Our Bidwells’ Rural Diversification & Planning team has created a 12-step checklist to guide you through the diversification process.
1. Why do you want to diversify?
Understanding your motivations is essential. Common drivers include spreading risk, improving financial stability through renewables or commercial income, and responding to market trends such as farm shops, glamping or dog walking paddocks. Environmental benefits, government incentives, and supporting lifestyle or succession planning may also play a role. These drivers will shape your strategy and priorities.
2. Do you have any underutilised rural assets?
Unused buildings, land and natural features often present valuable opportunities. Older or redundant barns may suit commercial, leisure or residential uses, while under-performing land could support glamping, renewable energy or seasonal attractions. Scenic areas may lend themselves to tourism or environmental schemes, and unused yards or hardstanding could support storage or parking. Taking stock of your assets can reveal opportunities hiding in plain sight.
3. Do you need planning permission?
Many diversification projects require planning consent, although some may benefit from Permitted Development Rights (PDRs). Building conversions, new structures or changes in land use often need approval, while certain agricultural building conversions or temporary uses may be permitted, subject to conditions. Always check local planning policies and restrictions, including designations such as Green Belt, Conservation Areas and Listed Buildings. Early professional advice can help avoid delays and ensure compliance.
4. Is the project financially viable?
Financial viability is essential for any diversification project. Assess capital requirements, funding options and realistic income projections, considering market demand, competition and seasonality. Understand how long it will take to achieve the desired return on investment. A robust business plan, cash flow forecast and development appraisal will help you assess financial sustainability and avoid costly mistakes. It can also help determine the best options to pursue.
5. Is it compatible with the farm?
Diversification should complement, not conflict with, existing farming operations. Consider impacts on core activities, biosecurity, safety, infrastructure and access, as well as whether the project aligns with your farm’s long-term goals and available skills. Compatibility ensures diversification strengthens rather than strains your business.
6. Are there any grants available?
Grants can reduce financial risk and improve viability. Options may include government schemes such as the Farming Investment Fund or Environmental Land Management Scheme, Local Authority funding, and specialist grants for renewables, heritage or environmental projects. Check eligibility, conditions and timing carefully, as schemes often have deadlines or limited windows.
7. What are the planning policy constraints?
Planning can be a ‘make or break’ factor when it comes to diversification. Local development plans, landscape or heritage designations, environmental impacts, ecology, highways considerations, flood risk and drainage can all influence what is achievable. Even where PDRs apply, conditions and supporting assessments may still be required. Early engagement with planning professionals helps ensure your proposals are realistic and policy compliant.
8. Who will run it?
Decide whether the enterprise will be run in-hand, by a specialist operator, or let to a tenant. Consider skills, experience, time commitment and succession opportunities. Choosing the right operating model is critical to long-term success.
9. How will it be funded?
Funding may come from your own capital, loans, grants, partnerships or letting the asset to a tenant. A clear funding strategy helps manage risk and avoid financial strain. It is important to understand the cost of borrowing and factor this into the viability of the scheme from the outset.
10. Will you be liable for business rates?
New commercial or leisure uses may trigger business rates, although agricultural land and buildings are generally exempt. Some ventures may qualify for small business rate relief. Rates are assessed by the Valuation Office Agency, and liabilities should be factored into financial appraisals early. For let units, tenants usually pay rates, although landlords remain liable during voids.
11. How will it impact your tax position?
Diversification can affect VAT, income or corporation tax, capital allowances and inheritance tax reliefs, including Agricultural and Business Property Relief. Careful structuring and early professional advice, including consideration of a Balfour Matrix, can deliver significant tax efficiencies.
12. Do you need professional advice?
Diversification projects are complex and often require input from planning consultants, rural surveyors, heritage, highways, ecology, flood risk and contamination specialists, as well as tax, legal and building consultants. Engaging the right team early can save time, money and stress.
Whilst there are a number of considerations, rural diversification continues to be a valuable, and often essential, means of generating income on farms and estates. With appropriate implementation, diversification can be hugely beneficial to rural businesses.
