Jim Bryant, owner of Bryant Land & Property, discusses the market and what a difference a few weeks can make in May’s guest blog.
At the beginning of May Farmers Weekly reported that there was 29% less acres of land for sale in the UK than at the same time last year. I see this shortage continuing and the market is not going to be awash with acres for sale despite the pressures some farming businesses must clearly be feeling following the result of last year’s harvest profits.
Uncertainty always brings stagnation in the rural property market and the Brexit referendum is undoubtedly a major factor, with some saying they will do nothing until after the 23 June. Future commodity prices are not looking any more exciting than following the 2015 harvest.
For the foreign buyer the weaker pound could have made things a bit more interesting in the UK land market but with so little on offer there is little evidence of activity from that direction.
A decision to exit from the EU could have a significant impact on agriculture, particularly in the short term, depending on the view you have about whether the level of direct payments under the CAP would they be maintained by the UK government in their existing form. I suggest that is highly unlikely. Defra’s most recent Farm Income survey found 70% of farm profitability is dependent on EU support.
Agra Europe have suggested that significant falls in land values would result if Brexit was to occur. I accept that with farming incomes reduced, the ability to buy may be reduced for a significant portion of the market, but we should not forget that purchase of this rare commodity of land in our small island is not just about what it can earn. It is influenced by supply, tax, way of life and affordability to name just a few drivers. We are already seeing pressure on land prices in certain areas around the country. Commercial farming areas, particularly where neighbour farmers (who are traditionally the backbone of farmland buyers) are required, are finding it the most difficult.
Considering average farmland pricing is a pretty meaningless comparison in such a small market. Local variation can be huge, let alone a national one. That range I believe will extend even more whether we Brexit or not, but particularly if we do and there may be some who will wish they had sold 12 months ago.
Going forward location as always will be key. If we stay in the EU I see well located property will continue to rise in value, but if we Brexit then it may take a little longer to rise. For more commercial farming blocks of land outside of these prime locations, Brexit could well be rather more significant.
The next step
If you would like to discuss this article further or speak to a country property consultant, please contact the Bryant Land & Property team on (0)1223 842675 or email firstname.lastname@example.org.