Upcoming months set to bring rise in farmland sales
17th April 2024
This spring could see a surge in farms and land for sale after weather held off some launches planned for the start of the year, a farm and estate property expert warns.
Even though the 11,400 acres publicly marketed in the first quarter of 2024 were almost 50% up on the same period in 2023, Carter Jonas still expects the traditional hive of sales activity, linked to the warmer temperatures and longer days in April and May, to be evident.
Andrew Chandler, head of rural agency at Carter Jonas, said: “Supply in the first three months of the year is typically a fraction of the level of supply that comes to market in the second or third quarter.
“Wet weather has delayed numerous launches, indicating that the usual surge in supply in the spring will be greater than in recent years.”
Relief for farming businesses
Carter Jonas’ new Farmland Market Update publication reports that robust demand from a range of buyers is set to continue to drive values upwards.
From 1st January to 31st March, average arable land values in England and Wales increased by 0.9% to £9,667/acre, and pasture grew by 0.7% to £7,806/acre.
CPI inflation eased from 4.0% in January to 3.4% in February, falling faster than projected. It is now expected that inflation will meet the Bank of England’s 2% target in the next few months, strengthening the arguments for the Bank to start bringing down the base rate.
Mr Chandler added: “Easing inflationary pressures offer a welcome relief for farming businesses, meaning a potential decrease in the cost of inputs, more stable customer demand, and potentially easier access to credit if interest rates follow suit.
“Nonetheless, there does remain uncertainty in the economic outlook. The expectation of interest rate cuts, a significant cash presence, and rising traction within the natural capital market mean the overall farmland market remains optimistic.
“With buyers’ appetites for land remaining strong, we can expect values to continue to continue their upward trend.”
READ MORE: Volume of UK farmland for sale has increased in 2024
Major barrier removed
The recent increase in newly-marketed land is likely to be matched by healthy interest, particularly from investors and farmers keen to enter into environmental agreements, as the industry adjusts to further reductions to Basic Payment Scheme (BPS) payments.
“In the Spring Budget, the government announced the extension of agricultural property relief from inheritance tax (starting April 2025) to land managed under an environmental agreement,” explains Sophie Davidson, Carter Jonas research associate.
She added: “This provides reassurance to farmers who have already entered an Environmental Land Management scheme and removes a major barrier for those looking to enter an agreement.”
Wet weather impacts
Persistent wet weather has created significant challenges for farmers in recent months, potentially prompting many to opt into the Sustainable Farming Incentive sooner than they originally planned.
Ms Davidson added: “With the relentless rain preventing many farmers from drilling winter crops and now delaying spring planting, farmers have been increasingly exploring strategies to ensure a more predictable income.
“Defra’s Farm Opinion Survey (published in October 2023) illustrates this trend, noting that 55% of respondents have made changes to their farm due to the weather and/or climate change, up from 46% just six months earlier. While this predates the recent wet weather, it indicates a longer-term trend that is likely to become more pronounced with the shift towards more extreme weather conditions.”
The findings add weight to fears that environmental schemes could be taking land out of food production.
The introduction of mandatory BNG in February was also geared at accelerating opportunities for landowners and demand for land for environmental gains.
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