Scotland’s entrepreneurial farms and rural business owners are increasingly taking advantage of the explosion in demand for agritourism. Scotland is seen as a premium destination by overseas visitors. The post Covid boom in demand for rural staycation accommodation is here to stay, boosted by those wishing to reduce their carbon footprint and city dwellers keen to escape to the countryside. Combining rural accommodation with outdoor activities, wellness experiences, farm based tours or locally produced food and drink can help to set the businesses apart.
Agritourism businesses can form an essential part of a resilient, diversified farm or Estate business structure. However, take advice on the structure of your business as early as possible. If part of an existing agricultural business, agritourism can result in loss of Agricultural Property Relief on Inheritance Tax exposure. Business Property Relief is not generally available on the value of any let property. It may be best to separate the business from any other farming activity. This can also be useful when considering succession planning. As a Land and Rural Business solicitor, I am all too familiar with the dilemma faced by rural landowners when considering how to split assets fairly amongst children. Creating a separate business and leaving that business and the accommodation itself to one child could avoid legal rights’ claims by non-farming children following a parent’s death, whilst creating a legacy for future generations and family income meantime.
There are numerous rules and regulations that accommodation providers need to be aware of. All hosts must hold or have applied for a licence from their local authority to provide short term lets. To obtain this, you must be able to provide documents such an Energy Performance Certificate and various fire, electrical and appliance reports and assessments. You should also hold adequate public liability insurance and ensure that your building’s insurance covers letting. While your own family may have consumed the private water supply for generations, it must now be tested for safety. You will probably need planning permission. The Scottish Government is also at the final stages of implementing legislation to create a Visitor’s Levy due to come in to force in 2026. Accommodation providers will need to implement a scheme to collect the so called “tourist tax”, the amount being calculated as a percentage of the accommodation cost.
If the business is a success, also consider brand protection. A trademark is relatively cheap to obtain and it may stop competitors from cashing in on the hard work you have put in to build your brand, your name and your website.
If your land is tenanted, it might be possible to resume land from the tenancy for a non-agricultural use, subject to payment of compensation. The compensation provisions will be updated in forthcoming Land Reform legislation. Tenants under most types of farm tenancy arrangements also have a statutory right to diversify their business. However, it is essential to take prior expert legal advice before considering this, due to consequences of the wrong approach.
There can be no doubt that Scotland has the potential to be a world recognised agritourism destination of choice. However, if you are considering an agritourism venture, seeking advice early might just save you time and money in the long term.
