Buying Rural Property -issues to consider
The rural property market is buoyant at present. Many people have opened their eyes to the benefits of living in the countryside since the onset of the Covid-19 pandemic. We deal with rural property transactions on a daily basis whether that be a rural property with large grounds, farms, farmland or an estate. Where clients are looking at the purchase of a farm or rural property there are a number of factors to consider beyond those required for a residential purchase.
When we are first consulted about a potential purchase of a farm we discuss the property with the client and review the information we have to hand. Where the property is on the open market we are able to discuss the features of the property with the client based on the marketing material and that assists the client when deciding what price to offer. At that stage we would also discuss the Land and Buildings Transaction Tax (formerly stamp duty) position so that the client is fully aware of their potential tax liabilities for the purchase. We also discuss the funding of the purchase. In some larger high value transactions the lender will want to use their own solicitor to review the titles on their behalf. This adds an additional layer of complexity and cost to the process but is fairly standard practice. It is best to discuss all of these matters with your solicitor before making an offer to ensure there are no financial surprises when it comes to completing the purchase and paying over the price and associated costs.
Once an offer has been accepted by the seller in principle our next job is to review the title deeds for the property. This involves checking the current boundaries of the property against the seller’s ownership to ensure that the area of land occupied by the seller is actually owned by them. We would then highlight any issues to the client. This exercise also ensures registration of the purchasers title in the Land Register of Scotland is as smooth as possible.
Whilst examining the titles to the property we also check for any rights that currently benefit the property but are not actually included in the title deeds. For instance the farm may benefit from a right of access which is not included in the seller’s title but has been used by the seller throughout their ownership of the property.
When purchasing farms we always check with SGRPID for any existing environmental schemes affecting the property, and Scottish Forestry for ongoing obligations in relation to forestry planting etc. If there are any ongoing schemes they can be transferred to the purchaser to take on the maintenance obligations and receive any remaining grant payments.
Where the property is a farm or estate, the seller often owns Basic Payment Scheme entitlements being the rights to claim annual subsidies on the land. Although entitlements do not automatically go with the land, very often the seller will also sell them to the purchaser so that they can step into the seller’s shoes. We would usually work with the purchaser’s land agent to ensure that SGRPID are notified that the farm has changed hands and the entitlements are included in the purchase so as to ensure a smooth transition for the next scheme year.
Throughout the whole process of purchasing a rural property our aim is to ensure the client is fully aware of what they are taking on and that they acquire a title to their property which will be straight forward to sell on in the future should they choose to do so.
Ian Angus is an Associate Solicitor specialising in Land & Rural Business Law. He is based at our Inverurie Branch. To find out more about our rural property services visit https://www.raeburns.co.uk/services/commercial-law/land-rural-business/, or contact us at LandAndRuralBusinessEnquiries@raeburns.co.uk