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Late spring is an ideal time to launch a farm for sale on the open market. With 2010 already moving on at such a rapid pace we are advising clients who are considering selling their farm and land this year, to begin preparing now. Associate Dan Taylor of the York office explains: "When selling agricultural property and land we aim to achieve the best price possible for our client, so it is important to carry out thorough preparation and ground work in advance of the marketing to ensure that sales are able to conclude without any unexpected surprises".
First impressions to prospective viewers are paramount, so the importance of preparing a farm for sale ahead of time cannot be under estimated. There are an extensive number of points to address and a number of minor cosmetic jobs can be carried out relatively inexpensively which can make a real difference to the initial appearance of the farm.
Although not exhaustive some recommended tips to prepare agricultural property prior to going on the market are as follows:-
1. Presentation of the farm - it is usually preferable to launch at a time of year when the farm is looking at its best with the hedges having been cut during the winter months with no nesting birds present and fencing repairs being carried out while livestock are housed. Minor repairs to farm buildings and the farmhouse will also create a positive impression as will removal of unwanted debris and redundant farm machinery to help smarten up the farm and allow prospective purchasers to get a true feel for the property.
2. Is the property registered with the Land Registry? - If not this may cause practical difficulties and there may be a need to rely on outdated Deed Plans and old maps to help identify the property boundaries. If this is not addressed at an early stage it can lead to a protracted sale and is an important consideration. These Title Plans would generally form the basis for the sale plan and this need to be accurate from the start with early liaison between the selling agent and solicitor being vital.
3. Legal Pack - Ensure that any legal information associated with the land is collated prior to the sale. In addition to Title Deeds this will include any former or existing planning consents, tenancy agreements, rights of way, covenants, overage clauses and special designations of the land.
4. Single Farm Payments entitlements and Rural Land Registry maps - ensure that all outstanding issues are resolved with the RPA where possible. Having approved maps from the RPA and the correct number of entitlements and accurate entitlement statements will make the transfer of entitlements with land far easier.
5. Do you need to hold a farm sale? - Depending on the reason for the sale there may be a need to hold a dispersal sale for farm machinery and/or livestock and it is important to reserve this right from the start. It is commonplace that sales generally take place once a sale has been agreed and the completion date.
6. Agri-environment schemes and Management Agreements - If there are any Stewardship Agreements it is important to understand when these commenced and whether you intend that these pass to the purchasers. There can be a cost benefit analysis to be undertaken, as if the purchaser subsequently withdraws from the Scheme previous payments received by the vendor may need to be repaid. This needs to be considered in the context of whether the land would be more or less attractive with such schemes and payments in place.
7. What else is to be included in the sale? - In the event certain fixtures and fittings are not included within the sale the selling agent must be made aware of these items from the start to inform prospective purchasers. It is important to establish whether grain bins, milking parlours, tanks and troughs etc. are included within the sale price or available by separate negotiation.
8. Tax considerations - of particular importance prior to selling your farm is establishing the potential Capital Gains Tax liability. Although there are annual exemptions and reliefs available the date of acquisition and previous price paid or gifted may open the door to a potential tax liability. It is strongly recommended that your accountant is consulted at an early stage and that there are good lines of communication between the selling agent, accountant and solicitor prior to launching the property on the open market. VAT should also be considered.
9. Consideration of any planning opportunities on the farm, such as development of traditional farm buildings or whether the property has potential for a wind farm or other renewable energy opportunities, which are becoming very topical. This can add significant value and should be explored at the earliest opportunity.
10. Finally, ensure you engage a reputable and well respected agent with experience in rural property and land management who will provide you with objective, balanced and unbiased advice.
The above list is not exhaustive and there are many points which need consideration and discussion with your professional advisers and agent prior to advertising the farm for sale.
Dan continues: “The most successful farm and land sales are the ones that have no hidden surprises, so the more work that is done prior to the sale, whether that being preparing paperwork or tidying up the farm then the smoother the whole process will be. A good agent will help guide the vendor through the sale from start to finish to achieve a successful outcome. The key point to remember is that agreeing a sale subject to contract is only the start, but if the above groundwork has already been carried out this should ensure a smooth transition to completion”.
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