David Jones, Head of Agency at Robinson & Hall, provides a detailed summary of how the market has been behaving over recent months and what is set for the future.
2019 has seen a significant fall in the volume of land being offered to the market. The Farmers Weekly suggests a drop of 44% on 2018 and that is certainly the case in our predominantly arable area stretching from the Cotswolds to the Eastern Counties.
There are various reasons for the fall in supply. Most importantly, few landowners are under any pressure from the banks due to continuing low interest rates and strong loan-to-value ratios. A couple of reasonable years for arable farmers, with excellent yields in the 2019 harvest, will extend this lack of supply into 2020. Benign Inheritance Tax rates also continue to encourage the retention of land at the end of a working life, rather than a sale.
Agents often suggest that they are dealing with the same number of sales as previously but that there is now a greater preference to sell “off-market”. It is true that some sellers and buyers prefer to avoid the scrutiny of a public sale and it can sometimes be possible to winkle out a strong bid from an acquisitive neighbour. However, in practice I have received fewer private approaches in the past year than for some time.
I hate to mention Brexit but it is also possible that uncertainty over our exit from the EU will have held some sellers back, for fear that buyers will be cautious. They need not have worried.
Demand for land is as strong as ever. There are considerable rollover funds from residential developments across the region and landowners instinctively wish to avoid tax and to acquire further land when possible.
We have also seen a resurgence in interest from traditional investors, such as Oxbridge colleges and the Church Commissioners. They have been joined by major housebuilding companies and development promoters, where the land is strategically located for future development. This is particularly the case in the Oxford-Cambridge Arc where 1,000,000 new homes are proposed to be built by 2050 and where house prices remain strong.
Accordingly, values have held up and may even have increased by a small margin on average. Prices around £10,000 per acre are commonplace for arable land.
We achieved marginally more than this price for an “off-market” sale of a sizeable block of inaccessible land in Buckinghamshire, where the neighbour was keen and had the necessary funds.
Nevertheless, there can be significant variation due to local circumstances, especially for modest-sized blocks of bare land. At the upper end, we have been offered £16,000 per acre for land in the Bedfordshire Greenbelt, where there may be long-term hope of future residential development.
At the other end of the scale, very similar land in Cambridgeshire suffered from a lack of rich neighbours and no future development prospects, where the price was around half this sum.
The number of buyers looking for a larger commercial farm continues to outstrip the supply. Some simply want a ‘trophy farm’ for residential or sporting purposes, while others wish to expand their farming empire, but there are many people with the necessary funds. A 1,000+ acre arable farm with a house and buildings would attract considerable interest but few have come forward this year.
Livestock farms and pastureland are less buoyant. If it is “up corn” then it must be “down horn” and recent years have been more difficult for the livestock sector. Again, local circumstances can create significant variation but prices of £7,000 to £8,000 per acre are more prevalent. I suspect that prices in this sector could quickly come under pressure if the land supply increases.
Small parcels can often make a premium, subject to location, and we have achieved some strong results through our regular collective property auctions.
Operating under the Auction House brand, we hold public auctions every two months, regularly featuring small parcels of agricultural land. A three acre unfenced plot near Bedford achieved £117,000, a one acre paddock on the edge of a South Bedfordshire village made £140,000 and a similar-sized parcel in Huntingdonshire was sold for £28,000.
Prospects for 2020
2020 prices will depend largely on the supply of land. While supply may pick up from 2019 levels, I am not predicting a flood of properties. Accordingly, prices should be maintained, subject to considerable variation due to local circumstances.
For more information or to discuss how we can help you sell or let your farm or land, please contact David Jones, Head of Agency at Robinson & Hall on 01234 362906 or email firstname.lastname@example.org