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If you are the owner of a farm and have decided to sell it, you should learn about the potential hurdles that you might face due to tax complications, planning permission and other factors. Yet even with these additional issues, you could still manage to sell your farm for a profit and do so quickly, depending on the method that you ultimately select for trying to find a buyer.
- Making the decision to sell your farm
- How planning permission can affect the sale of a farm
- Tax implications of selling your farm
- Steps to make your farm more attractive to buyers
- Choosing the method of how to sell your farm
- Frequently asked questions about selling a farm
Making the decision to sell your farm
Owning a farm can be a great experience, providing you hopefully with a steady income from cultivating crops or growing livestock, along with a farmhouse to live in. And because of their rural setting, farms often have tremendous views of the surrounding countryside, with a pace of life that is considerably quieter than that of people who live in or around bustling cities.
Despite the perks of owning and living on a farm, there are many people in this situation who decide each year to sell their property, and there can be any number of reasons for this.
It’s possible that the owner might be experiencing financial difficulties tied to the ongoing challenges that some UK farmers are facing, and needs to sell the farm in order to resolve that situation and to prevent repossession of the property. Or the owner could have secured a new job elsewhere in the country and doesn’t want to keep the farm after they move. Yet another explanation may be that they simply find the work of having a farm has become too stressful. There’s no right or wrong reason for selling a farm, as it’s a very personal decision.
This guide discusses the possible hurdles, and options for finding a buyer, if you’re looking to sell an entire farm – this typically means the entire land, the farmhouse, and any barns or other external buildings. Compared to selling a conventional freehold or leasehold house or flat, there’s much more property to purchase, and farms apply to only certain types of buyers.
You’re unlikely to find a private buyer who just wants a house to live in and would be willing to also purchase land that might currently be in use for agriculture, along with any structures. But that doesn’t mean you won’t be able to find a buyer, whether it’s a person or a company.
It’s worthwhile to note that some farm owners do try to sell specific parts of their property, such as a farmhouse or part of the undeveloped land, whilst retaining ownership over everything else. Although that is a viable approach, the advice in the following sections is designed to help owners navigate through potential complications with selling all of the property of a farm.
How planning permission can affect the sale of a farm
Because of the often large size of farms, which usually include many acres of land in addition to a house and any barns or other exterior buildings, they can be popular with property developers who would like to use the land for constructing houses – and planning permission can affect their desire to buy your farm.
As the UK government’s website explains, property owners are required to seek planning permission if they want to construct something new on their land, make a major change to an existing building like a large-scale extension, or change the designated use of a specific building. Owners must approach their council’s local planning authority to formally apply for the planning permission they need.
It’s vital that anyone who needs planning permission obtains it, because it is unlawful to pursue a construction project otherwise – and they could face costly fines as a consequence.
When you’re ready to sell your farm, you might want to look into whether you can get planning permission for redeveloping structures on the land, including barns. Having this approval in place prior to sale might potentially make the farm appear more attractive to some buyers.
The precise cost of the planning permission process will vary from property to property, and will be affected by factors including the type of structure being developed, its size and more.
Tax implications of selling your farm
Unless your farm consists solely of a house and land and is not used for any commercial purposes, there are some tax issues to consider when trying to sell the property.
Should any part of the property be used for growing crops, raising cattle or other work that produces income for you, you will likely have to pay tax on some of that profit.
And if you sell your farm at a profit, you might be liable for paying Capital Gains Tax. This is a fee that the UK government imposes on the financial gain that you might make from the sale of the farm, and it applies to the profit that you earn, not the overall price of the farm.
Note that you typically won’t have to pay this tax in the event that your property sells at a loss, because there’s no profit to tax, but make sure to seek professional tax advice.
Farms are often held by the same families for several generations, and they are sometimes sold after someone dies. It’s possible that you might be liable for paying inheritance tax in the event that you need to formally inherit the property first before trying to sell it.
When you’re talking with potential buyers, you should also be informed about the various different types of tax relief that they might be able to utilise if they were to own the farm. If buyers know these details, it could increase their interest in making an offer on the property.
Steps to make your farm more attractive to buyers
Part of the process of seeking a buyer for your farm is to make it as attractive to buyers as possible, hopefully increasing the number of people or companies that might be interested in purchasing it. In the event that you get several offers at the same time, it can be a great way to increase the asking price, safe in the knowledge that someone will likely pay at that value.
But making your farm appear as enticing as possible to potential buyers will also require some time, effort and possibly money on your behalf, depending on which steps you take.
One simple way to enhance the value of your property is tidying the exterior and interior. For the inside of your farmhouse, you’ll want to remove unnecessary clutter from rooms in order to make them look larger, and take care of unsightly problems like chipped paint or torn carpets. Just a little work and money invested can help to increase the perceived value of your home.
And the same applies to the outside of the property, as you should ensure that the land surrounding the farm is in good condition. If your farmhouse has a garden, be sure to remove weeds and mow the grass, and fix any visible flaws with the property – this can be anything from missing roof tiles to broken windows and more. The potential benefit of attracting more buyers should help to offset the relatively small cost involved with doing this kind of work.
A more expensive and time-consuming approach to making your farm seem more valuable to buyers would be investing in a major construction project, which could include extending or renovating your farmhouse, converting a barn to another home, or other similar projects.
Whilst this can possibly generate more interest from builders and other property developers, it’s only feasible for owners who have the time and funds to launch such an effort – and that will exclude many farmers. The good news is that you can still sell your farm fast without doing this type of work, particularly if you contact a quick buyer like LDN Properties who can make a competitive and speedy offer for the farm without charging you any commission.
Choosing the method of how to sell your farm
Although press reports suggest that the UK is still enjoying relatively strong demand from buyers seeking all types of properties, including farms, one of the biggest factors that can affect the speed and profit of your sale is choosing the method of how you want to sell your farm.
Generally, you will have to make a selection between selling through an estate agent, trying your luck with an auction, selling on your own, or using a fast buyer like LDN Properties. As you’ll see throughout the rest of this section of the guide, each of the options have their own benefits, and some have specific disadvantages including taking many months at least.
When preparing to sell your property, you should write a budget that covers every possible aspect of the sale. Note down important factors such as how long you are prepared to wait to sell the farm, how much profit you would like to make, and whether you’re willing to pay any commission to a third party for finding a buyer for the property, or want a no-fee approach.
Compare all of this information against the pros and cons of the various approaches of selling, and see which of the different methods best matches with your specific wants and needs, as it’s a very personal decision and the right choice for one farm will be different from another farm.
Selling through an estate agent
A traditional way of selling a farm is contacting an estate agent, who will put together a listing that features photographs and a description of the entire property. They will promote this listing in local newspapers, their office and online, hoping to generate interest from buyers. Estate agents will organise viewings where prospective buyers will visit the farm in person, and they are also responsible for handling any serious offers that might be made on the property.
But there are some drawbacks of selling this way, not least the fact that many owners find viewings take up a lot of their free time and can also feel quite invasive of their privacy.
This is often a slow way to sell a farm – even though some properties might be lucky and sell within days or weeks, it’s far more likely that you’ll be waiting many months or even more than an entire year before you obtain a genuine offer from a buyer. That can be far too long for those owners who need to find a buyer for their farm in the shortest amount of time possible.
Estate agents will also make you pay commission for selling your property. The fee is taken out of the sale proceeds immediately, which in turn will reduce your net profit from selling. This can be a setback if your main goal within finding a buyer is maximising your profit.
Also, you might struggle to find an estate agent that has the necessary expertise to find buyers for your farm. Many companies could only know how to sell residential properties, and have zero experience with selling farms. If that’s the case, they may not know how to market your farm, and this could make it even harder to generate any interest from potential buyers. Always ask specific estate agents whether they have successfully sold any farms in the past.
You should be aware that some estate agents may tell you a very high and enticing price for selling your farm, even if they secretly understand that you’re only likely to get serious offers at a much lower price. This trick is designed to make you commit to selling your farm through that estate agent, so that they will be able to profit from the commission they’ll charge when it sells.
It’s relatively simple to shield yourself from falling for this routine. Start by asking multiple estate agents for free quotes on the possible sale price of your farm, and then look on property sales websites and write down the prices of farms similar to yours. Calculate the average of all these prices, and that number will be much closer to the realistic asking price for your property.
Trying your luck with an auction
Auctions require luck because there is no promise on the price at which your farm could sell, nor even if it will even attract a single buyer. You’ll pick a reserve price – the lowest value that you’re willing to sell the property – and people will place bids on it, increasing in price the more that are placed. Always opt for a reserve price that will produce a satisfactory sale price for your farm, even after you have subtracted whatever commission the auctioneer will charge you.
Auctioneers charge fees to cover the time and money they spend on the sale of your farm, which starts when they develop and advertise a listing for it, and hosting the auction and overseeing the completion of the sale. Remember that even if your farm gets just one bid at the reserve price, this is a binding legal agreement for you to sell the property to the bidder.
Much like some estate agents may have no knowledge of how to sell a farm, many auctioneers might not understand how to get buyers interested in your property. Check with individual companies whether they’ve sold farms in the past, and the price at which they have sold.
Selling through an auction will take at least several months, because there’s plenty of waiting time between when you first enter the farm for an auction and when the sale takes place. And if the property does sell, the buyer usually has about 28 days to do their required tasks for finalising the purchase of the farm. Some auctioneers will set shorter or longer deadlines for the buyer to finish their tasks, so you should query specific companies on their timelines.
Selling on your own
One way to avoid paying third parties fees is to sell the farm on your own, but this will require that you do all the work in advertising the property, scheduling viewings, and handling offers. This is a huge undertaking that will require a massive amount of money, time and effort, and it’s only recommended for those people with experience in selling properties – or that have a friend or family member with such expertise who might be willing to help you out for free.
Otherwise, this method isn’t suggested for most farm owners, because it can be far too stressful. It’s also perhaps the slowest way to sell your property, as you should be prepared to be waiting many months, and usually more than a full year, before you manage to find a buyer.
Anyone who wants to sell but doesn’t want to pay any fees for the process should instead consider contacting a quick property buyer. These companies are able to quickly buy farms at a competitive price and zero fees, and with none of the stress from selling on your own.
Using a fast buyer
Fast buyers like LDN Properties have the financial resources to make immediate quick and competitive offers for buying practically any type of freehold or leasehold property, regardless of its age, condition, shape or size, including farmhouses, farmland, barns and other structures.
They can buy properties speedily because they don’t need to wait many weeks or months to first get approved for a mortgage to cover the cost of the purchase, which reduces the average timeline to just a handful of short weeks, and that includes exchanging contracts and paying owners their proceeds. This can make using a fast buyer often the swiftest way to sell a farm, giving you a no-stress, zero-hassle and streamlined way to get a fair offer for the property.
And the trustworthy quick property buyers never charge owners any commission, which means that they get to keep the entire profit when selling.
Because many quick buyers also have plenty of experience with buying a wide variety of properties, they’re also often more likely to seriously consider purchasing a farm compared to trying to find buyers through an estate agent, auctioneer, or on your own. For example, the long list of purchases that LDN Properties has made or considered since launching in 2003 includes plots of land, vandalised homes, flats with cladding, houses with low Energy Performance Certificate ratings, property without gas safety certificates, properties where the owner has misplaced the title deeds, listed buildings, and more. LDN Properties also have the skill to consider specialist types of property – so if you’re looking to sell a wind turbine do get in touch.
You can also have greater peace of mind when trying to sell your farm to a fast buyer, if they belong to an organisation known as The Property Ombudsman (TPO). This independent entity crafts policies that aim to protect owners against possible scams in the quick buying industry, and all genuine TPO members must follow those rules, which gives you extra protection.
Thankfully, it is quick, simple and free to check whether a specific quick property buyer is a true member of TPO. Just visit the organisation’s website and click on the tab labelled “Find a Member” on the main page, and then type in the name of an individual fast buying company. If a quick buyer is genuinely registered with TPO, you will then be shown their membership details, but if they’re not part of the organisation then you won’t get any search results.
You should always be very wary of any quick property buyer that offers to buy your farm and claims to be a member of TPO but cannot prove their registration status, or that tells you outright that they refuse to join the organisation, as they could be fraudulent businesses. Instead, only sell your farm to fast buyers that can prove they are registered with TPO.
Top queries and answers about selling a farm
Property owners thinking of selling quickly typically have a few queries for us, ranging from the amoutn of repair work they should do before selling through to selling a property in a poor state of repair. Here are some of the top questions we’re asked about selling a farm:
Your top questions when selling a farm
There can be many factors that lead to the owner of a farm deciding to seek a buyer for it. For some people, the workload required to operate such an enterprise can become too much. Other owners could need to sell because they’re relocating to another part of the UK or overseas, or they have to find a buyer for financial reasons – farm sales can have many justifications.
When you sell a farm, you may be be liable for paying some Capital Gains Tax on some of the profit from the sale, which in turn could reduce your net proceeds from selling. However, you might also be able to take advantage of some types of tax relief that might lower the amount of money that you’ll have to pay the UK government after the successful sale of your farm. Be sure to obtain professional tax advice.
The timeline for selling your farm will depend on how you choose to find a buyer. Trying to sell the property on your own can take a year or more, and will be very stressful. Using an estate agent or auctioneer to sell the farm will take on average at least a few months. But fast buyers like LDN Properties could complete the purchase of your property in just a few short weeks.
You won’t necessarily have to pay any fees for the sale of your property, if you choose an option that doesn’t charge commission, such as trustworthy fast buyers who never charge owners when purchasing their properties. However, if you sell through an auction or estate agent, they’ll make you pay fees that will be deducted from the sale proceeds.
Planning permission gives someone the ability to build new structures on a farm, or convert existing buildings like barns into homes. Obtaining planning permission from the local planning authority might make your farm more enticing to some property developers who could be considering buying it, but it can be an expensive and time-consuming process to go through.
It depends on whether you make a profit from the sale of the property, because Capital Gains Tax does not apply in those situations where an asset like a farm is sold at a loss compared to the original price paid for it. However, if you make a profit on the sale above the initial price, it’s possible that you will be liable for paying Capital Gains Tax on the gain that you make. Be sure to obtain professional tax advice when the time comes.
To give farm owners extra peace of mind when selling their property, LDN Properties and other legitimate quick buyers are registered with The Property Ombudsman (TPO), which is a third party entity that writes regulations to protect people against scams in the fast buying sector. All TPO members must comply with those rules, which should help to put owners at ease.
