Value of farmland rockets as investors look for safe haven
Investors are increasingly regarding farmland as a safe haven for their cash – and consequently the value of land is spiralling, both nationally and in the Westcountry.
And the trend is due to continue, with the price scheduled to rise by a staggering 40% across the board over the next four to five years.
In the South West the rise has been exacerbated by a shortage of land coming onto the market.
The new statistics have been released by specialist estate agents Savills, whose data shows the value of prime arable land has risen on average by 10.7% over the past year, to £7,594.
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That was marginally lower than the prime land average for the South West.
The national average has been lifted by prices paid for prime arable holdings in East Anglia, with two farms on the Cambridgeshire and Norfolk border selling for £12,000 an acre this month. There were no fewer than 18 separate people bidding for the two, an exceptional number, and as well as local farmers they included overseas buyers and agents buying for investors. In recent years, and in the Westcountry in particular, estate agents have been selling farmland in lots, allowing neighbouring farmers to increase the size of their holdings.
An analysis of the farm transactions carried out by Savills throughout Great Britain in the first half of this year showed that farmer buyers continue to make up half of all purchasers.
Significant factors also included the projected growing global shortage of food, and the financial markets still remaining jittery following the 2008 crisis, making farmland increasingly seen as a tangible asset.
Christopher Miles, of Savills, said investors were buying quality arable land, in particular, for the same reason they were investing in housing. "It's not a piece of paper or a derivative and people have confidence in it because it won't disappear," he said. "It's also a good hedge against the inflationary side effects of quantitative easing. And, as commodity prices remain volatile, land remains an excellent store of wealth."
Landowners enjoy Business Property Relief and an added benefit is that they may pass on farm holdings to their children without incurring Inheritance Tax.
Also, with landowners tending to hold onto their farms in a way that did not happen before the recession, prices have consequently gone on rising.
According to the Savills' statistics the volume of farmland publicly marketed so far this year in the South West region decreased by four per cent when compared to the same period in 2012.
But in the more arable counties in the South West, Wiltshire and Dorset, the amount of land marketed rose considerably.
Farming fortunes this year have risen considerably, with kind weather and a good harvest (contrasting steeply with the disastrously wet summer of 2012) another factor in adding attraction to the ownership of agricultural holdings.
In the Westcountry the proportion of lifestyle buyers has risen very considerably over the past year, to 40%, the highest level since 2004.