An Agricultural Property Loan creates new agritourism income for rural couple
Agritourism is now a strong diversification option for many rural landowners, which can take many forms, from glamping to alpaca walking. I have personally seen an increase in demand for loans for the purpose of agri-tourism. UK Agricultural Finance is now seeing more borrowers using our agricultural property loans to convert disused agricultural buildings into holiday accommodation. One such case I handled recently is an ideal example of how we can assist with this type of finance need.
Background on Our Borrowers
Following the sad passing of our borrower’s father, they inherited their childhood home. The property needed significant renovation, but our borrower was keen to find ways to make the most of the agricultural property and create an additional income for her and her husband.
So, the borrowers embarked on a journey to maximise their agricultural property’s potential. The agricultural property included two cottages; the borrowers decided to live in the larger of the two cottages, which had previously been a rental property, and find an income generating purpose for the second one. They knew they would need funds to renovate both cottages successfully, so they needed to find a use for the second cottage that would facilitate the repayment of an agricultural property loan. They started to research agritourism and holiday accommodation options.
The Agricultural Property
As well as the two cottages, the agricultural property included over 15 acres, primarily under a grazing agreement. The borrowers knew they were not interested in farming the land themselves, but they did want the land to generate an income, so a grazing agreement was the ideal solution for their needs. They would consider potentially selling the land in the future but would prefer to retain it for now.
The land also hosted several barns eligible for residential conversion under class Q, offering a promising diversification opportunity. This setup, featuring one barn with a private drive and three others sharing access, presented a strategic avenue for enhancing property value and generating income, aligning with their interest in exploring agritourism and holiday accommodation ventures.
Agritourism in the Area
Nestled in a picturesque rural setting, the agricultural property boasted easy access to charming villages and notable attractions, including estates, castles and a world heritage site. The area’s strong food scene, highlighted by Michelin-starred restaurants and award-winning pubs, complemented its natural beauty and abundance of walking paths. The borrowers’ research indicated high potential for the cottage’s success in the agritourism market, with demand for more holiday accommodation locally.
The borrowers were also able to establish a collaboration with a nearby wedding venue, which agreed to recommend the cottage for guest accommodations when there was insufficient space at the main venue. This venue hosted weddings most days of the week, which would provide additional income outside the traditional weekend occupancy that many agritourism businesses face.
How Did Our Agricultural Property Loan Facilitate Their Renovation Goals?
The agricultural property loan from UKAF was instrumental in the borrowers’ successful renovation of their cottage for Airbnb use. When I visited the conversion of the second property into an Airbnb, it was well under way. They had put a new roof on both cottages and new green double-glazed windows, which made the cottage very attractive and in keeping with the countryside.
With these improvements, and the rest of the renovations, the cottage now stands out as a premium accommodation option which is finished to a very high standard. This high standard is particularly important for attracting guests attending local weddings.
Utilising Disused Agricultural Property for Diversification
Looking towards the future, the borrowers are considering the potential of securing class Q permission for additional agricultural buildings on their property. This forward-thinking plan aims to transform these structures into residential spaces, providing a sustainable living solution for their adult children. This step signifies a broader strategy of diversification and optimal use of their agricultural assets, reinforcing their commitment to family and the practical enhancement of their agricultural property.
This case study exemplifies how specialised financial support from UK Agricultural Finance can catalyse rural entrepreneurship, overcoming traditional barriers like borrower’s age. At UK Agricultural Finance, we have no age limit on loans and instead will assess loans on a case by case basis. The couple’s journey from facing lending obstacles due to their age and lack of experience in the hospitality sector, to creating a successful cottage renovation, showcases the transformative impact of accessible, flexible financing on realising agritourism ventures.
Their choice of a two-year pre-paid interest option reflects a strategic approach to business development, ensuring their venture’s growth and sustainability while underlining the importance of tailored financial solutions in the agricultural sector’s evolution. The couple are hoping to refinance the loan to the high street once the Airbnb is generating enough income, and they have accounts to show. However, if this is not possible, they are also open to selling some land to repay the loan. At present, their income would cover the repayments once they need to be made.
Looking to unlock the full potential of your farm? Discover how our agricultural property loans can provide the pivotal support you need. Whether it’s upgrading facilities, diversifying income streams, or launching new projects, UKAF is here to help you grow. Don’t wait—let’s cultivate success together. Contact us now to learn more.