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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.


Example of Successful Holiday Let Farm Diversification

shepherd's cottage view

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, 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.

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”.


Farm Diversification Tax Benefits

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

Your farm diversified holiday let 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.


Farm Diversification Grants

The great thing about farm diversification through holiday letting 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 farm diversification grants available, so make sure to contact your local county council to enquire what is available in your area in terms of holiday letting your farm diversification project.


The Potential of Farm Diversification Holiday Lets

three peaks barn

Are you interested in diversifying your farm into holiday letting, but worried it won’t attract guests? Lots of people can be doubtful of their farm’s holiday letting appeal, but it’s often the case that those working so closely with the land can lose sight of the actual beauty of the rural surroundings.

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 is the best type of Farm Diversified Holiday Let?

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 attractive historic structure to work with. Log cabins and lodges are another great way for farmers to create a rustic charm out of the parts of their land without breaking the bank.

The ‘glamping’ trend has soared in recent years, and quirky properties such as yurts and shepherd’s huts can also make the perfect unusual holiday destination. The fact that there is much less labour involved in the setup of these properties makes them even more appealing as a business venture.

From helping you uncover the potential of an old barn to suggesting ways to maximise your holiday letting options on-site, our expert local Property Consultants offer free, no-obligation letting advice.

Whenever you’re making changes to your farm, don’t forget to investigate the holiday letting planning permission regulations.


Managing your Farm Diversification 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 a holiday let, farm owners have a distinct advantage. Unlike with many other owners, living on-site means that 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.


Let your property with Sykes and earn up to £125,000 per year*

  • Join over 15,000 holiday properties already working with Sykes Cottages
  • We welcome over 26 million web visitors a year
  • Many of our owners achieve more than 45 bookings a year
  • We specialise in turning your holiday property into a profitable year-round income for you

*Based on a 7 bedroom property in the Lake District with bookings between October 2017 to September 2018.

holiday let owner pack

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