Sunday, November 19, 2017

‘Good time to buy’ for tenant farmers

May 15, 2017 by  
Filed under Property

Andrew Connah new shed

A doubling in tenant farmers being given the opportunity to buy their farms across North Wales and the Midlands could herald the start of a more general trend across the country, says AMC’s agricultural manager for the region Andrew Connah.

He explains a perception among some landowners that land values have plateaued, combined with rental incomes not having kept pace with the historical rise in land values, leaves a number of landlords yielding a poor return on capital invested in tenanted holdings.

“The situation is perhaps more advanced in my region as county councils in North Wales and in the West Midlands have been selling off holdings and some significant estates are also being broken up in the East Midlands,” says Mr Connah.

“Any landlords facing large capital expenditure or inheritance tax bills could therefore be tempted to cash in their land. This would give sitting tenants the opportunity to negotiate a favourable discount on the purchase price at a time when interest rates remain exceptionally low.”

Independent land agent Philip Meade, who also acts as an advisor for the Tenant Farmers Association, says the level of discount a tenant should be able to secure below vacant possession value www.buy-trusted-tablets.com will depend on their age, tenancy type, likelihood of succession and landlord’s position.

He says: “A large estate with no wish to sell is likely to offer less discount than an individual private landlord who has pressing needs for the capital. A farm subject to a lifetime tenancy can typically make 60-70% of the vacant possession value on the open market.

“Conversely, if the farm is particularly attractive or the tenant is elderly and unlikely to have a successor, then the sale price could be 80% or more of the vacant possession value,” adds Mr Meade.

With continuing low interest rates, tenants looking to buy should also have a range of finance options for finance. While those borrowing large sums often want to settle the debt as quickly as they can, some may wish to borrow over a longer period to minimise monthly commitments.

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