Renowned strengths of UK farmland evident as third-quarter values remain unchanged

National property consultancy Carter Jonas has found that despite high rates of inflation and the increased cost of borrowing, the prices paid for land in the third quarter of 2023 remained at the same level as the previous three months.

Land has proven to be a safe asset for investors for many decades, and the past 12 months has reaffirmed that position. While residential and commercial property markets experienced sharp falls in capital values, pasture grew by 3.2% (£236/acre) and arable by 4.5% (£406/acre).

“High inflation and the increased cost of borrowing has significantly affected many asset classes, but interest in buying UK farmland remains strong,” said Andrew Chandler, head of rural agency at Carter Jonas. 

“There are a growing number of reasons for purchasers to act, and we are seeing a wide range of interest from businesses and individuals who see both the short and long-term benefits.

“Although land typically delivers a modest annual return, it remains a strong, proven asset at a time of uncertainty, and therefore has a reputation for being a safe haven in times of financial volatility.”

While interest from purchasers who want to explore environmental or carbon offsetting projects is evident, farm and estate owners are still very active. However, the level of interest from agricultural buyers has become even more driven by location and quality.

The market shows a clear return of ‘hotspots’ and ‘not-spots’; land and farm sales in certain locations are attracting competitive bidding and strong prices well above the average are being achieved, but properties with unresolved issues, or where local farmers are not looking to expand their holdings, are experiencing more limited interest.

Arable land is averaging £9,517/acre, while open-market sales data for pasture shows an average of £7,683/acre – a continuation of the record high recorded in the second quarter of the year.

Mr Chandler said: “Landowners are going through a period of immense change with the gradual phasing out of direct support and new policies such as the Sustainable Farming Incentive coming through.

“A general election is on the horizon, and we are seeing new regulations such as mandatory biodiversity net gain being introduced in January. We don’t know what else will be around the corner, but those who own land will be able to benefit from the opportunities presented.”

New, publicly marketed farmland supply to the end of September surpassed the total supply for 2022. Almost 80,000 acres have been brought to the market, while 75,459 acres were marketed in the whole of 2022.

Mr Chandler said: “While the data shows a good level of supply, 2023 is more in line with the long-term average we have seen. There will be more acres added before the end of the year, but those thinking about selling farms and land will most likely be looking to spring 2024 now. 

“Buyers are discerning, so our advice is to iron out any issues with land or farms well before they are brought to market. For those considering selling in 2024, now is the time to prepare for a sale to ensure the best possible launch.”