Record activity in Great Britain’s farmland market unlikely to continue in 2025
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Factors influencing supply
There are a number of contributory factors to this surge in supply, according to Savills Spotlight The Farmland Market, including restructuring in response to the ongoing agricultural transition, challenging weather conditions, and economic pressures.
Notably, analysis by Savills shows eight per cent of sales were due to retirement, while 27 per cent were attributed to debt and financial restructuring.
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Andrew Teanby, associate director Savills Rural Research, commented: “During the past few years we have monitored machinery dispersal sales and for 2024 there was a 16 per cent drop, suggesting retirements in response to the agricultural transition have peaked.”
Political factors also played a significant role in market behaviour; an anticipated change in government followed by a strongly publicised potential capital gains tax increase pre-Budget prompted a flurry of market activity in the first half of the year.
Consequently, 63 per cent of the annual acreage was launched in the first half of the year to get ahead of the October 2024 budget, compared to 55% in 2023.
Alex Lawson, head of Savills rural agency, stated: “In reality, most of the market activity was compressed into six months because of the challenging weather conditions during the first few months of last year.”
Regional activity
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Regionally, England saw increased market activity across all areas, and in the South, average values increased, including a 5.7 per cent increase in grade 3 arable land in the South West.
In Scotland, 38,000 acres of farmland were marketed in 2024, a 42 per cent increase from 2023, and average values rose by 12.2 per cent, with stronger growth for arable land.
In Wales, farmland supply was high, but average land values fell by two per cent due to various economic factors.
The strength of competition and prices achieved varied widely between and within regions. There were hotspots where limited supply, demand or the desirability of the location drove prices up, and sales progressed rapidly – while, in other areas, properties took longer to sell.
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In Scotland for example there were examples of bare Class 3(1) land sold at £8,500 per acre and at £12,000 per acre within just a 10-mile radius.
Future supply and values
Looking ahead, in the short term, Savills forecast a 20 per cent supply reduction to 150,000 acres during 2025 – the tax treatment of cash outside of a business is unfavourable compared to farmland, and the proposed inheritance reform is likely to introduce uncertainty to the sector.
After the introduction of the reforms to Agricultural Property Relief and Business Property Relief in April 2026, supply is expected to rise from 2027 to cover inheritance tax liabilities for those farming businesses unable to fund or where sufficient tax planning was not possible.
Savills would anticipate some activity from private investors if better investment opportunities arise, although our research shows most non-farmer buyers’ decisions are primarily driven by lifestyle and amenity rather than pure investment reasons.
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Farmland values are expected to hold with marginal growth, resulting in a 0.6 per cent compound annual growth rate over the next five years. This growth is most likely from 2027 by when clearer land use priorities will have emerged, and development activity will be increasing, leading to more buyers and competition in the market.