Selling land can be a significant decision to make and various factors should be taken into consideration before proceeding. Whether you are a seasoned landowner or first-time seller, it is vital that you understand some general observations below to ensure a successful transaction: -
1. Reason for the Sale
There must be a clear reason for the sale (i.e to raise working capital / pay down an overdraft facility). If the sale is part of a growth plan / relocation strategy or you simply wish to reduce the size of an estate (perhaps one that might not benefit from APR), it is still important to run any presumptions / reasoning behind the intended sale past your solicitor to ensure your logic is sound.
2. Tax Implications
It is important to appreciate the sale will likely bring with it some tax liabilities, in particular, Capital Gains Tax (CGT). Prior to agreeing to sell any land, we would always recommend you speak with your accountant first to ensure you are aware of your Tax Liabilities arising from a proposed sale – and whether there is a way to mitigate these.
3. Understanding the Local Market and value of your Land
Make sure you have understood the Local Market to determine the demand for land and its likely value. We would always recommend you instruct a trusted land agent in that respect. There are a huge number of factors that will impact the value of the land, from who the neighbours are to the quality of the soil, access and services to proximity of amenities and development potential. Can the land be sold as a whole or in separate lots? All of this will require consideration and careful planning.
4. Legal Considerations
Before listing the field for sale, it would be sensible to instruct a solicitor to act on your behalf and ask them to pass a copy of your title to the Land Agent for any marketing purposes. It would be prudent to speak with your solicitor generally about the sale and ascertain whether there are any other considerations you may not have already considered – i.e how the land is to be split, key rights / reservations and other covenants. Boundary ownership, easements and other existing restrictions are other common discussions. There may be some common questions raised by potential buyers and it would be helpful for you to have answers to such questions immediately to hand.
5. Environmental Considerations
There may be some wider points to consider – for instance, is the land subject to any Environmental Stewardship Schemes / Woodland Grant Schemes? If so, do you require an indemnity from the buyer? Is there an extraction licence for any Borehole on site? If so, does this need assigning / apportioning? Are any becks subject to drainage rates from the IDB? Another key consideration when it comes to environmental matters is contamination – are you aware of any and how are any potential liabilities arising from the site to be dealt with?
6. Development potential (overage)
When selling land, the Local Plan (together with local authority’s planning policy) should be considered – is any development on the site likely in the future? If so, consideration should be given to clawback and whether this is worth imposing on a buyer - although this will bring with it added costs and implications (particularly SDLT considerations for any potential buyer).
7. Infrastructure and Access
If any surrounding land is to be retained, you should always make sure appropriate provisions are in place for infrastructure and access. This should be discussed carefully with your legal advisor and land agent – you do not want to be left with a landlocked field or land that no longer has development potential.
8. Negotiation and Sales Process
Take the time to understand how negotiations take place and don’t be left frustrated if your land has not found a buyer immediately. You should also take the time to understand the legal process (conveyance) and the likely timeframes involved.
For further information or a meeting to discuss the sale of your land, contact a member of our Agricultural Team – Bedale, Ripon or Thirsk. We would be delighted to meet with you and discuss your proposals further.