20 Oct 2020
Spring into Action Ahead of 2021 Farmland Sales Season
Those looking to sell farmland and estates in 2021 are advised to act now to capitalise on the spring sales market.
Andrew Fallows, Head of Rural Agency at Carter Jonas, says now is the ideal time to begin preparations to ensure an effective launch followed by a smooth sale.
“If you begin planning now you can iron out any potential problems and get your property properly prepared and ready to bring to the market,” he said. “That will put you in a strong position to move quickly when buyers become more active and other land becomes available. If you don’t plan, you may miss opportunities and the process can be drawn out over many months.
“We are already seeing prospective clients who are planning to sell in the spring rather than this winter, so the market could become busy and those who have prepared well will be in the box seat.”
A big merit of early preparation is the ability to showcase farms at their best. Photographs can be taken while the landscape still looks green and leafy which will help design an attractive set of particulars to showcase the property. Andrew says it is important to allow time to appoint a strong sales and legal team, and to begin gathering information about the property in advance of marketing. Early discussions with you accountant are also vital to fully understand your tax liability.
“Having the right people advising and ironing out any issues will put you in the strongest position to proceed,” he said. “This includes preparing information ahead of time, such as creating a legal pack.” Starting early also gives sellers the opportunity to work with agents to add value.
“Thinking ahead and actually securing planning permission on redundant buildings, for example, can unlock significant and immediate value,” he said. As well as buildings, investigating the potential for mineral reserves and renewable energy diversifications present opportunities to increase market value.
“These things take time but are well worth it,” he said. Common pitfalls Andrew says there are four common barriers to hassle-free sales; overage negotiations, borrowing applications, background information and the title position of a farm. Providing buyers with RPA plans, entitlement statements and environmental stewardship agreements in a data room saves time in the due diligence process too, Andrew added. Farms not registered with the Land Registry can also put the brakes on the process and a tightening of borrowing rules is also contributing to slower transactions where mortgages are involved.
Solicitors carrying out the necessary searches is also a blockage with some taking up to 12 weeks to be returned. While Covid and Brexit has created some uncertainty in the marketplace, Andrew says 2021 presents opportunities that may benefit sellers.
“With a delayed budget from the Chancellor, we are in a period where the tax environment at present is settled so buyers and sellers know where they are. This, in itself, is a compelling reason to progress a sale or purchase,” he said. Although Brexit negotiations are still ongoing, Andrew adds that with a clear policy intention to use public money for public goods, diversified businesses and those with varied landscapes or features enabling them to take advantage of future policy direction will also be well placed.
“The Covid world has also crystallised the desire for many to have more space and when lockdown started to ease a lot of areas had more spring in their step than before,” Andrew says. “Leisure and lifestyle are proving to be big selling points. Rural land in close proximity to good travel networks is high in demand from lifestyle purchasers. So 2021 could present a sterling opportunity for sellers.
“Farmers who are thinking of selling next year can capitalise upon these opportunities, but they need to prepare to be in a prime position when the starting gun is fired on 2021 sales.”
Questions sellers should ask themselves Are the title deeds to the property correctly registered with the Land Registry? Are there any restrictive covenants, clawbacks or rights of way which may affect the land? Do you have all relevant paperwork? Energy performance certificates, details of boundary maintenance responsibilities, crop yield records, drainage plans, planning permission certificates, details of any easements and information on services for electricity, water and sewerage are all required.