Major shifts in UK farmland prices have been more forcefully driven by changes in tax structures or macroeconomic trends than by commodity prices, according to Knight Frank’s head of rural consultancy James del Mar.
He added it was too early to say whether Brexit would lead to a dramatic shift in British farmland prices, given that prices were already slowing before the vote to leave and fell only 1.3 percent in the third quarter of 2016, according to Knight Frank’s index.
“The signs for farmland [as opposed to property] are positive, and September has seen some pick-up in market activity after the summer break,” said head of farm and estates Clive Hopkins, at the estate agent, who said he is more worried about the possibility of a raise in stamp duty on farmland over the next three years than Brexit. But agents added it would to take time to assess real values, as activity in the market has slowed and private sales are becoming increasingly common.
A good indicator for investors, said Hopkins, would be the 762-acre Bibury court Estate in Gloucestershire, which has a guide price of £17.5 millio. Insurance provider Zurich is also selling the 4,227-acre Hampshire Sutton Scotney Estate, with agent Savills saying the buyer is unlikely to be a farmer.
“For the bottom 25 percent of farms it is also EU support that is keeping them afloat,” said del Mar. The top 25 percent of arable farmland sees incomes of around £301 per hectare in the UK, while the 25 percent with the lowest values has an income deficit of £223 per hectare.
Brexit has also changed the way in which agents market farmland. The Knight Frank recently sold an estate for more than their £12 million asking price, but admit they are being more conservative from the start.
“You can’t put price on that is too high,” said Hopkins. “It’s the worse thing that you can do at the moment.” He said that by marketing estates privately and keeping prices reasonable, buyers are put in a competitive situation and more likely to buy.
Brexit also seems to have triggered more international investment, according to the estate agent, echoing Strutt & Parker’s findings that while fewer farmers were participating in a slowing market, international buyers are snapping up some properties, taking advantage of the dip in the value of the pound.