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Land continues to hold its value for UK farmers

The value of UK farmland remains steady despite high rates of inflation and the increased cost of borrowing, according to property expert Carter Jonas. The reasons for this appear to be a strong demand from a growing number of purchasers together with new opportunities that existing landowners are keen to explore.

Land has proven to be a safe asset for investors for many decades, the property consultancy says, and the past 12 months have reaffirmed that position.

While residential and commercial property markets experienced sharp falls in capital values, pasture grew by 3.2% (£236/acre) and arable by 4.5% (£406/acre).

Head of rural agency at Carter Jonas, Andrew Chandler, explained: “Although land typically delivers a modest annual return, it remains a strong, proven asset at a time of uncertainty, and therefore has a reputation for being a safe haven in times of financial volatility.”

While interest from purchasers who want to explore environmental or carbon offsetting projects is evident, farm and estate owners are still very active. However, the level of interest from agricultural buyers has become even more driven by location and quality, Carter Jonas says.

The market shows a clear return of ‘hotspots’ and ‘not-spots’; land and farm sales in certain locations are attracting competitive bidding and strong prices well above the average are being achieved.

Arable land is averaging £9,517/acre, while open-market sales data for pasture shows an average of £7,683/acre – a continuation of the record high recorded in the second quarter of the year.

Mr Chandler said: “Landowners are going through a period of immense change with the gradual phasing out of direct support and new policies such as the Sustainable Farming Incentive coming through. A general election is on the horizon, and we are seeing new regulations such as mandatory biodiversity net gain being introduced in January.

"We don’t know what else will be around the corner, but those who own land will be able to benefit from the opportunities presented.”

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