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What is farm diversification?

Farm diversification is the creation of further business ventures on top of your existing traditional farming activity, in order to bring in additional income.

This can be achieved in many different ways, including anything from broadening the range of wares you produce or diversifying the types of livestock you keep to setting up a unique local attraction or exploring tourism opportunities onsite.

Why holiday letting could be right for you

Holiday letting as a means of farm diversification is an excellent way for farmers to generate new sources of income and create a host of attractive extra benefits.

Transforming redundant buildings into profitable assets

A great deal of farms have old buildings, such as barns and cowsheds, that are unused and unsightly; optimising these by turning them into holiday rental properties breathes a new, profitable use into these existing assets.

Many of the holiday lets with Sykes Cottages are converted farm buildings, and a perfect example of a thriving diversified farm let is Shepherd’s Cottage. Set on a beef and cattle farm in the Lake District National Park, this former lambing barn is now a two-bedroom holiday cottage.

Mrs and Mrs Woodhouse are second-generation farmers who rent their farm from a private landlord. They converted the barn to supplement their income and, since joining Sykes back in 2015, the cottage has barely been without bookings, having taken forty three this year already.

Mrs Woodhouse said: “Converting the barn was actually quite easy. It already had a good roof and the window openings were already there so we just added one wall to form the two bedrooms.”

Adapting to modern commercial demand also supports the success and future longevity of a farm in an ever-changing world, securing its continuance for future generations. Using the holiday let to ensure the farm’s legacy was a huge motivator for the Woodhouses: “Having the holiday let helps secure the farm moving forward for the next generation- for our sons and their future families”.

Tax Benefits and Grant Schemes

Being the owner of a holiday let can potentially make you eligible for a number of beneficial tax breaks.

Qualifying as a Furnished Holiday Let (FHL) applies special tax rules that can work in your favour. If you do qualify, you may be able to claim Capital Gains Tax relief and Small Business Rate Relief, you’ll be able to make tax-advantaged pension contributions, and you could also benefit from capital allowances.

Find can find out more about FHL qualifying specifications and what you could be eligible for, with our Tax Guide to Furnished Holiday Lets.

The great thing about this kind of diversification project on your farm is that there’s ample funding available. Part of the European Agricultural Fund for Rural Development, the LEADER programme has been running for over 10 years and offers excellent grants across England to help rural businesses bolster the rural economy, including support for rural tourism funds. There is also a variety of other regional grants available, so make to contact your local county council to enquire what is available in your area.

Where to start with your holiday let

Realising your farm’s potential

Interested in diversifying into holiday letting, but worried your farm won’t attract guests? Lots of people can be doubtful of their farm’s touristic appeal, but it’s very often the case that those working so closely with the land can lose sight of the actual beauty of the rural locations around them. It’s vital to remember that part of the huge draw of cottage holidays is the opportunity to reconnect with the spectacular natural landscapes the UK has to offer, and farm holiday lets fit the bill perfectly.

What kind of holiday let is right for me?

Holidaymakers are forever looking for something different. Offering guests a unique and inviting property to stay in, on top of a wonderfully out-of-the-ordinary environment like a farm, can drive enormous bookings, regardless of where you’re based.

Converting existing barns and cowsheds means you’ve already got a sturdy and attractively historic structure to work with. Log cabins and lodges are another great way for farmers to create a rustic charm on out of the way parts of the land without breaking the bank or the privacy of both you and the guests. The trend for ‘glamping’ has soared in recent years, and quirky properties, like yurts and shepherd’s huts, can also make the perfect unusual holiday destination; the added beauty of these types of property is that there’s much less labour involved in their setup too.

From helping you uncover the potential of an old barn or a vacant plot of land to suggesting ways to maximise your holiday letting options onsite, our expert local Property Consultants offer free, no-obligation letting advice.

Whenever you’re making changes to your farm, don’t forget to investigate planning permission, which can be found on the GOV.UK website.

Managing your holiday let

Investing your time and energy into holiday letting can be rewarding both financially and personally, as Mrs Woodhouse reveals about her experience: “I really enjoy running the holiday cottage. It’s lovely to meet and talk to lots of different people – people are so interesting!”

When it comes to managing holiday let, farm owners have a distinct advantage. Unlike with many other owners, living onsite means there’s no time wasted travelling back and forth to the property, and any sudden maintenance requirements can be dealt with straight away.

However, as with any other business, year-round effort is needed to ensure your holiday let is a success. The dedicated team at Sykes is here to support you on your owner journey, from beginning to end, making sure you continually get the most from your holiday let.

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