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Advice on what not to do when selling land

What are the very good reasons why buyers often don’t proceed with purchases of land?

When it comes to selling land, farmers and landowners who are considering entering the marketplace need to plan in advance and take note of the challenges and obstacles which they might meet along the way.

Here Tracey Jackson, Associate Director and Chartered Surveyor at H&H Land & Estates, outlines some of the less obvious issues that selling land and property often reveals.

For anyone selling land which they may think has ‘potential’, you first need to check that there are no pre-existent Occupancy Restrictions, Overages or Restrictive Covenants. An overage clause is the means through which a seller may be entitled to receive further monies after completion. For example, this might apply to farmland which is later sold off for housing. If the buyer then gains planning permission for a residential development, a subsequent seller may find an earlier owner wanting up to 75% of the uplift in value. If the purchase was based on redevelopment potential, the buyer would rightfully be reluctant to progress any further as most of the profit gained from the permission and efforts of subsequent building would go straight to the previous owner. 

The overage should be tight enough to realise value in the event of a change of use but not a disincentive to start with. Here at H&H Land & Estates, we often see buyers put off by sellers trying to impose their own hefty overage restrictions. It’s a better bet to make the overage fair for both parties, thereby encouraging a good sales price and the incentive for the buyer to actually trigger the overage.

We are coming across more and more confusing, and poorly drafted restrictive covenants and overage clauses. Sometimes buyers and their solicitors don’t understand them, as they were imposed when the current owner bought the farm, for instance, many decades ago.

Retention is another area that can cause problems, by the current or earlier seller, for example for commercial sporting arrangements on the land. Where the seller has no control over the person accessing the land to exercise their rights, the buyer may not be impressed. If they have been retained by a previous seller, generations ago, this can cause serious problems.

Some of the other issues that property sales turn up, with sometimes serious consequences include: -

  • Failure to provide detailed records about repairs or installations – for example the lost FENSA certification for new farmhouse windows which nearly cost a whole farm sale
  • Tenancy issues, where a house, or land does not have vacant possession.
  • Stewardship schemes which you are passing on, is restrictive
  • Verbal agreements with your neighbours which haven’t been documented
  • Method of sale isn’t right for the buyer
  • Where planning permission issues haven’t been satisfactorily sorted out
  • Any structural issues which surveys are likely to reveal

Now finally, a reminder of the obvious issues - though they are obvious it still doesn’t prevent them being overlooked! For the seller, setting too high a guide price. A buyer is less likely to show an interest, if the level is noticeably above current market values. The beauty is in the eye of the beholder so what you see in your farm is not necessarily the same as someone else.