Private sales on the rise in variable farmland market
Low supply, varied demand and uncertainty related to the potential impact of Brexit and Covid-19 continue to shape the farmland market in England, according to land and property specialists Strutt & Parker.
According to analysis of the Farmland Database, which records the details of all blocks of publicly marketed farmland over 100ac in size, just 46,000ac of farmland have been launched on the open market in England so far this year, which is well below the five-year average.
With relatively little land expected to come forward in the latter part of the year, it is now inevitable that 2020 will see the lowest amount of land publicly marketed on record.
“In total, just 152 farms have been publicly marketed to date in 2020, which is 25% fewer than in 2019 and 23% fewer than the five-year average,” said Matthew Sudlow, head of estates and farm agency.
“In our experience, some sellers are choosing to hold back from the market until we are past the worst of the Covid-19 crisis.
“However, others who had previously intended to sell on the open market, are choosing to market privately instead.
We estimate that private sales are growing, currently accounting for as much as 35-40% of farms and estates changing hands.
“What is not clear is whether this year is a one-off because of Covid-19, or a sign of things to come in the future.”
‘Demand can be varied’
Sudlow said most farms that have been marketed are selling, although demand can be varied, depending on whether there is a local farmer-buyer or if the land has a broader appeal to investors or lifestyle buyers.
“There is good interest from investors, lifestyle and rollover buyers for farms launched in the buyer’s target area or close to where they may already have property.
Farmers remain the predominant type of buyer, in that they account for the greatest number of transactions. In 2020, these sales have typically involved farmers with rollover funds or large farming businesses which are in the market for farms and bare land that allows for expansion.
“But generally, excluding rollover money, there is a smaller pool of farmer-buyers, with any needing to borrow to finance a purchase taking a cautious line when it comes to bidding, conscious of the serviceability of any loans given that changes to markets and support payments are ahead that are likely to impact on their profitability.”
Overall, the trend in recent times is that about 30% of arable land sells for more than £10,000/ac, 20% sells for less than £8,000/ac with the rest between £8,000-10,000/ac. The percentage increases seen this year are due to more land selling in the highest price bands and less in the lower price bands.
Sudlow said a wide range of factors make the future even more difficult to forecast than usual, including the outcome of trade deal negotiations with the EU which is likely to have a major influence on farm profitability.