With residential buyers extremely choosy and so many people looking for purely commercial farmland, judicious lotting is often the way to achieve the best result from a sale.
However, lotting of farms and estates is an art not a science, requiring understanding of both local and national markets.
Since the recession, the pool of lifestyle buyers in the market for a country estate is a small one for all but extremely rare gems.
These have the ideal balance of all the required components – they are very well situated in terms of privacy and setting but are within close proximity of major communication routes and fall inside 90 minutes travel time to London.
Instead, the rural asset of choice increasingly is large blocks of commercial farmland unencumbered by residential property or amenity assets.
Our UK Agricultural Land Market Survey highlights that over the past few years, there has been little change to the proportions of different types of buyer.
Farmers represent about half of all buyers. Non-farmers and lifestyle buyers, whose principal motive is other than income generation, account for another 40% and institutional and corporate buyers about one in 10 buyers.
The main change since the recession is the growth in the proportion of non-farmer and lifestyle buyers making their first farmland investment. This fact partly explains why, in many cases, estates that are offered for sale as a whole often have remained on the market after failing to find a buyer.
Astute sellers accept that it is often sensible to lot an estate or farm where a proportion of the value is tied up in the residential and non-core farming assets. This ensures the property is exposed to as wide a marketplace as possible.
There will be many buyers who are just interested in the principal house and its grounds but who are not in the market for 1,000 acres of farmland and certainly won’t pay a premium to own it.
Equally, there will be parties interested in the commercial farmland but not the residential element. These potential buyers will probably discount the residential element if the property is only offered for sale as a whole.
In other words, the sum of the parts can be greater than the whole and therefore workable lotting is paramount.
It is, however, extremely important not to lot a property too heavily as this can easily put off that one purchaser who could be interested in buying the whole but is put off by the prospect of having to buy too many lots, often in strong competition.
Lotting an estate or farm also helps potential buyers see the value in the property. Rather than being faced with working out how a multi-million pound guide price for the whole was reached, they are able to appraise the total value from that of the lots.
Also, lotting enables deals to be done. There will be parties who have funds available to buy the main house and the adjoining acres, but who don’t have the assets or indeed the motive to take on all of the farmland.
Neighbouring farmers often are very keen to buy the bare land to add to their existing holdings and achieve economies of scale.
Knowing whether there are neighbours in the market for more land plays a big part in how a property will be divided into lots.
Likewise, knowing the main house and its surrounding parkland is tailor-made for a potential buyer already on the agent’s books, all contributes to how the property is packaged up for sale.