Landlords weigh options ahead of IHT relief changes

A rise in let farms for sale ahead of changes to inheritance tax reliefs is not yet evident but is very much a live option for landlords.

GSC Grays director Phil Scott-Priestley says land-owning clients are taking a good hard look at all their assets in light of changes to inheritance tax (IHT) and requirements for on-farm investment, but that this is not specific to let farms.

“It’s more a case that owners are now looking closely at how individual assets fit into their portfolios and whether they still meet their ultimate requirements, given the tax changes,” says Phil.

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“They are certainly being critical about how to balance competing demands for investment.”

“There may well be disposals to pay IHT in due course, which has always been the case to a degree, depending on what type of property is owned and what tax reliefs could be utilised at the time.

“It’s the volume of disposals that could change.”

Shorter tenancies

Signs of that are apparent as tenants who had anticipated long-term agreements have instead been offered shorter tenancies, says George Dunn, chief executive of the Tenant Farmers’ Association.

“We know that landlords are actively engaging in discussions with advisers on how they could reduce their IHT burden,” he says.

“Some are taking a knee-jerk response by selling land to provide a war chest or not investing in their farms to avoid raising value and incurring a bigger tax bill on death.”

Savills rural agency director Charlie Paton says a number of investment estates landowners have been reviewing their assets, with some looking to reinvest proceeds from an estate sale into a higher yielding asset or for other purposes.

“As well as tenants and immediate neighbours, buyers of these estates have tended to be longer term investors (traditional institutions, property investors or high net worth individuals treating them as a pension-like investment),” he says.

“Although some of these buyer types are less active now, it is still a way to invest in farmland at a discount to full value.

“Also, the proposed changes to IHT will effectively equalise the treatment of let farms and those with vacant possession, which could generate interest from the tax-driven buyer.”

Let land supply 

There is still a good supply of land to rent. Carter Jonas recently handled the letting of three Crown Estate farms in East Yorkshire and Lincolnshire.

These were offered on 15-year environmental farm business tenancies – a new type of agreement designed to support food production and nature recovery.

Andrew Fallows, a partner at Carter Jonas, reports very strong interest in all three, from new entrants, joint ventures and established farmers.

Rents have adjusted downwards in recent months to reflect the scaling back of direct support payments, uncertainty over the Sustainable Farming Incentive (SFI) scheme in England, and lower output prices, he adds.

Arable tenancies in eastern England

Large blocks of productive land with buildings are to let in renowned arable regions of England. These cover 1,559 acres of Grade 1 and 2 land in Lincolnshire, Cambridgeshire and Norfolk. 

Land at Gosberton and Surfleet Fen Farm in Lincolnshire, and at Wisbech, Upwell and March in Cambridgeshire and in Norfolk comes to the market as a nine-year farm business tenancy (FBT) is ending.

The third parcel, Cowbit in Lincolnshire, is being let for the first time because its location is separate from the owner’s main holding. 

The land gives progressive and ambitious farmers the opportunity to dramatically increase their farmed area, says Alice Hunns, an associate at R Longstaff & Co.

“While there has been a small smattering of land offered to the market to let in south Lincolnshire, Cambridgeshire and Norfolk this year, there has been very little, if any, on the scale being offered.”

All are being let on an initial five-year FBT from 11 October 2025.  

Land at Gosberton and Surfleet Fen Farm, Lincolnshire © R Longstaff & Co

Land near March, Cambridgeshire © R Longstaff & Co

Land at Upwell, Cambridgeshire © R Longstaff & Co

At Wisbech, Upwell and March there is 681 acres, available as a whole or in three lots, with buildings including grain stores. 

A quota for 1,232t (adjusted) of sugar beet to the Wissington Factory is expected to transfer to the incoming tenant. 

At Gosberton and Surfleet Fen Farm there is 775 acres, with a grain store and other general-purpose buildings.

The 103 acres at Cowbit includes a grain store for 600t.