The amount of land sold so far this year has increased sharply, as farmers rushed to beat changes to capital gains tax legislation.
Taper relief and indexation allowance meant land sold before 5 April could qualify for a much lower rate of capital gains tax. After this weekend, changes in Alistair Darling’s first budget mean land sales will be taxed at 18%.
Property agent Savills says land availability in the first quarter of 2008 rose by 41% across Great Britain compared with the same period last year.
This figure is backed up by the Farmers Weekly Land Tracker, which measures the amount of land advertised for sale in the magazine. By 28 March, nearly 21,000 acres had been advertised, almost 100% more than last year.
Many of these sales were by auction, which allows a sale to be wrapped up as soon as the hammer falls.
But a number of private treaty sales have also been completed in time to beat the Chancellor’s deadline.
David Cross of Savills’ Salisbury office put a 360-acre block of arable land at Fovant, Wiltshire, on the market on 15 February and has already sold it for well over the £5500/acre guide price. He said a private investor paid almost £7000/acre for the land.
Ian Bailey, Savills’ head of rural research, said average land values in England had risen 20% to £4450/acre. Prime arable land was now worth £5075/acre across the country and had topped £5700/acre in the east of England, an increase of almost 26%.
But land sales already appear to have slowed down now it is too late to sell before this weekend’s CGT cut-off. The FW Land Tracker has fallen by over 50% during the past two weeks and Mr Cross said he did not expect an overall increase in land sales this year.
“Some people who don’t have an emotional attachment to their land might be tempted to sell by these high prices. But I think most sales will be down to the usual three Ds – death, divorce and debt.”
The market for farmland has heated up ahead of this April’s changes to capital gains tax rules.