A GUIDE TO SELLING YOUR FARM

Selling your farm is one of the biggest, if not the biggest, financial and emotional decisions you can make during your lifetime. Not only is a farm often a home, but also a business which has frequently been within the same ownership for several generations.

Selling your farm should be planned alongside individuals you can trust. The team of professionals you choose should comprise at least a selling agent, a solicitor, and an accountant, who should all work together to ensure the sale of your farm runs smoothly.

Before your farm is offered for sale, your solicitor and agent should liaise with each other to ensure that the sale contract is prepared. It can then be sent to the purchaser’s solicitors once a sale has been agreed. This will encourage discussions on essential points, including overage clauses and whether the property will be sold subject to any covenants.

Consideration also needs to be given to tax implications when selling your farm. The agent and accountant need to liaise over the apportionment of value between the assets. For example, Principal Private Residence relief will often be available against the value of the farmhouse and curtilage, whilst Entrepreneurs’ Relief may also be available. Both of these reliefs have the potential to reduce the Capital Gains Tax payable, however, these reliefs can easily be lost.

The chosen method of sale – whether the farm should be offered for sale by private treaty, informal tender or auction – needs to be discussed and considered in great detail. The best method of sale often depends upon a number of factors, including the characteristics of the property, market conditions, and the personal circumstances of the vendor.

The main advantage of the private treaty method of sale is that it gives the vendor the greatest amount of flexibility and control with regard to how the property is divided (if at all), the timing of the sale, and who it is eventually sold to.

A sale by informal tender with a set date and time for best offers can lead to the maximum sale price being achieved. However, if no offers are received, or they are insufficient, this can make agreeing the sale of your farm at a later date more of a challenge.

The auction room offers the greatest degree of certainty for both the vendor and the purchaser; upon the fall of the hammer, contracts for the sale of your farm are exchanged with a 10% deposit normally paid, and completion of the sale four weeks later. This removes the risk of the sale falling through after it has been agreed – one of the main disadvantages of private treaty and informal tender sales, where exchange of contracts typically takes one or two months from when the sale is agreed.

However, auction purchasers need ‘cash’ funds available, or finance already arranged, to facilitate the immediate exchange of contracts. In addition, some potential purchasers are uncomfortable with the auction process and may therefore be deterred from purchasing in such a way. This can reduce the number of interested parties when selling your farm by auction.

Selling your farm should be planned alongside individuals you can trust.

Prior to the marketing of your property, other factors need to be considered, including:

1. Timing - the best time to market a farm is generally during the spring, summer and early autumn months, when farms are looking their best.
2. Lotting - should the farm be offered for sale as a whole, and/or in separate lots to maximise value? This will depend on market conditions, as well as the assets in question. 
3. Tenure - how is the holding occupied? Ensure that the appropriate tenancy or licence agreements are in place, so that the terms of occupation are clear for potential purchasers.
4. Planning - is there permission for all of the uses on the holding? If not, consider applying for lawful development certificates, or retrospective planning consent, prior to marketing your farm.
5. Services - what do these comprise, and where do they run? 
6. Rights of way - are there public or private rights of way through the holding? 
7. Uplift clauses - consider the development potential of the holding. Is it appropriate to sell subject to an uplift clause, obtain planning permission for change of use, or sell with ‘hope value’?

The best time to market a farm is generally during the spring, summer and early autumn months.

Once these factors have been considered, the farm should be prepared for the market. In terms of generating interest and viewings of the farm, quality marketing material is essential and this should include:

1. Professional photographs – try to have photographs taken when your farm is looking its best. If you plan on selling later in the year, it may be a good idea to take photographs in advance. Aerial photography is particularly helpful to demonstrate the setting of a farm, as well as scale.
2. Floorplans – these will demonstrate the size and layout of the farmhouse and other residential properties. Energy performance certificates (EPCs) are normally a legal requirement.
3. Farm buildings plan – again, this will demonstrate the layout and scale of the farm buildings.
4. Farm plan – ensure that this clearly displays the boundaries of the holding and includes individual field numbers and areas for reference during viewings, discussions and negotiations for the sale.

It is also very important to ensure that the farm is looking at its best when potential purchasers come to view the property in order to make a good first impression. Some of the simplest things which should be considered prior to marketing are listed below:

1. Weeds – top or spray them off
2. Gates – ensure they are hanging properly
3. Fencing – repair where necessary
4. Gutters – ensure they are cleaned out
5. Driveways – fill potholes and repair cracks
6. Farm buildings – fix broken cladding/roof sheets and clean out FYM
7. Cropping – continue to farm the holding well, as if you are staying

The approach you take to preparing your farm for sale, and the subsequent method of sale, can have a real impact on the price achieved, and how smooth the sale process is. Preparation is key, both on the farm and with the preparation of marketing materials and legal documents so we recommend seeking professional advice from the outset.

To find out more, use the contact information at the top of this page to talk to our team.