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Why More for Less?

People are often surprised that small areas of land cost more to buy than larger parcels – pro rata that is. Right now, agricultural land that grows crops of wheat and barley might sell for £8,000 – £10,000 per acre; pasture land may go for a bit less. But, if you want to buy a one- or two-acre field or even a smallholding, you probably have to pay three times that rate. And if you want to add an even smaller strip to your garden, it could be ten times. So why do people pay more for less? Here are some reasons: 1. The landowner may need the encouragement of a good price to make him sell. He will be proud of his property; money may not be the sole motivator. The transaction needs to appeal to him and allow him to do something else as a result. He will feel no incentive to be better off if the terms are not attractive. 2. Small areas tend not to be bought to earn a living. Their purpose is often to provide leisure or space for a hobby (a pony for children, model aircraft flying) or for a cottage-industry (alpacas or specialist crops such as lavender). The buyer is likely to have other income to support these sorts of uses and price is can be influenced by affordability. 3. To enhance the family home; increase the size of the garden; protect the view and even to make up for lost garden space when a dwelling is to be extended. The price for more land is influenced by the calibre of the dwelling and the perceived ‘added value’ that the extra area may provide. 4. Simply, a ‘feelgood factor’! This has less to do with the practical use of the land but is more about an invisible value that the purchasers can personally feel and which gives them pleasure. People find that adding to their land holding is very positive and seems well worth the investment. 5. A desirable locality will lead to an inevitable uplift in value. Land in the New Forest for instance fetches a much higher price than, say, parts of Dorset. Even if two parcels of land are pretty similar in all other particulars, the New Forest land will command a significantly higher price. 6. Tax - is not an obvious cause for achieving a higher value but the seller may have a tax liability resulting from the transaction and will want the sale terms to compensate him for this; he will not want to feel ‘worse off’.

7. As with a larger area of land, the sale of a small parcel can give rise to other costs – all of which may be appropriate to be reflected in its sale price such as : erecting a new fence, installing a separate water supply, even perhaps reconfiguring access both onto the subject land and sometimes onto the seller’s retained land.

And, of course, as with any transaction,

you still need the essential formula of there

being both a willing buyer & a willing seller.

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