More private land sales in strong market

Private or “off market” sales are dominating the work of some land agents at a time when few farms are openly for sale.

The strength of the market means that many are doing more work as buying agents than as sellers of farms and land, often being required to approach the owners of farms that are not on the market.

Bidwells’ James Brooke and colleagues are working on the private purchase of five East Anglian farms totalling about 4500 acres.

“Private sales have always been there and at present represent a larger share of the work we are doing than open market work, but it’s hard to say whether overall the proportion of private work is increasing because the public market is so thin,” he said.

“Larger commercial farms tend to choose this route, especially where the vendor might continue to farm the land or occupy buildings for some time after the sale. This might not be a traditional sale-and-leaseback arrangement, but is more likely to be a contract farming agreement or farm business tenancy.”

Confidentiality for both buyer and seller was usually the biggest motivator in choosing the private route, said Alex Lawson of Savills. For vendors, it avoided general knowledge of the farm being for sale and endless public viewings. It could also save on marketing costs.

The negotiation process in a private sale could be less stressful and avoided uncertainty for family, tenants and employees, especially as the farm might not sell, in which case no one need know it was on the market, he said.

Over the past six years the proportion of private sales handled nationally by Savills ranged from 10% to 20% of total sales but represented 10-35% of acreage.

“There tend to be more private sales when the market is at its strongest. In a weaker market, the private sale may favour the buyer.

“In some cases, a private sale can achieve a higher price due to exclusivity – on the other hand, if you are not on the open market you could miss out. While not everyone who views may be a buyer, open marketing could increase the eventual sale price because new buyers are appearing all the time with funds from many sources.”

Private sales are roughly one-third seller driven and two-thirds buyer driven in Wiltshire, Dorset, Gloucestershire and Somerset where Richard Nocton of Woolley & Wallis sells farms. In a buoyant market where buyers could see there was a profit to be made, there were premium prices for exclusive access to a farm for sale, he said.

Private sales were often being used as a seasonal marketing exercise in Scotland to test the water in the run up to a public launch in spring, said Simon Brown of CKD Galbraith.

At Smiths Gore, Fochabers, Jamie Watson is seeing a slight increase in private activity in the north of Scotland as farmer sellers may be reluctant to expose a farm to the open market in case it does not sell. Scottish prices had softened in the face of resistance to last year’s high prices. Uncertainty about CAP reform had also affected the market.

However, the private sale route is not favoured in all markets or regions. Agent Halls covers Shropshire, Worcestershire, Herefordshire, Warwickshire and mid-Wales and chairman Peter Willcock prefers to test the market for the best price through the open market route.