and large properties often come with rights of way (known as easements), permitting other parties to access the land. Ensure you understand these rights, as they may affect privacy, security, and use of certain portions of the land.
• Common law and customary rights: customary or common law rights, such as grazing or fishing rights, may apply. These rights can significantly impact how you can use and develop the land, so it’s crucial to identify any pre-existing rights and assess their impact.

Planning restrictions

Planning restrictions are critical in determining how the property can be used. Such restrictions can affect various aspects of the property such as agricultural occupancy restrictions which restrict who is entitled to live in a property.  Planning designations may impact on the ability to develop the property in the future.

• Historic or protected designations: Many large estates are in designated conservation areas or are listed. These designations often restrict alterations or developments to preserve the historic or environmental value of the land. Buyers should understand the restrictions associated with protected status.
• Development approvals: If you plan to develop or alter the estate (e.g., building new structures or changing land use), ensure that planning permission is in place or can be obtained. Failing to obtain necessary permissions can result in hefty fines, demolition orders, or legal battles with planning authorities.

Environmental and conservation concerns

Environmental regulations are increasingly significant, especially for large landholdings that may have unique ecosystems or water resources. Complying with these regulations can impact the buyer’s plans and the land’s long-term value.

• Environmental liabilities: regard needs to be given to environmental protection laws, particularly concerning water bodies, wetlands, and woodland. Buyers should be aware of any existing liabilities, such as contaminated land, which may require cleanup and remediation.
• Protected species and habitats: Some properties may include protected habitats or species, such as wetlands or endangered plants. This can severely restrict activities and may necessitate ongoing conservation efforts, which can be costly.
• Water rights and management: Water resources on the property, including rivers, lakes, or wells, may be subject to specific regulations. It’s essential to understand the scope of water rights, especially if water resources are vital for planned agricultural or recreational uses.

Agricultural land use and tenancies

Understanding tenancy laws and agricultural restrictions is key if the land will be used for or already has ongoing agricultural activities.

• Agricultural tenancies: Agricultural tenancies can limit a buyer’s ability to repurpose the land. Tenancy arrangements can vary significantly and in certain circumstances a tenant may have significant rights to carry on using the land. Buyers should ensure they understand how these agricultural tenancies might impact future land use.
• Subsidies and gGrants: Some properties benefit from agricultural subsidies, conservation grants, or other governmental incentives. These subsidies usually come with compliance requirements and land-use obligations. Check to see if the land is enrolled in any subsidy programs, as non-compliance could potentially lead to penalties.

Boundaries and access rights

Boundary issues are common with large estates and can lead to disputes with neighbouring landowners. It’s essential to confirm boundary lines and clarify access rights to avoid conflicts after purchase.

• Boundary surveys: If there are obvious discrepancies then it is worth engaging a surveyor to confirm property boundaries and ensure they match with the title deeds. Discrepancies in boundary lines can lead to disputes, legal challenges, or even encroachment claims, which could be costly to resolve.
• Neighbouring land aAccess: Some estates may include land that can only be accessed through neighbouring properties, or vice versa. In such cases, verify any existing rights of way and confirm that access routes will remain open. Failure to secure necessary access rights could result in restricted entry to certain parts of the property.

Tax implications

Tax implications for large properties can be significant and vary based on the property’s size, location, and usage. Buyers should consult with tax professionals to understand all potential tax liabilities.

• Capital gains and inheritance taxes: If the estate is intended to be a long-term family holding, potential future taxes, such as capital gains or inheritance taxes, should be considered. Some properties may qualify for inheritance tax relief if they are maintained for specific agricultural or historic purposes, but the general relief for agricultural property is no longer available.
• Estate Management Expenses: If the property is used for income-generating activities, such as farming or leasing, expenses related to the property may be deductible. Tax planning with a financial advisor or accountant is essential to understand these benefits and to make the most of any potential tax deductions.

Rights and obligations of estate management

Tax implications for large properties can be significant and vary based on the property’s size, location, and usage. Buyers should consult with tax professionals to understand all potential tax liabilities.

• Common law dDuties: Estate owners may be legally required to maintain and protect natural resources on the land, such as woodlands, watercourses, or heritage sites. These obligations can include protecting wildlife habitats, preventing pollution, and ensuring sustainable land use practices.
• Public access rights: Some properties are subject to public access laws that allow the public to use certain parts of the estate, via established paths and bridleways. Understanding the scope and impact of these rights is important, particularly if privacy or exclusivity is a primary concern.
• Community responsibilities: In some rural areas, estate owners play a role in community events, land stewardship, and local partnerships. While not always legally binding, these social expectations can affect land management decisions and enhance the estate’s reputation within the community.

Insurance and liability protection

Large estates typically require comprehensive insurance coverage, which may include unique considerations for rural or undeveloped land.

• Property and liability insurance: Owners of large estates should obtain adequate insurance coverage for both property and liability risks. This may include coverage for natural disasters, accidents on the property, and any structures on the land.
• Employee and contractor liability: If the estate employs staff or contracts workers for maintenance, additional liability coverage may be necessary to protect against potential workplace injuries or accidents.
• Specialised coverage: Certain estate features, such as historical buildings or large water bodies, may require specialised insurance policies. Buyers should work with an insurance agent experienced in large estates to assess all potential risks.

Conclusion

Purchasing a large estate or residential property with significant landholdings is a major commitment that requires careful legal and financial planning.

Each of these considerations—title verification, planning laws, environmental concerns, agricultural tenancies, boundary issues, tax implications, management obligations, and insurance coverage —can profoundly impact the value and usability of the property.

How we can help

Our real estate and family enterprise teams can take you through the legal process from start to finish, looking at the transaction from the wider perspective of your overall situation and getting in the additional expert assistance that you need from trusted advisers.