Land and Farm Sales Update
The purchase and sale of agricultural property is an exciting and fast moving enterprise offered by George F. White which I am pleased to be involved in. It has, however, been an area of work which in the lead up to, and post EU Referendum, we were unsure of the level which it would be impacted upon – commodity prices seem to be remaining at a low level despite a weak pound and Brexit is still causing uncertainty in the market place.
One of the big unknowns in purchasing agricultural property in the current climate is the future of the Basic Payment Scheme (BPS) income. But on a positive note, banks and financial institutions are still willing to lend on a business forecast which shows continued BPS support over the coming years. This is promising and is coupled with the continued low levels of interest payable on borrowing thanks to the long term low on the Bank of England base rate.
Thanks to these factors, we are pleased to report that it does seem like it’s business as usual with land transactions and general business growth across the region. This is very encouraging for the industry and shows good testament to people wanting to crack on despite the on-going saga the politicians seem to have us in!
Interestingly, privately marketed land transactions seem to remain popular across the region. The thought process is that the seller benefits from reduced marketing expenses and personal intrusion to their home whilst the purchaser is able to get their foot in the door from an early stage and complete on the deal without any turbulence from additional competition.
We expect to see continued movement within the land and property sector, whether it be as a result of retirement, dispute or cashflow pressure. I think that this is something that we are going to see increase within the industry with struggling businesses in need of a cash injection.
In terms of the larger scale land transactions, the market seems to be sustained as a result of the attractive tax benefits currently offered to investors, whereby the payment of capital gains tax can be offset against the purchase of a new qualifying investment.
Whether this is an area of tax likely to receive scrutiny going forward is yet to be seen – perhaps it would be prudent to assume a change for the worse.
Whilst making these business decisions, we feel it’s always important to understand what the exit strategy is going to be if something does go wrong. Stress testing the various ‘what if’ scenarios is something which is often overlooked in the run up to making a deal.
If you would like any advice regarding your property or agricultural business please speak to your regional contact:
Countryside Stewardship Scheme: Simplified Options