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Residential vs commercial farms: what’s in a name?

Wed 16 May 2018

The difference between residential and commercial farms is key when it comes to selling up, says George Alder.

Commercial Farms

These are primarily businesses, focussed on growing crops, producing milk or rearing livestock for sale in the market. The following criteria are priorities for commercial farm buyers:

Land: Very often commercial farms are looking for as many good quality acres as possible, even if this is to the detriment of the dwelling house (if indeed there is one). The land is the most important part of a commercial farm purchase as it is the only thing that cannot be substantially altered and will be the income generator for the whole enterprise.

Farm buildings: Depending on the chosen enterprise, a buyer will be looking for modern and adaptable buildings suitable for a variety of uses.

The house: Often this is not top of the list for a commercial farmer. A modest, easily-maintainable family house or bungalow positioned centrally within the farm and suitable for a family is the ideal for most commercial farm buyers. Huge, period or thatched properties are often a no-no, as they are perceived to be too expensive, both in terms of initial outlay and ongoing maintenance. 

Location: Large or small, a commercial farm needs good access to the road network to be able to bring in inputs and deliver end products. Access roads need to b able to cope with modern farm machinery and often articulated lorries too.

Residential Farms

Residential farms are properties where the house is of primary importance, with the land used mostly to provide privacy and enjoyment. The ability to earn money from the land is of secondary importance. Sometimes ‘too much’ land (over, say, 20 acres) can be a negative, as potential buyers for this sort of property feel they do not have enough knowledge, skill or time to deal with a large land block. Here are the key criteria that will attract a residential farm buyer:

The farmhouse: Often this is the key motivation in a purchase. Buyers often prefer a character property and are not put off by having to renovate or modernise such a property. 

Location: The farm needs to be easily accessible to key everyday services for the buyers, such as good schools, shops, gastro pubs, restaurants and easily-reached roads and rail connections. In general terms, many residential farms in the South West tick the boxes here, as they have the benefit of offering access to both the coast for water-based leisure activities such as surfing and yachting, as well as being close to moors and open countryside for riding and walking.

The land: This provides interest for would-be buyers, who may decide to use their acres in a variety of uses including agriculture, equestrianism, sporting or conservation. Most often however, buyers simply want the land to provide privacy and protection, often because they are relocating from much busier parts of the UK or abroad.

It should be noted, however, that a commercial farm can be turned into a residential farm, often by dividing it for sale into lots, while a residential farm can be turned into a commercial farm when the buyer owns neighbouring land. 

For more information or advice on buying or selling a residental or commercial farm, do not hesitate to contact Stags Farm Agency.

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