Average farmland values in the North of England have continued to increase year on year across almost all land types, according to Savills.

Quarterly analysis from the rural property agents shows that prime arable land is now trading at an average of £11,277 an acre in the North – up 4.5 per cent compared to the same period last year. This compares to an increase of 2.5 per cent for prime arable land across Great Britain, to an average of £10,200 per acre.

The value of Grade 3 arable land is sitting at an average of £8,371 an acre - up 3.4 per cent on the same time last year, while pasture land is trading at an average of £5,631 an acre, 5.15 per cent higher than the previous year. Meanwhile, prime dairy land in the region has stayed the same, sitting at an average of £7,669 per acre.

READ MORE:

Overall, the average value of all land types - incorporating arable and pasture - sits at £7,452 an acre, a 3.3 per cent increase on the same time last year.

Andrew Black, who leads the rural agency team for Savills in the North of England and is based in the firm’s York office, said a number of factors were impacting values and they remain highly localised.

“Farmland values in the North of England are 16 per cent above 2020 levels and also remain higher than the national average, with values of prime arable and grade three pasture now around £10,200 and £7,000 per acre respectively across Great Britain,” he said.

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

“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 rather than less predictable alternative investments. However, prices are generally still up on last year.

“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.”

According to the Savills survey, a total of 30,736 acres of farmland have been publicly marketed in the North of England so far this year, but this includes the 9,500 Rothbury Estate in Northumberland. This is a big increase on previous years with 18,639 acres, 15,725 acres, 19,196 acres and 23,065 acres marketed across the North to the same period in 2019, 2020, 2021 and 2022 respectively.

Of the land marketed this year, 13,350 acres were in Northumberland (including the 9.500 acre Rothbury Estate), 6,383 acres in North Yorkshire, 3,559 acres in Cheshire, 3,097 acres in Cumbria, 1,301 acres in Lancashire, 1,151 acres in Durham, 383 acres in West Yorkshire and 140 acres in South Yorkshire.

Andrew said the amount of farmland being openly marketed could increase again next year as farmers make more informed decisions about the future of their business.

“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.”