Last reviewed: June 2026
TL;DR- Agricultural mortgages cover the purchase of farms, farmland, agricultural buildings and rural properties with agricultural ties.
- Specialist agricultural lenders - including Barclays, Lloyds, NatWest, specialist banks and the AMC (Agricultural Mortgage Corporation) - assess farming businesses and land values.
- Income assessment includes farm trading income, Basic Payment Scheme (now replaced by the Sustainable Farming Incentive in England) and diversification income.
- Agricultural land valuations and mortgage LTVs vary significantly by land quality, location and permitted use.
Types of Agricultural Property
Agricultural mortgages cover a wide range of rural property types: working farms (arable, livestock, mixed); bare farmland without buildings; agricultural buildings and storage facilities; farmhouses with an agricultural tie (planning condition restricting occupation to agricultural workers); smallholdings; and rural properties with diversification income from tourism, leisure or equestrian use. Each property type is assessed differently by lenders, and not all agricultural mortgage lenders cover all property types.
How Agricultural Income Is Assessed
Farm businesses generate income from multiple sources that lenders assess in combination:
- Agricultural trading income: profit from crop growing, livestock farming, contracting or other core agricultural activities, assessed from certified accounts and farm management accounts.
- Government support payments: the Basic Payment Scheme (BPS) in England is being phased out and replaced by the Sustainable Farming Incentive (SFI), Countryside Stewardship and other Environmental Land Management (ELM) schemes under the Agriculture Act 2020. Lenders treat government support payments as income but assess the sustainability of the specific payment stream under the new regime.
- Diversification income: income from holiday cottages, glamping, livery, renewable energy (wind turbines, solar panels), farm shops and other non-agricultural activities on the farm. Each income stream is assessed on its own merits.
- Off-farm income: many farming families derive additional income from off-farm employment, which can supplement the farm income in the affordability assessment.
Land Valuation and LTV
Agricultural land values in the UK vary significantly by region, soil type, drainage, land quality classification and permitted use. The Agricultural Land Classification (ALC) system rates land from Grade 1 (excellent) to Grade 5 (very poor) based on physical characteristics. Grade 1 and 2 land commands premium values. Lenders use RICS agricultural valuers to assess the land and buildings independently.
LTV for agricultural mortgages is typically 65-70% of the agricultural value, though this varies by lender and the quality of the land and business. Some lenders lend against the market value including the residential element of the farmhouse; others lend only against the agricultural value, which may be lower.
Specialist Agricultural Lenders
The Agricultural Mortgage Corporation (AMC), owned by Lloyds Banking Group, is a specialist lender that provides medium and long-term finance to the agricultural sector. High street banks with dedicated agricultural banking teams (Barclays, NatWest, HSBC) and some specialist rural finance providers also operate in this space. The specialist nature of agricultural lending means that mainstream residential mortgage lenders are not appropriate for farm purchases.
Frequently Asked Questions
Can I use a standard residential mortgage to buy a farmhouse?
If the farmhouse is sold separately from the farm and land (with no agricultural tie on the property), a standard residential mortgage may be available. If the farmhouse has an agricultural occupancy condition (AOC) - a planning restriction limiting occupation to people employed in agriculture locally - most standard residential lenders will not accept it. Agricultural mortgage lenders can assess AOC properties. AOC conditions significantly reduce the market value of the property compared with an unrestricted residential dwelling.
How does the Sustainable Farming Incentive affect agricultural mortgage assessment?
The SFI and other ELM schemes provide income payments to farmers in return for environmental management activities. Lenders are adapting their assessment approaches to the new payment landscape as BPS is phased out. SFI income is generally treated as income in agricultural mortgage assessments, but lenders will assess the specific scheme agreements in place and whether the income stream is sustainable under the borrower's land management approach. The transitional period creates some uncertainty for lenders assessing income from newer scheme participants.
Can I get an agricultural mortgage for a hobby farm or smallholding?
Smallholdings and hobby farms that are not commercially operated may not qualify for specialist agricultural mortgages on the same terms as working farms. Lenders assess whether the farming activity generates a viable income stream. A property with a small amount of land and no commercial farming operation may be assessable as a standard residential property (if no AOC applies) or as a rural residential property by lenders with flexible criteria for properties with agricultural land. The specific approach depends on the property and lender.
Is stamp duty different for agricultural property?
Stamp duty land tax on agricultural land and farmhouses follows the standard SDLT or commercial SDLT rates depending on the nature of the transaction. Bare agricultural land without a residential element is typically assessed at commercial SDLT rates. A farm purchased as a single lot including a farmhouse may attract mixed-use SDLT rates. The SDLT treatment of agricultural purchases can be complex and specialist tax advice is recommended.
