Business Clinic: Do we need planning for worker housing?

Whether you have a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Nicola Quick, rural planning expert at Carter Jonas, advises on the planning requirements for building workers’ accommodation.

Q. Our equine business is expanding and we are looking to recruit another full-time member of staff. We do not have any suitable accommodation, so are thinking of developing. Can we apply for planning permission for a normal residential dwelling, or do different rules apply?

A. We assume you already live on site and require a second dwelling as the business has expanded.

In line with the National Planning Policy Framework, planning policies and decisions aim to avoid the development of isolated homes in the countryside except in certain circumstances.

One of these exceptions is if “there is an essential need for a rural worker, including those taking majority control of a farm business, to live permanently at or near their place of work in the countryside.”

However, you will need to meet certain criteria to prove that you have a genuine requirement for the dwelling. The same principles apply whether the accommodation is for an equestrian or an agricultural worker.

See also: Business Clinic – must I give mobile operator survey access?

To prove that you meet these criteria, a planning application would need to include an agricultural or equestrian appraisal, alongside the application forms and plans or drawings. Your local authority may also require additional documentation.

Functional and financial tests  

This appraisal is essentially a review of the business, and is comprised of two key tests – the functional test and the financial test.

The functional test assesses whether there is a genuine need to have an additional member of staff living on-site (and therefore within sight and sound of the equine yard) on a full-time, year-round basis for animal welfare and/or security etc.

It is based on a system of Standard Man Days (known as the SMD system). A person is expected to work at least 278 SMDs or 2,225 hours of labour a year.

To justify a second dwelling and assuming one person is already fulfilling the above requirement, you would need to be looking at a total number of days or hours at double this level to pass the functional test. Consideration would be given for holidays, sick days and time not working.

I would recommend a professional produces the appraisal, even if you do the rest.  There are industry standard figures for each sector.

To undertake a quick check that you’d meet the required level, they’d just need acreage and a breakdown of number of animals, including full livery, part livery and activities such as breaking and training and so on. 

Viability 

The financial test is about assessing the viability of the business, making sure it can continue to produce a sufficient profit to retain the new member of staff in the long run.

This aspect of the test would be carried out with the help of an accountant, based on three years of accounts and forecasts for two years, for a permanent dwelling. (For new businesses, there are different requirements and you would be likely to be applying for a temporary dwelling in the first instance while the business establishes.)

The application must demonstrate that the business can sustain the worker based on at least minimum wage. I use £20,000 as a minimum profit and then look at the funding for the proposed dwelling separately.

It is key for the two tests to be considered in tandem, so make sure that there is good communication from the outset with the planning consultant and the accountant to maximise your chances of success.

In terms of the type of residential dwelling, if there is a suitable barn for conversion this is an option, but often I find all existing buildings are utilised by the business so a new-build dwelling would be more appropriate. Any dwelling would be subject to an occupancy restriction and the size would need to be appropriate.

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