The rural land market in 2016?
David Ward, who is a Fenn Wright partner and chartered surveyor specialising in rural land and affairs, has some thoughts on this:
“We believe that in our region – in East Anglia – the effects of farm profitability on land prices will not be as significant as it is in other regions of the UK. Whilst profit margins are tighter across the farming industry, the arable sector, which is most prevalent here, has had it less tough than the livestock and dairy sectors.
“In our region, the availability of land is the major factor that is driving land prices. Preferential borrowing rates, tax incentives, and the finite supply are all contributory factors too, but in areas where there is a greater availability of land, the price softens.
“So, will more land be coming to the market in this region? This depends on whether diminishing returns and an overall fall in farm profitability will be enough to compel people to sell. The market is finely balanced. For traditional farmers and land owners a squeeze on revenue and profit is a recurring theme and they may see the current market conditions as another downturn to weather. Some investors though may feel it is time to liquidate and look for other forms of investment with higher returns.
“And will anyone be buying? Definitely. Some have concerns about the UK withdrawal from the EU and potential interest rate rises. And others are expressing a pessimism over farm profitability in the medium term. But many farmers and producers still need to expand to create greater economies of scale within existing businesses, now. Also there is the potential for land owners to benefit from the preferential tax treatment of agricultural land – particularly in areas where land has been given up for development and can be replaced in a way that allows the buyer to benefit from reliefs from capital gains tax.
“In short, it is most likely that there will be a greater divergence in the land market in this region. In some areas land may have a higher value when all the contributory factors come into play, whilst in other areas – where there is less competition for land – the prices will not be as keen.”
To discuss any matters relating to buying, selling and valuing agricultural and amenity land in Essex & Suffolk, please get in touch with David Ward MRICS.