More land on market but shortage continues

The area of farmland openly marketed so far this year is about 10% higher than a year ago.

However, the general shortage of commercial farmland continues – Farmers Weekly‘s Land Tracker shows that almost 14,000 acres have been put on the open market in 2013.

Most agents expect activity to pick up later this spring, but in others there is nothing on the horizon. Private or “off market” sales still account for a large proportion of transactions in some areas.

At Bruton Knowles in Gloucestershire, Matthew Peters believed it was the quietest he had ever known things since he started working in the land market in 1976. The usual drivers of land sales – death, divorce and debt – were simply not bringing land to the market.

The banks were still lending so there was not the pressure to sell, although some tenants might start to find things more difficult, he said. On the other hand, owner occupiers who might think of selling had very little secure alternative investment opportunity and the current inheritance tax regime offered landlords a further incentive to hang on to their land.

“People are just sticking where they are. We get several calls a week, all farmers wanting to expand and looking for 100-plus acres,” said Mr Peters.

While the farming community might be ageing and while sons and daughters may not be coming into the industry, their grandchildren often were, said Mr Peters.

Farmers looking to expand were also the main buyers in Bagshaws’ trading area, said Christine Baggott of the firm’s Uttoxeter office. Very little land was available, with the practical challenges of farming over the past few seasons perhaps one reason for some potential sellers putting off marketing decisions. Interest from investor buyers had cooled off as borrowing had became more difficult, said Ms Baggott.

Chris Leney of Robinson & Hall in Ipswich said that his area had fared relatively well in comparison with many others last harvest. The impact of the past seasons’ weather could prove the tipping point for some and bring land or farms to the market in areas which had suffered badly, he said.

While demand remains strong for commercial arable land in the Eastern Counties, Mr Leney thought that there could be certain areas where if a large acreage came to the market, things might cool off a bit.

“If the hot buyers have had their fill it could struggle a bit but it depends on the size of parcel and the local interest.” If there had been no land on the market in an area for three years, then demand could be very strong.

Although banks were still lending to farming, they were increasingly looking for farming businesses to demonstrate the ability to generate positive cash returns, rather than simply offering asset security, said Mr Leney.