Rented land - sale value?

King Rollo

Member

Location

Strathclyde

• Oct 11, 2017

• #1

I have a small area of ground which I have rented out for a
number of years. This land has been used to run a business
on, not for agricultural purposes.

The tenant has asked me about the possibility of purchasing
the land. I'm wondering if there is a rule of thumb or
suchlike for how many years rental value the sale price
should be based on.

I know there is no 'correct answer' to the question of land
value, but it would be good to have a starting point for
negotiations.



Any ideas?

 

chipchap

Member

Mixed Farmer

Location

South Shropshire

• Oct 11, 2017

• #2

Ask the guy to put a figure on the table; he has approached you after all.

 

King Rollo

Member

Location

Strathclyde

• Oct 11, 2017

• #3

Sure I'll do that, but that will be his figure - I need to know what my figure will be. I expect his figure will be lower...

 

Goweresque

Member

Location

North Wilts

• Oct 11, 2017

• #4

Unless you need the money for something else, I wouldn't sell it for less than the market price without a tenant, even if he has security of tenure of some kind (which he may not, as its not an agricultural business). Small plots of land are valuable, there's always a decent trade in them, and will continue to be as the population expands and gets wealthier over time. Unless you have another surefire investment lined up that would bring in more income than the rent on this bit does, keep hold of it. Money in the bank gets you SFA these days.

 

S

SRRC

Member

Location

West Somerset

• Oct 11, 2017

• #5

No rule of thumb, just by negotiation.

 

quattro

Member

Location

scotland

• Oct 11, 2017

• #6

Be better asking what he thinks it's worth
Might surprise you!!

 

nick...

Member

Arable Farmer

Location

south norfolk

• Oct 11, 2017

• #7

It's worth less tenanted than it would be without a tenant.
Nick...

 

Goweresque

Member

Location

North Wilts

• Oct 11, 2017

• #8

nick... said:

It's worth less tenanted than it would be without a tenant.
Nick...

Click to expand...

If you're the person proposing selling yes, but the OP is being asked to sell, thats a different position.

 

Courier

Member

Location

M62 - M1 - M18 triangle

• Oct 11, 2017

• #9

Depends so much whether or not the tenancy is from year to year or something more permanent.

Test the market by putting up a For Sale sign and your telephone number.

Not unusual for sale value to be 200 to 400 years (or more) rent but they are in completely different markets.

A full blown Ag. Tenancy will reduce the land's value by 2/3.

 

chipchap

Member

Mixed Farmer

Location

South Shropshire

• Oct 12, 2017

• #10

King Rollo said:

Sure I'll do that, but that will be his figure - I need to know what my figure will be. I expect his figure will be lower...

Click to expand...

So, you're going to ask him his figure, and what ever it is will not be enough?

 

Nearly

Member

Location

North of York

• Oct 12, 2017

• #11

chipchap said:

So, you're going to ask him his figure, and what ever it is will not be enough?

Click to expand...

It's business.

Garden £100k an acre
Tree surgeon yard same.

Price up a quality carpet per m2 and you'll be longer wearing a meter of land out.

 

Danllan

Member

Location

Sir Gar / Carms

• Oct 12, 2017

• #12

Nearly said:

It's business.

Garden £100k an acre
Tree surgeon yard same.

Price up a quality carpet per m2 and you'll be longer wearing a meter of land out.

Click to expand...

Even at just £10 per square meter it would be over £40k; take a squint at the John Lewis website and start planning your retirement...

 

Nearly

Member

Location

North of York

• Oct 12, 2017

• #13

Danllan said:

Even at just £10 per square meter it would be over £40k; take a squint at the John Lewis website and start planning your retirement...

Click to expand...

Already working on it.
That's my favourite line to justify my asking price to householders.

 

Lazy Sod

Member

Location

Warminster Wiltshire

• Oct 13, 2017

• #14

Don't forget Capital Gains Tax.

 

King Rollo

Member

Location

Strathclyde

• Oct 13, 2017

• #15

King Rollo said:

Sure I'll do that, but that will be his figure - I need to know what my figure will be. I expect his figure will be lower...

Click to expand...

chipchap said:

So, you're going to ask him his figure, and what ever it is will not be enough?

Click to expand...

I had my tongue in my cheek typing that...

Thanks for the replies.

 

Dry Rot

Member

Livestock Farmer

Location

Scottish Highlands

• Oct 14, 2017

• #16

King Rollo said:

I have a small area of ground which I have rented out for a
number of years. This land has been used to run a business
on, not for agricultural purposes.

The tenant has asked me about the possibility of purchasing
the land. I'm wondering if there is a rule of thumb or
suchlike for how many years rental value the sale price
should be based on.

I know there is no 'correct answer' to the question of land
value, but it would be good to have a starting point for
negotiations.



Any ideas?

Click to expand...

An idea, but it won't be accurate!

https://investmentproperty.co.uk/property-investment-calculators/years-purchase-single-rate/