Polarised values, off-market deals and increasingly discerning buyers typified transactions of South West England’s farmland in 2016.
Forced sales did not increase, according to region’s agents, but the first half of this year could see farmers with no succession plan retiring amid policy uncertainty.
Realistic valuing has been challenging but vital to attracting bidders.
Charlie Evans, partner, Strutt & Parker, Salisbury
I cannot remember a market where values were so polarised.
The lack of supply has maintained average prices, but that hides the range of prices being paid.
There is a 150-acre block of Grade 3 arable land where we are struggling to reach £8,000/acre. Just four miles away we sold a block of 100 acres of very similar land for £15,000/acre.
Anything seen as overpriced struggled last year – correct pricing is key.
Buyers are definitely more cautious and don’t like to make starting offers at a low level that might be seen as insulting. Once the first buyer is off the fence, however, and there is competition for a sale, confidence returns and they are prepared to bid strongly.
I sense there will be more land available this year, particularly livestock farms. There were a lot available privately last year – some of these have sold and some will come to the open market in 2017.
This is particularly the case where the owner is approaching retirement age in the next three years and does not want to face an uncertain two years approaching Brexit and likely changes in subsidy regime.
Ben Compton, associate, Bruton Knowles, Gloucester
Political uncertainty, reduced profitability and a modest increase in supply resulted in downward pressure for many parts of the region in 2016.
There was good demand for quality bare arable land, small farms with a reasonable house and buildings as well as some investment opportunities.
Land and whole farms in predominantly grassland and dairy regions have proved less attractive to buyers over the past 12 months with guide prices having to be more realistic in order to secure a sale.
Buyers are also definitely becoming more discerning – issues such as road noise, power lines or flooding mean property can stay on the market for a considerable time if the guide price is set too high.
There will be quite a few farmers assessing their options this spring if prices remain under pressure, especially if those approaching retirement with no immediate successors.
Rents across the region for a few open market lettings have been more realistic than a year or two ago, but the lack of supply is keeping rent levels up on review with few opportunities coming to the market.
Richard Nocton, partner, Woolley & Wallis, Malborough
There are still buyers looking for investment opportunities, but there are fewer sellers and more transactions are happening off market.
We have seen farmers eager to buy and well supported by lending from banks, and there are still a number of farmers with rollover funds who are often keen to buy additional agricultural property.
But lifestyle buyers and non-farming investors seem to have a greater appetite to acquire rural property.
There is also more caution in the market. Buyers are certainly looking for their purchase to be without blemish – any drawbacks will be penalised.
Lower commodity prices have seen a slight rise since the weakening of the pound and most sales are for reasons other than low farmgate prices.
Land for the tenanted market in our region is relatively scarce at present with no clear evidence of rents reflecting depressed incomes, although things could change this spring.
What did farmers buys in 2016?
Vale of Pewsey
Woolley & Wallis sold a 165-acre parcel of Grade 1 and 2 arable land at Coate in the heart of the Vale of Pewsey, Wiltshire.
Strong demand from local farmers and investors from across the country pushed the final sale price in excess of the £1.775m guide price.
Oxstalls Farm at Frampton Mansell in Gloucestershire sold at 30% over its £1.3m guide in March 2016.
It had 86 acres of Grade 3 permanent pasture, modern and traditional farm buildings and an agriculturally tied house.
Croft Farm at Westbury Sub Mendip in Somerset, sold through Strutt & Parker to an expanding dairy farming business.
It had 272 acres of Grade 3 arable and pasture and a guide price of £2.9m.