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When is the sum of the parts greater than the whole?

Thu 20 April 2017

Of the 15 farms brought to the market in Devon by Stags Farm Agency in 2016, 11 (or 73%) were offered for sale (although not necessarily sold) in lots.

Andrew Dodds, MRICS is frequently asked why so many farms are divided into smaller sections, often with the subtext that to do so goes against the grain. Lotting can undoubtedly be an emotive issue, but one that Stags have been advising clients on for decades in a calm and objective manner. The issue boils down to what is usually our main objective when being asked to handle the sale of rural property: to achieve the maximum possible sale price.

When a farm has been in the same family for multiple generations, it is never an enjoyable prospect to contemplate the division of a farm into lots, but the fact remains that in doing so we immediately widen the appeal of the property. This allows us to target not only buyers that are looking to purchase whole farms, but also residential house buyers who are looking for a dwelling with a few acres, as well as those searching for bare land to add to their existing holding or indeed as an investment. This creates competition between the different types of purchaser, which in turn can help achieve the best possible prices as well as speed up the whole sale process.

Often a house buyer will not want the responsibility of 100 acres with a dwelling, as in reality they require only 5 or 10 acres for privacy. The additional land not only increases the purchase price and therefore their monthly mortgage payment, but also brings the headache of how to manage such a large acreage. Meanwhile, a farming business may not want a house absorbing a large capital sum that could otherwise be spent on land that fits into their existing business.

In the area Andrew covers for Stags, examples of farms and large land blocks being sold in lots include Lower Newton in Zeal Monachorum at the heart of Mid Devon. Extending to 178 acres, and having been in the same family’s hands for more than 50 years, the farm was divided into four lots, with the agriculturally tied bungalow sold to a young local family, with the land and buildings going to two neighbouring farmers. South Week, near Chulmleigh was lotted into two, with the stunning house sold in December to buyers from out of the region. Large land blocks have also benefitted from being broken down into smaller parts. 100 acres of land at Higher Millallers, near Coldridge was offered for sale in four lots and ended up selling to two separate buyers, one a local farmer and the other an investment buyer.

It should be noted that not every farm is suitable for lotting. If there is no demand for land in the local area, or if road access is not suitable, offering a farm for sale as a whole may achieve the best outcome for the vendor. This is where Stags’ expertise in the local market comes into play, and where our knowledge of buyers in any given locality helps us to offer the best advice.

Examples of farms which were only offered for sale as a whole in 2016 include Higher Moor Farm, Morebath, which was sold to a purchaser from the Home Counties and Little Dart Raffe, Witheridge which was sold to a local organic dairy farmer who purchased the farm to expand his existing business.

In terms of an annual update for the area, in 2016 more farms were sold by Stags than the previous year (both in numbers and acreage) but marginally fewer acres of land changed hands. The total value of farms and land sold was within 0.6% of the 2015 figure, although this figure belies the fact that average land prices across the whole of Devon rose 3% on 2015, offering  some stability in what was undoubtedly an unpredictable year.

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