Farm land counted as capital?

Hi,

My Client’s are a married couple aged 61 and 63. They own a property with a mortgage.

They also own 400 acres of farm land which they rent out to a local farmer who pays £4000 grazing fees per year. The land cannot be built on and Clients advise that the land is virtually worthless and they are unable to sell it because of this. Therefore they allow the farmer to graze his sheep on the land for the nominal fee.

The client mentioned in the past that the land has been disregarded for benefits purposes as it was running at a loss. The land is owned outright.

Anyone have any ideas? Will the value of land be counted in full as capital? After looking at a land agents site in Northumberland, grazing land is sold for between £4000 and £8000 per acre!

Thanks,

Paul

There’s something very odd about this.  Your clients surely can’t be so clueless that they think the land is virtually worthless if grazing land goes for anything like the price you say - your lowest figure would put £1.6M value on it!  Perhaps it has something to do with the location & geographical features of the land.

Anyway, I would hope that DWP/Pensions Service would require a proper professional valuation of the land & suggest your clients get one anyway.

Are you sure they’re not thinking about tax credits?  I’ve been doing some modelling about the issues around capital and tax credits with UC and transitional protection.

A possibility: if the land could be regarded as an asset of the “business” they are engaged in running, then it should be disregarded as capital.

Eg see CIS/841/1994.

(depending on the facts, and bearing in mind that it has been held that eg renting out a single residential property does not constitute a “business”)

A few years ago I had a client who owned farm land she considered worthless. From memory - the client was left a small central parcel of land within a bigger field system.There was no direct access to it and would require other landowners permissions to cross to it.
She was the eldest child of her mother who married her step father - a farmer - and they went on to have other children. He left her out of his will but not his other children.
Her mother had always known this would happen and she for some reason had this strange plot and left it to my client. The mother died and client inherited the land and was refused PC on the basis of some vague valuation, that did not appear to take account of the access problems.
On the basis that everything is worth something I suggested to client she could get her own valuation to use at appeal, since the circumstances were so unusual. I suggested a local valuation from a local land agent with a view to putting it on the market. I also suggested putting an advert in the Farmers Weekly. I also suggested she asked her step sisters if they were willing to buy her out. They refused but intimated they would change their minds when the father died.
The land agent gave a valuation. The client was made several offers as a result of her advert in the Farmers Weekly- as apparently there are loads of speculative purchasers willing to buy up odd bits of land and roadside verges.
Her step father heard that ‘outsiders’ would be buying within his farmland and made client an offer for her land. It was better than the other offers and she accepted it.
I cant recall the sums involved but it was enough for her to be just over PC.
Not sure if this helps you or not but surely the benefit system was not set up to support people sitting on valuable assets they chose not to sell.
As a happy ending -when I saw her again to ask if she wanted a benefit check she said step father had died and her step sisters had gifted her some capital to right a wrong. Sometimes I do like my job…