Having been involved with buying three farms in the last 18 months, I feel I know a enough about farms and farm land to understand some of the pitfalls of buying rural farmland.
To avoid the pitfalls of buying rural land and what you need to know includes to make sure the land is in good condition with good drainage, to make sure the boundaries are clear and these match the legal title plans and that you have access to the farmland to a public highway for vehicles.
Before you buy any farmland check the condition of the soil and the drainage, as some farmland is not good for growing crops, nor is it any good for keeping livestock. Ask an expert farm specialist surveyor to survey the land before you buy the land.
2. Confirm the boundaries of the land
As with buying any plot of land, you need to check and confirm the boundaries of the land you are buying. This is about checking that the rural land you can see you are buying matches with the legal title plans held by Land Registry.
3. Ownership of boundaries surrounding the farmland
The cost of maintaining boundaries on farmland can be high, especially if you buy a large amount of land, which is why it’s important you confirm which boundaries will be your responsibility to maintain.
4. Are the fences or hedges in good order?
Depending on what the farmland is going to be used for will depend on how necessary good fencing is, for example, if the land is for grazing livestock good fences will be a requirement to keep the animals contained.
5. Registered or unregistered title of the farmland
Unregistered land isn’t a problem when buying the farmland, but it can take longer for the conveyancing process, and your solicitor will need to carry out a more detailed checks into the land and check any covenants or restrictions that may or may not exist.
Ideally, Land Registry will want a copy of the original title deeds to register the land, but if these are not available, then an insurance policy to cover any risk of a defective title can be taken out.
6. Access to the farmland
Farmland without access is next to useless and will be almost worthless, which is why it’s important to confirm the farmland you’re buying has access to a public highway. It is very important that the access allows vehicles to pass over it so that farming epiupment and vehicles have access to the land.
7. Planning use for farming use or otherwise
You need to make sure the farmland you intend to buy has the correct planning use in place for its intended use, be it for continued use a farmland or if you intend to change use to something else, like property development.
8. Overage on land designated as potential development land
Some land will have and overage clause (also known as a clawback clause) for the owner, or a previous owner, to clawback profit from an increase in value should planning permission be given for change of use to develop the land instead of keeping it as farmland.
9. Farm buildings use and occupation
Check whether the farmland has buildings and/or farmhouses on the land and whether any of these are currently occupied. If any have farming tenancies, and if they have farming tenants living in them, they have good security of tenure to stay.
10. Farming entitlements and subsidies
The current rules around farming entitlements and subsidies mean that the farmland needs to be farmed to obtain the entitlements. It is the owner of the land who will get the entitlements, which should be transferred with ownership, but often times the are paid for.
11. Public rights of way and public footpaths
Having recently had problems with a public right of way with local residents, this is something to be aware of. We were trying to move the foot path from going straight through the farmyard, which made the path better and this avoided any dangers associate with walking next to heavy plant and machinery.
But certain locals created havoc over the panned move for no good reason, and this took longer than planned and more costs to make the change. Never under estimate how locals don’t like change.
Is rural property a good investment?
Rural property is a good long term investment and in time will increase in value like and land or property does. But investing in rural land becomes an even better investment if you obtain planning permission to change the land into development land.
What to ask when buying acres?
When buying farmland by the acre, and on the basis you intend to use the land for farming, you need to ask about the quality of the land. Ask about what has been farmed on the land in the past few years, as this will affect what the land is used for going forward.
Does rural land appreciate?
As with all land and property rural land will appreciate in value over time, as there is only a finite amount of land, and more and more farmland is being built on for housing. Farmland is valued on a per acre basis and will be worth more and appreciate better if it’s quality farmland.
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Pitfalls Of Buying Rural Land: Buying From A Farmer
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Article written by Russell Bowyer who has been investing in property since purchasing his first commercial property in the 1990's for his own Chartered Accountancy business. But his first property investment project was to turn an old dilapidated restaurant into a large 5-bed home, which he purchased for £117,500 and sold for £450,000 (to see an "after" photo of the house before it was sold see here: About). Russell owns a number of investment properties, which includes houses, flats and HMO's. More recently he has turned his creative side to investing in property using lease options. His largest lease option deal to date was to acquire 12 properties worth over £2 million for just £12, which means he paid just £1 to acquire each property!
