Farmland market dominated by wealthy investors, say experts

Peter Mason, who lives on his family's farm near Swaffham, is an associate partner with consultancy Ceres Property, specialising in farms and estates brokerage in the East of England.

He said the supply of farmland coming onto the market is now considerably higher than the the "famous lows" during the Covid pandemic.

And while "death, divorce and debt" have traditionally been the main drivers for farm sales, this has changed in recent years, fuelled by factors including Brexit and the "sluggish transition" from EU subsidies to new environmental incentives, leaving a hole in cash flows.

This has been compounded by cost inflation and sharp rises in interest rates which have "stifled borrowing" and prompted many farmers to consider selling land to clear debts or reinvest into other parts of their businesses.

But, notably, the profile of buyers entering the farmland market has "started to shift", said Mr Mason.

"Traditionally, local farmers would have been the mainstay of buyers in the farmland market, but this has changed, no doubt largely due to the challenges the agricultural industry has faced in the last few years, coupled with the fact that interest rates have made borrowing more expensive," he said.

"The dominant players in the market now constitute high net worth individuals, as well as rollover buyers looking for Capital Gains Tax relief, especially given how much development is taking place right now.

"Both wealthy individuals and institutions from other industries look at buying farmland as a way to preserve wealth (inheritance tax planning), but also as a way to obtain privacy and exclusion from the busier urban environment.

"The result is a farmland market where the traditional agricultural buyers are being priced out by wealthier investors.

"This shift is likely to have long-term implications for the sector, as land ownership becomes more concentrated in the hands of those who may not be directly involved in farming.

"As the market continues to evolve, the role of farmland as both an investment asset and a productive resource will be increasingly scrutinised, so all eyes are now firmly on Labour, starting with the upcoming budget on October 30."

Peter Mason is an associate partner with consultancy Ceres Property (Image: Ceres Property)