The number of conversions of farm buildings into new homes dropped 20% in the last year, denting hopes that these conversions could help solve the rural housing crisis.
According to Lendy, one of Europe’s largest peer-to-peer lending platforms, only 1,511 agricultural-to-residential conversion applications were approved in 2016/17.
This figure is down from 1,890 in 2015/16. Lendy adds that local authorities rejected 38% of all applications for converting farm buildings to houses last year.
It says converting outbuildings such as barns and stables into housing can be an "effective" way of combating the UK’s housing shortage, which is being felt "just as badly" in the countryside as it is in cities.
For example, a recent development of eight new houses in rural Cornwall had over 800 people apply to rent, demonstrating the demand for more rural housing.
As well as making unused buildings available for new housing, selling surplus outbuildings to convert can provide farmers with a vital source of additional income, according to Lendy.
Lendy adds that in addition to the fall in applications and high number of refusals, another issue for developers is that bank lending to property developers remains low.
It says many developers can "struggle" to finance conversion projects through traditional means.
Bank of England figures show that in December 2013, over £34 billion in lending was outstanding from banks to property developers, but this plunged to just £14.8 billion in December 2017.
As a result, more and more developers are turning to alternative forms of finance, such as peer-to-peer lenders, to build more homes.
Liam Brooke, Co-Founder of Lendy, says: “Converting farm buildings is one of the easiest ways to help solve the rural housing shortage, so this sharp drop-off in approvals is very disappointing.
“Agricultural-to-residential conversions can be a win-win for everyone –farmers can unlock capital from their land and more homes get built for prospective buyers – helping to close the housing gap.
“It doesn’t make sense to have so many redundant outbuildings that have no aesthetic value at all slowly decaying when they could be turned into homes.”