Retirements bring more land to the market
There has been an increase in retirement-based farm sales in the first half of this year, with favourable conditions encouraging more people to sell up, according to Savills’ second quarter Farmland report.
While the English land market remained fairly static, increasing just 3% to 59,500 acres for sale in the first six months of 2014 compared with the same period last year, the number of people downsizing or leaving farming appeared to have increased.
In the East, where land supply had increased 87% on the year to 13,000 acres, Savills’ east of England head of farm agency Chris Miles, said retirement had been the most common reason for land coming to the market.
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“People are beginning to recognise that land prices have gone up so much, and if they’re thinking of retiring then they’re asking themselves ‘should I do this now?’,” said Mr Miles.
“We’re also coming up to an election year and CAP reforms being introduced, so there is a bit of uncertainty – it’s also a friendly tax regime at the moment for those wanting to retire,” he said.
“We’re also coming up to an election year and CAP reforms being introduced, so there is a bit of uncertainty – it’s also a friendly tax regime at the moment for those wanting to retire.”
Chris Miles, Savills
However, the tight land supply meant just a few additional farms entering the market had caused the large surge in the region, where a 120-acre block of commercial farmland sold for £13,600/acre at the beginning of year. Top arable farms and top dairy farms continued to be the most sought after, said Mr Miles.
See also: Small farm market heats up
Interest from lifestyle buyers was also starting to increase, he said, as economic confidence improved, helping to further increase land prices. Pension funds and institutional investors, such as the Church and the Crown Estate, also appeared to be showing renewed interest, said Tom Raynham, head of Knight Frank’s agricultural investment team.
Land values continue to increase as expected, with Savills estimating a 10.4% increase for prime arable land during the first half of 2014, to an average of £9,500/acre, while Knight Frank’s second quarter farmland index reported an average of £7,517/acre across all agricultural land types, up from £6,421/acre in June last year.
The strongest value growth was in the West Midlands (up 18%) according to Savills and the east of England (up 13.5%), while Wales showed a 3.6% increase for prime arable land.
Land supply in England was still tight, but Scottish supply remained almost static – up just 1%, while supply in Wales fell 24% according to Savills. The largest fall in supply was in the north of England (down 45%) and south east (down 17%), while the South West recorded an increase in land supply of 43%.