Growing Capital Value in Land
Published April 2011
With commodity prices near their peak again more people are considering purchasing some of the neighbouring farm but need to keep the bank on side. In assessing the value in this many factors are considered. One important factor is gaining additional titles and also the ability to dispose of land that is unwanted. Additional titles offer major flexibility to the land owner, including immediately freeing up some capital.
We work with both purchasers and vendors to make things more financially attractive in the long term. Most farmers clearly see the advantages once we show them how council rules allow them to create additional titles and then move them around. The opportunities are often hidden in the fine print or interpretation of the policies.
When purchasing the entire neighbouring farm you often end up with two houses. Selling one can provide much needed surplus funds to pay the solicitor, and perhaps wipe 20% off the mortgage right away. Even if you require the additional house you should consider taking advantage of the situation and creating a separate title around one house, because the flexibility will pay big dividends later. More appropriate worker accommodation can often be built later on the farm.
If you're buying part of the neighbour it pays to request a separate title rather than just amalgamate it with your existing title. That way you have the flexibility to sell it again or use that title somewhere else to increase your equity. In some districts you can sell titles to someone else without even losing the land! Titles are money - so my advice is to never, never give them up if you don't have to.
These days most District Councils are moving to restrict the number of rural titles created. If you are watching the proposed rule changes in your area you will know what I mean. Under these changes farmers will lose the flexibility needed to run a business in an ever changing global economy. I believe that we can strike a balance - retaining this flexibility and protecting the highly productive land for future generations.
In this changing climate, with future subdivisions opportunities set to become limited, we are working with landowners to set up titles for the long term whilst they still can. For further advice on securing consent for those titles or subdivision you should immediately contact a professional surveying company very familiar with the evolving subdivision rules.Information contained in these articles is not intended to replace professional advice.
Contact Surveying Services for case specific advice.
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