Serving the Farming Industry across the Midlands for 35 Years
Average farmland values in the East Midlands have continued to increase year on year across all land types despite a surge in supply. Some... East Midlands farmland values increase as supply surges

Average farmland values in the East Midlands have continued to increase year on year across all land types despite a surge in supply.

Some 14,276 acres of farmland were marketed during the first three quarters of 2023, according to a quarterly analysis by Savills. It analysed sales across Derbyshire, Leicestershire, Lincolnshire, Northamptonshire, Nottinghamshire and Rutland.

This represents an increase of 129% in the amount of publicly marketed land sold during the first nine months of 2023 compared to the same period in 2022. Farmland values also rose, with prime arable land rising by 1.3% to £8,740 per acre.

The value of Grade 3 arable land has increased by 6.7% on the same time last year, with an average of £8,000 per acre, while pasture land is sitting at an average of £7,400 per acre, an increase of 5.5% against September 2022

Local variation

Henry King, associate in the rural agency team for Savills in the East Midlands, said a number of factors were impacting values. Farmland values in the East Midlands were now 13% above 2020 levels, he said.

“This has largely been driven by continued pent-up demand from buyers motivated by business asset rollover relief and investors which have so far insulated the market from wider economic factors and sustained overall value growth.”

But there is a lot of variation depending on location, land grade and farm type.

“For some, farmland competition is also beginning to weaken where the pool of buyers has reduced following acquisitions by those with rollover relief funds and as investors take advantage of guaranteed rates of return from bank interest.”

Interest rates

Additionally, interest rates are affecting financing costs meaning neighbouring landowners may find it difficult to fund purchases.

“Levels of supply have also started to increase, with more opportunities to purchase larger-scale commercial farms this year, while at the other end of the scale, higher interest rates have triggered some smaller-scale sales to raise capital.”

Of the 14,276 acres of farmland marketed this year, 5,398 acres were in Lincolnshire, 4,274 acres in Northamptonshire, 1,284 acres in Leicestershire, 1,192 acres in Derbyshire, 1,118 acres in Nottinghamshire and 1,011 acres in Rutland.

Increase in land sales expected during 2024

The amount of farmland being openly marketed could increase again next year as farmers make more informed decisions about the future of their business, says Henry King of Savills.

“The agricultural transition is progressing and it is now clearer what the new agri-environment schemes such as Environmental Land Management and the Sustainable Farming Scheme will require or incentivise – and the degree of financial reward these will provide,” he said.

“Consequently, farmers can now make more informed decisions about the future of their business and property, which in some instances may involve retirement and sale.

“Additionally, high costs of production combined with increased interest rates have put a strain on some businesses, perhaps accelerating retirement plans.”