Farmers looking to sell agricultural land in 2021 are advised to act now to capitalise on the spring sales market.
Now is the ideal time to begin preparations and iron out any potential problems to ensure an effective launch followed by a smooth sale, says Andrew Fallows, head of rural agency at land agents Carter Jonas.
“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.
Mr Fallows says time should be allowed to appoint a strong sales and legal team – and to begin gathering information about the property in advance of marketing. Early discussions with your 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 says. “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.”
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,” says Mr Fallows.
Four common barriers must be avoided or overcome to ensure a hassle-free sale. They are overage negotiations, borrowing applications, background information and the title position of a farm.
Providing buyers with Rural Payments Agency plans, entitlement statements and environmental stewardship agreements in a data room saves time in the due diligence process too, says Mr Fallows.
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 necessary searches can also delay a sale, with some taking up to 12 weeks to be returned. That said, while Covid and Brexit have created market uncertainty, next year is likely to present some opportunities for 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,” says Mr Fallows.
At the same time, the government’s clear intention to use support environmental measures on farms means diversified businesses and those with varied landscapes or features will be well-placed to generate additional income.
“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,” explains Mr Fallows.
“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.”