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As I write, the 2023 farmland market is just beginning to get underway. Agents across the country are launching farms and land for sale. Others are keen to see what might be available to buy.
The past few years have seen a shortage of farms on the market. Some localised areas might have seen a small flurry of sales but for many other areas, the cupboard has often been bare.
This shortage of supply is combined with a continued demand. There is always a latent demand among farmers to purchase the land next door. Funding might be a challenge, but such opportunities are rare and local competition for smaller blocks can sometimes be fierce. That said, if the locals are unable or unwilling to compete for small blocks of land, the demand from further afield is likely to be less enthusiastic, with a consequential reduction in price. It is not uncommon to find two very similar blocks of land where the price differs by 100%; the only difference between the two blocks of land being the capacity of the neighbours to compete in the purchase.
The sector which is perhaps the most under-supplied is the market for larger complete farms. There is a surprising number of potential buyers for a farm of, say, 1,000 acres or more. The money may come from a development sale or from outside the industry but there is a large number of potential buyers with tens of millions of pounds held in cash at the bank. The number of farms of 1,000 acres or more to come to the market in any year is limited and again competition for such farms can be intense.
The average price for decent arable land now lies in excess of £10,000 per acre, albeit this hides quite a wide range. £8,000 per acre is not unknown where the locals will not compete. Likewise, it is not unusual for prices to rise to £12,000 or even £14,000 per acre and sometimes more where competition is strong.
We shall see how matters develop as the market unfolds through 2023. There remains little pressure from the banks, and the tax advantages of remaining in farmland have not been withdrawn. My expectation is that we shall see a year of continued constrained supply where cash buyers are king.
For information or assistance on any of the above, please contact David Jones, Head of Agency on 01234 362906 or email djj@robinsonandhall.co.uk
Agricultural Land
At this time of year, we look forward to the prospects for the agricultural land market. We would normally expect to see the first properties coming to the market by this time, but the big news is that there is very little available. This continues the theme of recent years when supply has been very tight with well-funded purchasers chasing the better farms and blocks of land which become available.
Some observers have predicted that much more land will come to the market this year as a result of the Agriculture Act, increased fuel prices, increased fertiliser prices and increased interest rates. Likewise, it is predicted that buyers will be in short supply for the same reason.
My own prediction is that we shall see little difference from last year. In reality, there is little pressure from the banks for farmers to sell. Meanwhile, there is a considerable number of well-funded buyers who are willing to compete for whatever is available. Smaller blocks of bare land will continue to be dependent upon local interest, which could give rise to a wide range of outcomes. Well-equipped large farms, whether commercial or residential, will certainly attract interest.
Residential Development Land
Many landowners dream of the possibility of releasing a few acres for residential development. We have certainly been able to assist many across the Oxford to Cambridge Arc and beyond, in converting farmland into residential development land worth a multiple of between ten times and one hundred times its agricultural value.
Such sales can be life-changing, often providing a broader range of opportunities for the next generation. However, a lot of time and money has to be invested to maximise potential. There is much to be won and much to be lost. Proceeding in the correct manner is key.
We work with a select list of professional promoters in securing Local Plan allocations with great success. We are always keen to manage the marketing of the land to ensure that best value is secured and also to deal with important matters such as retaining the correct rights to any retained land. The development world is full of sharks and egos and it is important to be well represented.
If you are considering your options and would like to find out how we can help you, then please contact David Jones.
