Whilst winter is often a time of hibernation we recommend those looking to sell their farm in 2020 to start preparations early to avoid disappointment. As the farmland market tightens and becomes increasingly competitive, it is critical to set your farm apart from the competition, and attention to detail can make all the difference to not just achieving a successful sale, but also maximising value.
Get the timing right
Timing is key to any successful farm or estate sale. Whilst the market has become much less seasonal, the opportune time to market most farms is from spring to mid-summer, when crops are flourishing and stock farms and sporting estates look their best.
Identifying when you wish to sell and working back will enable you to formulate a plan and determine all the hurdles you need to overcome before a sale can happen.
Don’t let tax planning be an afterthought
Tax is a critical consideration and Capital Gains Tax is likely to be the biggest issue. The sale of land in a farming business will attract the standard rate of 20% but, if the vendor qualifies for Entrepreneurs’ Relief, this is reduced to 10%. Whilst you don’t need to be a mathematician to work out the benefits, you will need a tax expert to ensure eligibility.
It is key to showcase a farm in its best light. You will want to ensure that prospective purchasers see your farm at its best and, as such, a ‘spring clean’ prior to marketing will benefit. It is often good to put yourself in the purchaser’s wellies, and ask yourself ‘would I buy this?’
Pick your team
It is critical to build a professional team who can move quickly. Putting this team together at the earliest opportunity will ensure that your sale is considered from every angle.
Inspection of the Land Registry Title and Deeds at an early stage is crucial, and addressing any restrictions on title or title defects and resolving them prior to launch will reduce the risk of a sale falling through. A comprehensive information pack made available to prospective purchaser’s lawyers will help expedite the conveyance.
Look to the future
Whilst farmers and landowners are usually aware of planning potential on their land, they are not always aware of the latest regulations, and highlighting untapped potential such as proximity to grid connection for developing renewable technologies could unlock significant latent value. Careful use of development clawbacks can also protect your interests long term, however there is a fine balance to strike to ensure that it doesn’t have a negative impact on a purchaser’s appetite.
For further information, contact Sam Johnson, Associate (email@example.com. / 01423 707801), or your local Carter Jonas office.