Farm sales: when to divide and conquer and when to sell as a whole
Andrew Dodds of Stags Farm Agency discusses the pros and cons when it comes to dividing farms into smaller lots and selling as a whole.
Of the farms brought to the market in Devon by Stags Farm Agency so far this year, approximately 70% were offered for sale both in lots and as a whole. However, interestingly 58% of the farms offered for sale this year have been sold or sale agreed as a whole whereas in previous years the majority would have been sold in lots.
We are frequently asked why so many farms are divided into smaller sections. Lotting can undoubtedly be an emotive issue, but one that Stags has been advising clients on for decades. The issue boils down to what is usually our main objective when asked to handle the sale of rural property: to achieve the maximum possible sale price.
When to divide into lots
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 looking to purchase whole farms, but also residential house buyers who are looking for a dwelling with a few acres, plus 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 five or 10 acres for privacy. The additional land not only increases the purchase price and therefore the amount being borrowed, 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 2019, examples of farms for which the farmhouse has been sold separately to the farmland include Toatley Farm near Chawleigh in the Taw Valley (above), which was sold with 11 acres, Tottiskay Farm near Southleigh in East Devon (below), which was sold with 9.5 acres and a farm within Exmoor National Park, which we discreetly marketed before selling the farmhouse and barns with seven acres.
When to sell as a whole
It should be noted that not every farm is suitable for lotting. If there is low 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 seller. 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.
Holwell Farm near Tavistock (113 acres), Tremlett Farm near Wellington (118 acres) and Sholford Farm near Huish Champflower (73 acres) have all been sold by Stags this year as whole farms. We have also agreed sales on some more commercial-sized farms as a whole, ranging from 75 acres up to 290 acres.
No farm is exactly the same as the next and when advising on a potential farm sale we always consider whether lotting is likely to add value to the final sale price, but sometimes selling as a whole is indeed the best option.
For more information or to discuss the sale of your farm, contact Stags Farm Agency today.