More farmland for sale in next 5 years but fewer buyers

A rise in the amount of farmland for sale in England is being forecast as more landowners look to sell up ahead of direct subsidy payments being phased out during the Brexit transition period.

With only scant details available about Defra’s planned replacement – the Environmental Land Management system (ELMs) – internal research by Savills reveals that 22% of its surveyors and consultants have met clients who are intending to sell vacant possession property.

A further 15% said they had clients who intend to sell let property, again citing uncertainty about what will replace direct payments.

See also: Environmental land management scheme – what we know so far

However, a fifth of consultants said that other potential land sellers had shelved their decision to sell until more detail emerges about the future policy, meaning the total increase in sales is likely to be limited.

But land buyers are also likely to be in shorter supply, with the survey revealing that 32% of Savills professionals have met clients who have postponed the decision to buy vacant property, and 41% the decision to buy let property.

Impact on tenants

Policy uncertainty is also having a significant impact on the rental sector, with Savills forecasting a rise in short-term deals between tenants and landlords until more details are known about ELMs.

This means contract farming agreements, share farming and stubble-to-stubble contracts are likely to be more popular, while break clauses and shorter term lengths are becoming more common in tenancy agreements.

Most professionals believe that Defra’s proposal to “de-link” direct payments, where farmers can claim several years’ subsidy payments at once, should help provide older farmers with sufficient capital to retire.

They are forecasting increased rates of retirement in the tenanted sector, particularly among Agricultural Holding Act (AHA) tenants, with the number of surrender deals being negotiated already falling as parties postpone negotiations until the proposals are fully understood.

This process could be made easier by recent proposals for tenancy reform, which include a plan to enable AHA tenants with no successor to offer their tenancies on a 25-year term to new entrants.