Wealthy individuals and lifestyle buyers push down proportion of land being sold to farmers
PUBLISHED: 06:19 17 February 2019
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An increasing volume of non-farmers are snapping up farmland, a survey suggests.
A Strutt & Parker study showed farmers accounted for less than half of all land purchases in 2018, with lifestyle buyers, investors and ‘high net worth’ individuals all getting in on the act.
“Farm profitability is only one of a number of factors that determine farmland prices, not least because farmers are not the only people who buy land. Our data confirms that over the past two years non-farmers have played an increasing role in the market,” said Strutt & Parker’s head of estate and farm agency Michael Fiddes.
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According to the Strutt & Parker Farmland Database, the average price of arable land in England rose by 2% in 2018 to £9,400/acre. This is down by £1,300/acre from its peak in the second quarter of 2015, but only a little below the five-year average. “The farmland market has proved more resilient than many might have predicted considering the Brexit-related uncertainties and practical challenges posed by the weather over the past 18 months,” said Mr Fiddes.
The Agriculture Bill, published in September, confirmed the government’s intention to phase out support payments over a seven-year period and much had been made of the negative impact this could have on land prices, he said.
But he added: “Land in the right location remains in considerable demand for capital investment for many non-farming reasons, including development potential, privacy, tax reasons, or amenity. For many of these investors, generating profits from farming is not their primary focus.”
Mr Fiddes says while this non-farmer demand continues to be strong, the percentage of land bought by existing farmers has decreased, creating a wide range of values achieved which are not immediately apparent from average prices. The price of arable land in England during 2018 ranged from a low of £4,575/acre to a high of £15,000/acre. Location rather than quality of land continues to be the key driver of the price achieved.
“For the first time since we started compiling detailed records in 1996, farmers accounted for less than half of the buyers in 2018,” he said.
“Conscious of the likely squeeze on farm profitability going forward, farmers are finding it more difficult to justify buying land funded by borrowings so are taking a more cautious approach.
“However, the most entrepreneurial farmers remain in the market for more land if it is in the right location and at the right price.”