Farm Ireland

Tuesday 12 December 2017

Death, debt and divorce drive UK land

Jim O'Brien

Jim O'Brien

The three Ds of death, debt and divorce account for 60-70pc of land sale in central England, Savills' winter review of land prices has found.

A fourth D, downsizing, due to retirement, was also identified as a significant player in the market.

Richard Binning, of Savills Oxford, said that debt continued to be a major factor in land sales and confirmed that banks were increasingly scrutinising their clients' ability to service debts, resulting in more debt-related sales, even in cases where the capital is secure.

Like their counterparts in Ireland, English farmers are back in the land market.

Profiling the most active customers in the market, Mr Binning said that neighbouring farmers were once again important players at sales.

"Farmers with cash from development sales particularly want commercial-scale properties," he said.

"Investors and corporate funds, including Oxbridge Colleges and pension funds, are keen on long-term investment vehicles: sizeable parcels of land, preferably with a built-in uplift in value, such as an expiring tenancy or development potential."

While the supply of land on the market was slightly down to the end of July, Savills did not see a fall-off in the number of buyers.

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In examining the dynamics of the market Mr Binning noted a striking division between what he described as 'the best' and 'the rest', with the best plots selling quickly while poorer farms and equestrian properties were taking longer.

In terms of prices, the report termed it as a two-tier market.

Alex Lawson, Savills director of London farms and estates, stated: "We are seeing a two-tier market. The £10,000/ac sales grab the headlines but are at odds with the many [sales] that achieve their guide prices or less. This can flatter the market and expectations must be balanced with reality."

The Savills report regards the base price to be £5,500-6,500/ac.

Mr Lawson is not surprised with an easing in land prices.

"Some of the froth has come off the market. That's not surprising; the incredible growth of the past three to five years was always going to slow," he said.

Nevertheless, he expressed confidence, even in the context of instability in economic markets, that farmland remained attractive to conservative investors.

"Concerns about climate change and food shortages seem bound to reinforce arable land values, and some incredibly healthy sales are being achieved across the UK," he added.

"Overall, the market is positive. Unless we see major changes -- to the [British] government's tax plans, for example -- the market looks set fair."

Likewise, Mr Binning does not expect a slump any time soon but does not see values increasing at the rate they were.

"I anticipate a period of consolidation at the current level for the next year or two before the next market surge."

Indo Farming