The pandemic and rural property market
In the middle of a global pandemic the drivers for change in rural businesses have, perhaps unsurprisingly, stayed the same: death, divorce and debt, as well as succession planning.
But what about the rural property market?
While there was no property launch week at the Royal Highland Show this year, so visibility hasn’t been as high as normal, the rural market has been very strong.
In spite of the reduced social interaction at the usual in-person agricultural events, private, off-market, property transactions appear to be on the up.
Often neighbours consolidate their holdings at any available opportunity. The pressure on the agricultural industry being driven by the post Brexit market and, as ever, the vagaries of the weather and complexity of the supply chain.
In fact, the Registers of Scotland Property Market Report 2020-21 said accessible rural areas saw the largest rise in the volume of residential property sales compared with the previous year, increasing by 2.5 per cent.
It added these areas also saw the largest rise in the average residential property price over the latest year. That matches our experience as lifestyle purchasers seek rural retreats in growing numbers as the option of remote or hybrid working remains with us.
Supply v demand
Demand continues to outstrip supply — as ever with overseas investors also prevalent.
Agricultural and forestry land are traditionally seen as safe investments — not least because of their resilience to negative external factors on property prices, but also because of favourable inheritance tax treatment.
Other contributing factors are investor incentives driven by climate change and the net zero challenge, with both planting land and established forests attracting increased interest from natural capital purchasers, individuals and organisations keen to offset their carbon usage and meet net zero targets.
Differences in buying and selling rural property
While the mechanics of these transactions may seem similar to buying and selling urban residential or commercial property — there are pitfalls to be aware of.
For buyers, these can include boundary issues, private water supplies, sewerage, access, planning and any potential clawback arrangements or pre-emptive rights which may be retained. That, along with determining the best structure and set-up for the business with a keen eye on future succession planning, means specialist advice is essential.
Expert guidance is also recommended to help access fast changing agricultural and forestry grant requirements.
Buyers may also need to speak to a specialist lender. Unexpected issues can arise when purchasing rural homes with a few acres where a traditional residential lender may not be able to provide funding.
As a potential seller, it is worth seeking specialist advice from professionals to ensure the deals struck are the best for all.
It’s important too for the seller’s solicitor to work with land agents from the beginning to prepare a comprehensive sales pack to avoid unexpected issues down the line.
Rural land and property remain a smart investment, but it remains to be seen how things play out and plenty for both purchasers and sellers to consider in these transactions.
A version of this article appeared in The Courier in August.