Last year saw a diverse mix of buyers looking for land, with farmers accounting for almost half of buyers.
“Our analysis of farm transactions across Great Britain, where Savills acted for the buyer or seller, shows that the demand for UK farmland is diverse – both in the types of buyers and their motives,” said Savills’ head of rural research Ian Bailey.
Land as safe haven in turbulent economic times continued to be a driver for those investing both from outside and within the sector.
Conservation and the environment motivates both farmers and conservation bodies, while farmland is also an efficient asset for the transfer of wealth. The cautious return of lifestyle buyers reinforces that, for some, owning a piece of the countryside or a trophy asset is the motivation.
One in two buyers is a farmer, while non-farmers and lifestyle buyers whose principle motive is other than income generation make up four in 10 buyers. Institutional and corporate buyers account for the remaining 10%.
Lifestyle buyers are expected to rise in significance as the economy improves over the next few years and confidence returns to the country residential market. The proportions of different types of buyer has changed little over recent years.
Debt accounted for a higher proportion of sales than at any time since 1996, when base interest rates were 10%.
This suggests that recessionary pressure, the volatility of commodity prices and some difficult physical conditions over the past two years put pressure on some businesses.
About 60-70% of the debt-related sales were by farmers in 2013 but non-farmers with off-farm business interests were not exempt form this pressure. A rise in the bank base rate would tend to bring smaller farms onto the market unless it was a very sudden jump or rates went to 2%, said Mr Bailey.
In addition to debt, land and farms were sold because of relocation (16% of sales and similar to 2012), to enable investment off-farm (31%, down from about 40% in the past two years).
Retirement, death and other personal reasons were recorded in the remaining third of sales, which was similar to 2012 levels.
The proportion of overseas buyers in 2013 was similar to 2012 at about 8% of all buyers. About half of these were from the EU, excluding the UK. This compares with the 20% of mainly Danish buyers recorded in 2005-06 before the credit crunch.
Cash continues to be the main means of purchase in more than 70% of all sales. Historically, low interest rates have not tempted buyers to increase the use of loans to purchase farmland – only just under a third of all buyers use debt – a level that has been consistent for the past eight years.