Planning and Environmental

Practical tips for tenants planning to buy their farms 

Issues tenants need to be aware of when buying farms:-

Discount to vacant possession value

The discount a tenant should be able to secure below vacant possession (VP) value depends on several factors including age, type of tenancy, likelihood of succession and the landlord’s position.

A farm subject to a lifetime tenancy can typically make 60-70% of the VP value on the open market.  Conversely, if the farm is particularly attractive or the tenant is elderly and unlikely to have a successor, then the sale price could be 80% or more of the VP value.

To get a farm at 60% of VP the farmer would probably need to be in his forties and with children who at some stage may succeed them.

Where a current tenant is say 65 and succession is available, the discount will depend on whether a son or daughter looking to succeed is in a good position to do so.

Beware of restrictions

Some sales to tenants have clauses attached  -  for example a clawback in the case of the grant of planning permission for a use other than for agriculture or the land being sold for development.  It is better to agree a realistic VP value with a fair discount without such clauses included as they can cause problems for borrowing and resale.

Where there are such clauses, purchasers should ensure clarity and in particular check whether the clauses will be applied to planning permission for the owner’s own use i.e. solar panels or an extension to the farmhouse.

Dilapidations, Tenant Right, Fixtures, Improvements

Unless the farm is in a really poor state or the tenant has spent huge amounts on fertilizer and feedstuffs (the basis for tenant right) then very often it is agreed that one cancels the other.  Although in reality figures will rarely if ever be identical.

Tenant’s fixtures and improvements (buildings etc) are a different matter and should be accounted for in the valuation.

For more information on buying your tenanted farm please email or telephone 01691 659658


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