Farm and estate owners planning to sell land in 2023 should use the winter months to prepare for a sale if they are to capitalise on the spring market, says Carter Jonas.
The UK being in a recession is driving interest in ‘safe assets’, and farmland has traditionally performed well during times of economic uncertainty. There is evidence that well-prepared farms are out-performing those which have outstanding issues to resolve.
“Agriculture is a resilient industry, even in the face of considerable economic uncertainty, and land values reflect that,” said Carter Jonas head of rural agency Andrew Chandler.
“Arable and pasture land values have seen a 10-year annualised growth rate of 2.8% and 3.6% respectively. The market is predicted to continue to benefit from an ever-expanding pool of motivated buyers, who are interested in a range of holdings from prime lifestyle land to unproductive blocks of marginal land for natural capital purposes.”
The recent rises in interest rates are affecting mortgage offers and those with cash available will be in a position to move faster and will favour properties which have been prepared for sale.
“If you’re not ready, your farm could potentially be out-performed by another property.” Mr Chandler said. “Cash buyers do tend to bid higher on land and property they know is ready, but they won’t wait around.”
While the market has quietened since the intense period during the pandemic, demand is still outstripping supply and competitive bids will help to secure premiums.
“Quality offerings, and those located in a number of hotspots across the UK, are seeing considerable interest regardless of the time of year, so there may be advantages for those farms which are first to market in 2023.
“Building in time for the legal process is also advisable – sellers can mitigate risk by engaging professionals well in advance and being ready to proceed quickly.”
According to Mr Chandler, creating a positive first impression is invaluable, so preparing the farm for sale ahead of time is key. Smartening up the farm and carrying out minor tasks can be achieved quickly and inexpensively, but could make a high difference to its overall appearance.
“Ensure all your paperwork and agreements are up to date; carrying out due diligence such as checking your farm is registered with the Land Registry, that you have approved maps from the Rural Land Registry and that any agri-environment schemes or management agreements can be easily transferred to a potential purchaser will save you time down the road,” he added.
“We aim to achieve the best possible price for our clients, so it’s important to carry out the thorough groundwork in advance of the marketing to make sure sales can proceed without any unwelcome surprises.”
Sellers should also explore potential planning opportunities as these can add value, as well as potential Capital Gains Tax liability.
“Consulting your accountant at an early stage is sensible, as is ensuring good lines of communication are established between your selling agent, solicitor and accountant prior to launching your property on the market,” Mr Chandler said.
“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.”
Buyers should also be in a position to move quickly, as this will make them an attractive bidder. Contacting agents to discuss requirements and what is coming to market is a good starting point.
“Buyers needing to borrow funds need to take into account that this is not as simple as it was a few months ago – talk to lenders and ensure you will be able to access the necessary funds before moving forwards,” he concluded.