Valuations become much more tricky
WITH such diverse activity, but so little market evidence, farmland valuation is harder than ever, not least because it is all totally unprecedented, says consultant Peter Prag.
When conditions are so uncertain, valuations are likely to be even more crucial in making decisions, including whether to sell in the face of ongoing losses, whether a bank still has sufficient security and whether buyers can justify the price being paid.
It is no longer possible to categorise farms on the basis that certain types of property in particular locations will all command about the same price an acre.
Instead each case is likely to be determined by its particular features and by the nature of demand within that locality and sector of the market.
Particularly important is the level of interest from buyers and whether this would be for the whole or just parts of the property.
The principles of valuation remain unchanged – an assessment of all the relevant factors including lotting, planning, residential and sporting appeal, as well as the quality of the land and buildings – but the emphasis has changed.
Now it is often a case of establishing if a property has the potential to attract buyers in a particular area of the market. Those elements can now make the difference not just of a few £/acre, but of whether a farm is likely to sell at all at a realistic price in a reasonable time.
The full version of this article appeared in the latest issue of Farmland Market. For further information contact Louise Rose 0208-6524920.