Agricultural Tie & Tied Mortgages — Guidance for UK Farms and Rural Property Owners

Gable Asset Finance provides specialist advice to farmers, landowners and rural businesses on the implications of agricultural ties and tied mortgages. This comprehensive guide explains what an agricultural tie is, how tied properties are valued and financed, how lenders view tied mortgages, the practical options for removing or managing an agricultural tie and the steps to secure lending against tied property. If you own, operate or are buying a rural property with an agricultural tie, this page will help you understand the legal, financial and practical issues — and how our agricultural finance specialists can support you.

What is an agricultural tie?

An agricultural tie (sometimes called an agricultural occupancy condition) is a planning restriction placed on a dwelling or property that limits occupation of the dwelling to persons wholly or mainly working in agriculture, or to persons retired from such employment and their dependants. Agricultural ties are most commonly found on rural properties where a new dwelling was approved to support a farm worker or where a planning permission was granted on the basis that the property would serve an agricultural need.

Key features of an agricultural tie:

• Legal restriction: The tie is a condition of planning permission and is usually registered as an occupancy condition on the planning records and/or deeds.
• Purpose: It aims to ensure that housing in the countryside is used to meet local agricultural needs and not general market housing.
• Applies to certain dwellings: Typically applies to tied cottages, farmhouses, or dwellings built as an essential worker’s residence.

What is a tied mortgage?

The term tied mortgage can be used in two ways in the rural property context:

1. Mortgage on a tied property: A mortgage advanced by a lender where the security is a property subject to an agricultural tie. The lender must assess the impact of the tie on resale value and marketability before lending.
2. Mortgage with tied conditions: Less commonly, a mortgage may be linked to specific requirements (for example, the borrower must maintain a farming business or an income level). These are bespoke and usually only for specialist lending arrangements.

In practice most of the time when people ask about a “tied mortgage” they mean obtaining a mortgage secured on a property that is subject to an agricultural occupancy condition.

Why agricultural ties matter to lenders

Planning ties reduce the pool of prospective buyers because only people meeting the tie’s criteria can lawfully occupy the property. That can have a direct effect on the value and marketability of the property. Lenders therefore consider tied properties higher risk. Typical lender concerns include:

• Lower market value: The restricted buyer pool usually reduces open-market value (and therefore the amount a lender will advance).
• Resale risk: If the borrower defaults, the lender may find it harder to sell the property quickly at a commercial price.
• Use compliance: Lenders need assurance that occupation complies with the tie condition to avoid legal challenge.
• Exit strategy: How the borrower and lender will realise value (sale, conversion, removal of tie) is important to underwriting.

How a lender assesses a tied property

Lenders follow a structured underwriting process when assessing tied properties. The main stages are:

1. Title & planning review: Check deeds and local authority planning records for the exact wording of the agricultural occupancy condition.
2. Valuation impact: An RICS valuation will identify how the tie affects market value and likely LTV (loan-to-value).
3. Borrower covenant: The financial strength, farming experience and business plan of the borrower are examined closely — especially if the borrower is expected to meet the tie criteria through their farming activity.
4. Exit route analysis: Lenders examine possible exit strategies — e.g., sale to an eligible occupant, release or removal of the tie via application, or blending security with other assets.
5. Specialist lender appetite: Some lenders are comfortable lending on tied properties (often at reduced LTV or higher rates); others will only lend against untied or marketable property.

Typical lender responses and LTVs

Loan-to-value (LTV) acceptable on tied properties varies dramatically by lender and by how restrictive the tie is. As a general guide:

• Standard lenders/banks: May decline or offer much lower LTVs (e.g. 40%–50%) for tied cottages unless the borrower has strong covenant and clear agricultural employment.
• Specialist rural lenders: Experienced agricultural lenders may offer higher LTVs (50%–70%) when the borrower has a sound farming business or other compensating assets.
• Bridge & short-term lenders: May provide short-term funding to enable the borrower to resolve the tie, albeit usually at higher cost.

How agricultural ties affect property value

The presence of an agricultural tie generally reduces the market value of a property because the pool of potential purchasers is restricted. Valuers will compare the property with both tied and untied comparables and may apply a discount to reflect:

• The reduction in resale marketability.
• The likelihood that only a small section of buyers (farm workers, retired agricultural workers) can legally live there.
• Any difficulty in proving an applicant’s agricultural employment or status.

In some rural locations where there is high demand for tied accommodation among agricultural workers the discount can be modest; in others it can be significant.

Removing or relaxing an agricultural tie

There are two principal pathways to address an agricultural tie:

1. Apply to the local planning authority for the removal or modification of the occupancy condition. This is done under Section 73 (variation) or Section 73A/73 of the Town and Country Planning Act depending on circumstances — or by applying for a lawful development certificate if occupancy conditions have not been enforced for a long period. The success of an application depends on local planning policy, the justification for the change and the impact on rural housing supply.
2. Demonstrate that the occupancy condition is no longer necessary by marketing the property correctly for a specified period and proving there are no eligible occupants. Local authorities often expect a robust marketing campaign targeted at those who meet the tie — for example, advertising in agricultural trade press, local farm job listings and placement on rural property portals — typically for 12 months. If no suitable occupants come forward the authority may consider releasing the restriction.

Other routes can include changing the planning use (for example, proving the dwelling now supports a diversification enterprise) or making a case that the original agricultural need no longer exists due to structural changes in farming. Each case is determined on its facts and by local planning policy.

Marketing a tied property — practical guidance

If you are attempting to prove that the agricultural tie is no longer necessary, the local planning authority will expect evidence that you made reasonable efforts to find an eligible occupant. Practical steps include:

• Engage a reputable rural estate agent with experience in tied properties.
• Run a continuous, targeted marketing campaign (print, online and trade press) aimed at workers in the local agricultural sector.
• Keep records of enquiries, viewings and reasons for rejection (if any).
• Advertise in locations and media where agricultural workers look for housing: NFU newsletters, farm contractor lists, local farming forums and rural worker job boards.
• Provide the local authority with a full log of marketing activity when applying for a variation or removal.

Getting a mortgage on a tied property — step-by-step

If you own or are buying a tied property and want to obtain a mortgage, the following stepwise approach is sensible:

1. Get the title and planning position checked: Confirm the exact wording of the tie and any associated conditions (e.g. “for a person employed or last employed in agriculture”).
2. Obtain a pre-valuation: Commission a valuer with rural experience to assess likely value and marketability under the tie.
3. Prepare your business case: If you are a farmer seeking lending, prepare accounts, cashflow forecasts and show how your employment or business meets the tie conditions.
4. Approach specialist lenders: Use lenders with a track record in agricultural lending — they understand the nuances and may offer better LTVs and tailored products.
5. Consider blended security: If the tied property alone does not support the required lending, a lender may accept additional security (other land, buildings, or guarantees) to improve the loan position.
6. Negotiate terms and covenants: Lenders may require covenants (reporting accounts, maintaining farming activity) — negotiate these to ensure they are practical for your operation.

Options lenders may offer for tied properties

Lenders often provide bespoke solutions for tied properties. Common options include:

• Lower LTV with standard mortgage term: Lender advances a conservative proportion of value.
• Short-term or bridging finance: To buy time while you apply to remove the tie or complete marketing.
• Blended security facility: Combine the tied property with other assets to improve LTV.
• Business mortgage: If the borrower operates a confirmed farming business, lenders may structure a business mortgage where the tie is aligned with the business operation.
• Conditioned offers: Lenders may release funds on completion of agreed milestones — e.g., planning consent or evidence of marketing.

Case studies — real world examples

Case study A: Mortgage for a tied cottage where borrower is a full-time farm worker

Scenario: A long-serving farm worker living in a tied cottage wanted to re-mortgage to fund kitchen and energy improvements.

Approach: The borrower supplied employment records, a letter from the farm owner confirming continued employment and historic wage slips. A rural lender conducted a valuation that recognised the cottage’s tied status but accepted