Scott Mitchell highlights the points you may encounter when either selling or buying less productive, or less convenient, parcels rural land.
At a couple of recent events which have been attended by Land Agents and Bank Managers from farming business teams, the conversation seems to have turned almost inevitably to the pressures agriculture is under on the one hand and the market for rural land on the other.
In late 2015 these pressures and financial circumstances seem to have reached the point where a number of farmers and landowners are considering paying down their debt by bringing to the market relatively small and perhaps less productive or convenient parcels of land.
Whether these predictions of an increased volume of such transactions will come to pass in 2016 remains to be seen but, in case you are contemplating a sale or looking to buy such a parcel of land – say 10 acres or so – there are some particular points from a conveyancing perspective which will need to be considered at the relevant time.
Generally speaking, these points (such as access to the land) may be in very sharp focus for a prospective purchaser but they are nonetheless important for the prospective vendor too.
Experience dictates that selling part of a larger holding in such a fashion requires thought to be given to the following, amongst other points:
- Who has title to the land (e.g. one of the partners in a family farming partnership) and what are the tax implications of selling this parcel – taxation advice would need to be sought from the farm’s accountants.
- Is there a good quality plan available, to scale and complying with the very particular requirements of the Land Registry? If not, then it will be necessary to have one drawn up by a Surveyor or other appropriately qualified person.
- How does the parcel of land to be sold relate to the main part of the holding? Is it entirely independent/’split off’ from that main farm?
- In the context of the taxation advice, what is the likely value to be realised from the sale? Will it meet the vendor’s objectives, if those are concerned with (primarily) reducing debt? Does the prospective purchaser in fact have ready funds available to them?
- Does the land have development potential, however remote? If so, should there be ‘overage’ provisions for an uplift on planning consent being obtained/implemented? If the case, what terms (duration, percentage of planning gain, et cetera) should be applied within the detailed overage provisions to be included in the conveyancing documentation?
- What rights (such as for access, water pipes, power cables et cetera) need to be granted to benefit the land being sold and on the other hand reserved, so as to continue to service the land which is retained by the vendor?
- What arrangements concerning new fences/hedges or the maintenance of existing boundary structures or ditches and/or for new gates may be required?
- What covenants will be required both on the part of the purchaser and the vendor e.g. not to cause the other a nuisance, providing that ‘normal’ farming operations shall not constitute a nuisance in any circumstances; not to obstruct a view by planting trees in a particular area; or to pay a fair proportion towards the upkeep of access tracks and so on.
Conclusions
The above are just a few of the points you may encounter in either selling or buying part of a larger holding of land and from which you will see there is likely to be a need for input from Accountants and Land Agents as well as Solicitors. In a rural context, there are often many other points to be considered aside from these ‘basic’ ones and preliminary enquiries may reveal other issues that need to be considered such as the existence in third party hands of mineral or sporting rights, historic activity which has left mining related or contamination issues and so on. The list is potentially substantial and goes beyond the scope of this present article but the key thing is to take early professional advice and which Stephens Scown LLP are very well placed to provide.
Scott Mitchell is a partner in the commercial property team based in St Austell. He is also a member of the rural services team and has over 20 years experience of dealing with commercial property and rural land of all kinds, both within Cornwall and further afield. He can be contacted on 01726 74433 or via e-mail cpsa@stephens-scown.co.uk.