Buying a smallholding is buying into a new lifestyle. You’ll live on the land and work on the land.
Self-sufficient and in charge of your own destiny!
There are many decisions to be made when planning such a dramatic change in day to day living. What size plot will you need, what can you grow, where’s a suitable location?
And where’s the best place to get a mortgage?
While a smallholding is a distance away from being a full working farm, the plot will comprise of a house, or houses, and farmland, with you living on site. This combination is not usually suitable for the high street lenders, particularly if you have quite a few acres to manage.
This is where a smallholding mortgage, or rural mortgage can help. These experienced lenders fully appreciate the need for a mix of personal and business activities on the one site.
What is a smallholding?
A smallholding is a residential dwelling surrounded by land, often privately owned, which is used for growing food and keeping livestock. This type of small scale farming is common in the UK and typically involves traditional methods of farming such as the use of animal-based labour, hand tools and working with, not against, nature.
Common crops include vegetables, fruit trees, herbs and flowers. Livestock such as chickens, sheep and pigs may also be kept on the property. Smallholders may also keep bees for honey production or practice agroforestry by planting trees for firewood or timber.
How much land do you need?
Most smallholdings will be less than 50 acres, much smaller than a farm.
If you’re aiming for self-sufficiency, five acres of land is a good starting point for a family-sized smallholding. However, a larger plot of land may not always be the best solution; a smaller plot can often yield great results if managed well.
It’s important to remember that having too much land can sometimes hinder efficiency and make it difficult to manage effectively.
If you are looking to live completely from the land, and to generate income through selling surplus crops, then it is essential for you to have enough acreage that allows you to harvest enough for your needs as well as having some produce left over to sell.
What can you do with your smallholding?
As the land owner you are free to choose how the farmland should be used.
With a smallholding, you have the ability to raise livestock such as chickens, geese and pigs; cultivate arable crops like vegetables, grains, and fruit trees; or even use it for hobby farming for honeybees and wool production.
Depending on the size of your smallholding, you can also use it to generate an income by producing and selling products from the land or taking in visitors who want to enjoy its peaceful setting.
It’s important to understand what animals and crops would be suitable for the land, as different terrains and soil better suit different species.
You could also diversify and offer:
- Holiday letting
- Glamping
- Camping
- Airbnb
- Cattery
- Kennels
- Forestry lessons
- Stabling
- Livery services
- Renting fields
How to start up a smallholding
A smallholding requires you to be physically fit and enjoy working outdoors (even in the rain).
Some initial planning and research will undoubtedly contribute to how successful you will be. You will need to:
- Research your target market
- Identify the different types of customer
- Decide what services and products to sell
Smallholding mortgages
Finding a mortgage for a smallholding can be trickier than you think.
The main lenders will be cautious where a property has large acreage, with the ability to grow crops, possibility on a commercial basis. It’s horses for courses as far as mortgages are concerned.
- A residential mortgage is used to finance a property that is primarily used as your main home, or residence.
- A commercial mortgage is suitable funding for a business activity, such as farming.
Fortunately, a number of lenders operate within this specialised sector, offering rural mortgages and smallholding mortgages. They are very similar to semi-commercial mortgages where there’s a mix of living and working.
The type of lender you need will depend on the size of the acreage, the location and how the plot is to be used.
All of these lenders will be comfortable with subsistence farming. This is essentially providing for your own use; you might have a few livestock, some grazing animals and equestrian activities.
Where the farming activities become more substantial, the lending proposition moves from a lifestyle scenario to a commercial venture. There’s still plenty of eager lenders, but they will be looking at the mortgage from a commercial perspective, which will involve understanding your farming activities and possibly wanting to see a business plan and accounts.
Don’t worry if this sounds confusing and complicated!
By working with an experienced mortgage adviser, you will benefit from their long established relationships with lenders active in the farming and agricultural sectors.
They will be able to walk you through the steps needed to get the best finance options.
Typical mortgage terms
These mortgages are very much assessed on a case by case basis, and so the terms offered will depend on how the lender views your proposition.
- Up to 70% loan to value
- Terms up to 25 years
- Fixed and variable interest rates
- Repayment and interest only
Speak to a smallholding mortgage expert
You can’t find these types of loans by strolling down your high street or by using a comparison site.
They are a type of specialist mortgage, which requires the right style of broker to get access to the best lenders and rates.
Respect Mortgages works with one of the most respected independent mortgage brokers in the UK. They have won many awards and can help borrowers wherever they may be in the UK.
They have advisers that are highly experienced in arranging mortgages for farms, agricultural land and smallholdings. Let us introduce you, so your journey can begin..
FREQUENTLY ASKED QUESTIONS
This is a very common occurrence and competitive rates are available.
Often this situation would involve a main house and other cottages or converted buildings on the land. This could be an opportunity to run a holiday let, or perhaps provide accommodation for family members.
Formal experience will not be needed for a small ‘lifestyle’ venture. You will just need to learn on the job!
Providing the land is already classed as agricultural, you shouldn’t need any further permissions to carry out normal farming activities.
If you are unsure, always seek advice before starting any work!
Different licenses will be needed depending on your activities, so it’s worth seeking advice prior to making any decisions.
For example you will need:
- A county parish holding (CPH) number for land used to keep livestock
- Local environmental health approval if you intend on selling your produce
Yes you can. This is a great way to generate additional income and to make good use of surplus production.
With the right specialist advice, obtaining a mortgage where the land has an agricultural tie or AOC in place is fairly straightforward.
From the lender’s perspective, these properties can be difficult to sell in the event of repossession.
