Farm Diversification

Farm-based workshops appeal to start-up businesses and firms who see a rural location as prestigious. Demand is greatest where the site is within commuting distance of urban areas.

Industrial users may seek specific attributes from a building, for example clear span, vehicle access, functional flexibility. For this reason it is usual for farmers to provide the basic building and leave fitting-out to tenants.

Professional advice should be obtained regarding demand which varies greatly from area to area. Buildings developed for office space will offer good rental returns, improve the farms' surroundings and add to its asset value.

Good access and car parking. Mains services to the building of sufficient capacity to meet an industrial user's needs. Floor areas per unit of between 47m2 and 140m2 are most popular. Larger buildings can be sub-divided to meet tenants' requirements.

Security can be a particular problem in rural locations. It is advisable to complete the work in one go rather in a piecemeal manor.

Building costs suffer from being widely understated by owners and developers.

Quality office schemes will cost between £500 & £1000 sq m (average £750 / sq m). Conversion costs for industrial units vary between £100-£540 per m2, depending on building type, construction and standard of conversion.

Agents' management fees are likely to be in the region of 5%-10% of Gross Rent. Insurance will depend on the type of use and form of building construction, but will be approximately 0.5%-1.5% of replacement cost.

Annual maintenance charges are again variable. Allow between 0.5%-5% of replacement cost of building.

Gross rental income for industrial units is typically in the range £20.00 - £50.00 per sq m and for office space £50 - £200 per sq m. Adjustments must be made for the terms of the lease, particularly with regard to repairing and ensuring obligations.

Normally, the landlord would wish to insure the fabric of the building himself. Consideration must be given to the risk associated with accepting start-up businesses as tenants. This will have implications for the terms of the lease and the yield required on the investment. Lower yields may be acceptable for established businesses.

Legislation:- There are over 30 Acts affecting the design and letting of workspace. Some of the most important are:- Landlord and Tenant Act 1954 governing the letting of buildings for business. Town and Country Planning Act 1990 (as amended) - planning permission.

Also: Clean Air Acts 1956 and 1968, Factories Act 1961, Fire Precautions Act 1971, Fire Safety and Safety of Places of Sport Act 1987, and Highways Act 1980. BUILDING REGULATIONS The Building Regulations 1991 are administered by Local Councils and have a significant effect on the design of industrial premises.

The Workplace Directive (89/654/EEC) came into effect on 1 January 1993 and introduces a raft of requirements to apply to new and existing workplaces. UK implementation is the responsibility of the Health and Safety Commission.

Through the Scottish Rural Development Programme (SRDP) 2007-2013 funding is now available for rural businesses throughout Scotland for diversification and renewable energy projects. Specifically, support is delivered through Rural Development Contracts – Rural Priorities which was launched in April 2008. For further information about what support is available see the Section on Rural Development Contracts – Rural Priorities.