Selling land with tenant.

[Del and Raquel]

Morning, Some years ago I inherited from my Aunt approx 75 acres with a tenant on an aha tenancy. Whilst the rent has been a welcome addition to my income my own children are of an age and are looking to buy their first property.
I am thinking of selling the land to help them a footing on the property ladder and wondered if now would be a good/bad time to sell. I am not sure who would purchase this land apart from maybe the tenant.
Although I am not a farmer I am well aware this would not achieve the price of vacant land but I would like my children to benefit now when they need it and not when I am dead and gone.
I will speak with an agent but would like thoughts/advice on this beforehand.
Thank you for reading.

 

[Frank-the-Wool]

You do not say where you are or what the land is used for.
Make sure you use a local agricultural agent.

Might be best once you have a value to talk to the tenant as they may be the best buyer!

 

[Badshot]

They might vacate for a lump sum.

 

[Del and Raquel]

You do not say where you are or what the land is used for.
Make sure you use a local agricultural agent.

Might be best once you have a value to talk to the tenant as they may be the best buyer!

The land is used for grass and on the Leics/Northants border, apologies I forgot to add.

 

[PSQ]

Is the current rent at the market rate, or has the rent been at the same rate for decades?

I would have a chat with a good land agent before making any rushed decisions.

 

[chipchap]

Chances are you will have some capital gains tax to pay. Bear in mind that should your kids sell fairly soon after your death this will be avoided. However bear in mind you will not be able to pick your time to sell quite so easily.

 

[D.S.S18]

you'll regret it once its gone!
chat with someone in the know, could you do a rent review?
use the rent to pay / support a deposit?

when I was looking for a house, I was told to get on with raising the money myself with no support from my parents - my dad said i'd appreciate it in later life, sitting in a house i'd worked hard for.

 

[pine_guy]

I'm no expert, but would definitely look into the tax implications of selling. Thinking aloud, you might be better off mortgaging the farm and using that money to help your kids. It might be possible to get a good rate against the farm compared to your children with a small deposit on a house? As I said, just thinking aloud so just ideas..

 

[Exfarmer]

A good local agent is your man, speak first about options. He should know if the piece of land is worth a fortune sold to a neighbour.
Their are often people with money who would love to buy land close at hand, it will not be publicised but the agents will know.
This piece of land could make up to 20+ K per acre to the right buyer. However in the wrong location it may be nearer £5K this is with or without tenant. Your tenant may unfortunately know a lot about the local land market too!
I am sure a good agent will give you the benefit of his advice for free in the first instance.
If you use a local solicitor , they may have ideas too.

 

[Forever Fendt]

If you do sell it stick a development clause on it especially if it is to the tenant as he will be expecting a big discount so may offer less resistance to a clause ,Whats the tenants situation,if he is 80 and no successors sit it out and see what happens

 

[glasshouse]

Morning, Some years ago I inherited from my Aunt approx 75 acres with a tenant on an aha tenancy. Whilst the rent has been a welcome addition to my income my own children are of an age and are looking to buy their first property.
I am thinking of selling the land to help them a footing on the property ladder and wondered if now would be a good/bad time to sell. I am not sure who would purchase this land apart from maybe the tenant.
Although I am not a farmer I am well aware this would not achieve the price of vacant land but I would like my children to benefit now when they need it and not when I am dead and gone.
I will speak with an agent but would like thoughts/advice on this beforehand.
Thank you for reading.

Offer it to the tenant at £4k per acre

 

[wasted years]

Use the property as guarantee to a house loan, low interest rate loan will be the result , you get to keep the land and income, next generation get help to buy.
Easy.

 

[Del and Raquel]

Thank you for your responses. The rent is at market value and is collected via agent. The tenant is late fifties, with two sons, so I assume they will want to carry on the tenancy. This is one of the reasons I think it would be better off sold, it could continue for many years and generations, with multiple beneficiaries who may not agree and a cause of ill feeling between them. I am not about to do anything too hasty though and will talk it through with my accountant and agent. I just wanted a few other opinions so I am not too naive in dealing with this. .
Glasshouse would you say £4000 per acre is about right, do you have experience of this sort of land valuation? Am I correct in thinking it will be less than half than freehold land.
I am trying to think in reverse and if I was the tenant and my sons inherited the tenancy, why would they want to buy and outlay their capital or borrow the capital? If this was the case would there be anyone else who would buy?
I'm also thinking about Brexit and will this affect the land rental value if I don't sell or the sale value if I do?
I'm not too keen on borrowing against it I paid my own mortgage off recently and like being in this position.
My three children are hard working and ambitious and have no idea of what I'd like to do for them yet. I'd sooner be around to see them enjoy it now when they could do with the help and starting families of their own rather than when I've kicked the bucket.

 

[glasshouse]

Thank you for your responses. The rent is at market value and is collected via agent. The tenant is late fifties, with two sons, so I assume they will want to carry on the tenancy. This is one of the reasons I think it would be better off sold, it could continue for many years and generations, with multiple beneficiaries who may not agree and a cause of ill feeling between them. I am not about to do anything too hasty though and will talk it through with my accountant and agent. I just wanted a few other opinions so I am not too naive in dealing with this. .
Glasshouse would you say £4000 per acre is about right, do you have experience of this sort of land valuation? Am I correct in thinking it will be less than half than freehold land.
I am trying to think in reverse and if I was the tenant and my sons inherited the tenancy, why would they want to buy and outlay their capital or borrow the capital? If this was the case would there be anyone else who would buy?
I'm also thinking about Brexit and will this affect the land rental value if I don't sell or the sale value if I do?
I'm not too keen on borrowing against it I paid my own mortgage off recently and like being in this position.
My three children are hard working and ambitious and have no idea of what I'd like to do for them yet. I'd sooner be around to see them enjoy it now when they could do with the help and starting families of their own rather than when I've kicked the bucket.

You said it was grazing land, so not arable. i dont know where you are, but if grazing land is £6k per acre, £4k is a good deal for you.
tenant might beat you down to £3.5

 

[Del and Raquel]

You said it was grazing land, so not arable. i dont know where you are, but if grazing land is £6k per acre, £4k is a good deal for you.
tenant might beat you down to £3.5

Thank you, that puts it into perspective.

 

[glasshouse]

Grazing land varies from £1k to £8k by the way, as a rough stab in the dark.

 

[Exfarmer]

I think you should speak to your children before you make a final decision, although I agree totally with the idea that, a lump sum to them now is a lot better than a figure some time in the future when they may not need it.
A big deposit yo buy a house will ensure a far lower mortgage interest payments. However, there could be one fly in the ointment, if they split with a partner!
Without knowing anything of the land, it may be rush infested wetgrazing Worth very little, or it may be what agents used to describe as a hunting box, with the shooting rights a lot of new money would give their right arms for it, next door.
The figure of £4,000 sounds reasonable, but if the tenant sells it on, a year down the line for £20k to a neighbour, will leave you feeling a bit sick.
Do check out the market!

 

[Goweresque]

Another bit of info to stick in the pot is Brexit and the likely removal of the current subsidy system post 2022(ish). This is going to have a significant impact on farming businesses, how it affects a AHA tenancy I don't know. It could be the tenant has to give up the land at some point voluntarily because he can't afford the rent, equally it could be that he can get the rent reviewed downwards and the land becomes worth even less. But another point to consider (and maybe ask advice from a professional on).

 

[7610 super q]

Professional advice, PDQ. You may find you've inherited a millstone rather than an asset.

 

[franklin]

The gap between AHA land and vacant land is not as large in % terms as it has been say ten years ago. There is a lot more AHA land coming to the market than in other years. It is a good time to sell, unless you can see the tenancy ending in your lifetime.