Business Clinic: What will it cost to sell our farm and buy another?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s experts can help.

Andrew Chandler, head of rural agency at Carter Jonas, advises on the likely cost associated with selling one farm and buying another

See also: Business Clinic: Is phone mast land lease renewal offer too low?

Q: What would be the costs involved in selling an 80ha farm and buying a similar holding elsewhere in England?

A: Selling agents’ fees vary depending on several factors, including the nature and extent of the sale, work involved and anticipated time incurred, as well as the basis of the instruction.

Typically, fees are a range of between 1% and 3% of the sale price, with the lower end being a straightforward sale with perhaps a local agent.

A national agent, particularly one with a range of expertise, could be up to 2% for a more complex transaction.

This higher commission will get you access to a national or international network of buyers and buying agents, other experts, and more comprehensive marketing tools and exposure.

Fees should only hit 3% if you decide to appoint joint agents, where they will share the fee and work in collaboration.

Even within firms, fees will vary, essentially based on how much work will be involved in selling.

This in part depends on the overall value of the property, but if the agent is to do all the viewing, if the holding has complex lotting, extensive buildings, planning consents and so on, the agent will charge a higher fee.

The job of the agent is not just to find a buyer, but to make sure that the purchase gets over the line, and all of these variables will make that more time-consuming.

Typically, the fee to you is invoiced on exchange, but is often payable on completion when funds are available.

When instructing an agent, make sure that you are choosing a seasoned operator, who has a good profile in your area, and access to the right buyers and buying agents for your property.

In addition to the sale fee, most farm agents will charge for expenses to cover Energy Performance Certificates, floorplans, photos, brochures, sale plans and – depending on the seller’s appetite and the agent’s advice – advertising.

For your 200-acre farm, I’d expect that to be in the region of around £5,000 including advertising, but would be higher if you have lots of farm buildings or cottages.

These costs would normally be incurred up front, and therefore payable regardless of sale success, but many agents won’t expect the bill to be settled until the sale has completed.

You also need to consider costs for other professionals – for example solicitors’ fees or tax advice.

Depending on how quickly you want to sell, you could investigate adding value by exploring opportunities for development or renewables.

It would be worthwhile regularising any planning or change of use issues, to reduce complications further down the line.

Regarding purchase, it is down to the individual as to whether they use a buying agent to find a property and negotiate on their behalf.

This can be a substantial cost, but it’s a popular solution and may also give access to parts of the market that are not (yet) widely publicised.

Fees for this are normally charged on a consultancy or retainer basis, plus a percentage of a successful purchase.

Similar to selling, it is very varied depending on asset type, clients’ needs and sourcing of purchase.

Generally for a discreet, off market sourced purchase it will be between 2-3% for the complete solution. Fees will be lower for a more bespoke or stripped-back route.

An ad hoc or consultancy charge may be hourly, a retainer will be a bulk fee for an assumed number of hours worked in a month.

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