COMMERCIAL
The return to a
Farmers’ market
Andrea Kirkby looks at how the market for rural
property – farms, land and country houses – is changing
armland and country house prices April 2008 left farmers with a narrow
F
rocketed in the last two years as window for sales to take advantage of
City boys invested their bonuses accrued reliefs. That led to a temporary
in green acres. Now the banks increase in supply, as sellers rushed to
have crashed and City jobs as well finalise transactions while they could still
as bonuses are under threat, is take advantage of the old rules.
farmland likely to follow? However that was a temporary blip.
Ian Bailey, head of rural research at Subsequently, supply has fallen back – in
Savills, says that the investment of City the first quarter of 2009, Savills say it was
money certainly did have an impact on the flat. Ian Bailey says sellers in the farming
market for agricultural land over the past
Up to last year the
sector are scarce.
couple of years. “Up to last year,” he says,
“the bonus pool was quite important, and
bonus pool was quite
“The significant thing in the farmland
market is that there’s very little supply,” he
35 to 40 per cent of all our farm buyers
were what you could call lifestyle buyers,
important, and 35 to
notes. “In the 1960s, 1.6 per cent of the
market turned over every year – now it’s
where agricultural income was not a
40 per cent of all our
less than half a per cent.”
primary motive.” Smiths Gore, the property consultancy
He says that these buyers haven’t farm buyers were firm, is seeing fewer farms actively
completely disappeared. Those left are
frequently cash buyers, with wealth that
what you could call
marketed than last year. Many potential
vendors, it seems, are waiting to see what
doesn’t depend on a single year’s bonus.
lifestyle buyers,
happens to the market and unwilling to sell
Indeed, he believes, “the larger purchasers at low prices since they expect the market
have increased their presence as the lower
where agricultural
to recover. Smiths Gore also says the
end of the scale has decreased.” average size of farms being marketed has
But the credit crunch has significantly income was not a shrunk, with bigger parcels of land being
reduced the number of non-farmer buyers
of farmland, and some of the non-farmers
primary motive.”
held back until the direction of the market
becomes clear. This seems unlikely to
have been selling up. change – with the firm forecasting a 25 per
However, the absence of these buyers
IAN BAILEY, SAVILLS
has meant to end of a period of exceptional
growth in values in the agricultural market. smaller farmers – they are an important
According to Knight Frank’s figures, factor at the margin, in a market with tight
though 2008 finished with priced 16 per supply, but they do not, by any means,
cent up on the previous year, the fourth represent a large percentage of holdings.
quarter saw a five per cent fall in prices,
and land prices have continued to fall since. A DECADE OF GROWTH IN THE FIELDS
We shouldn’t overestimate the Even after recent falls, farmland has been a
importance of the City buyers, though. Ian good investment over the last decade, says
Bailey says that, “80 per cent of the Knight Frank – the price has risen from
farmland is farmed by 20 per cent of the £2000 to £4673 an acre. That’s not a bad
farmers” – big farmers, together with return at all. But in the second half of 2008,
major investment owners such as the prices fell across all regions and across all Savills farmland offerings start at £25,000
Crown and the Church Commissioners. So farm types. This is partly due to changes in for the freehold of a one acre paddock
the smaller lifestyle buyers and investors Capital Gains Tax regulations. The near Andover, Hampshire with good access
share the other 20 per cent of the land with removal of taper relief and indexation from and fishing rights.
66 JUNE 2009 PROPERTYdrum
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