Farmers are no longer looking to buy farmland to the same extent with a new report claiming demand has dropped by almost 10%.

While demand for land is still outstripping supply, the number of farmers looking to purchase has slipped according to North of England rural land and property specialist, GSC Grays.

Head of sales at GSC Grays, John Coleman, said: “In the buyer market in any one year we would expect the number of active farmer buyers to be at or just over 50% but in 2023 this is falling closer to 40%.

“The lack of farmer buyers has been compensated by private investors, lifestyle buyers, institutional investors, and environmental buyers.”

Mr Coleman added that institutional investors and environmental buyers prefer larger farms or land holdings, as their need for ‘green credentials’ is hard to fill.

“ESG investment funds have been hugely influential recently and capital funding for environmental groups has made them very competitive with the need for Biodiversity Net Gain (BNG) and in Nutrient Neutrality (NN) where the better the land taken out of agricultural production the greater the reward and benefit to the environment,” he said.

“How long these conditions can continue is open to debate, as the government is threatening the removal of Nutrient Neutrality (NN) to assist housebuilders.”

However, he said the lifestyle buyers and private investors face changes as their competitive advantage over farmers comes from capital tax reliefs through Agricultural and Business Property Relief (APR and BPR) which a new government may affect.

While many believe the the supply of farmland on the market has been increasing, analysis across the North of England, suggests otherwise.

Reports show anywhere from 33,000 to 62,000 acres of openly marketed land was on offer at the end of June 2023 – down a little on 2022 figures and 10% below the 10-year average.

“For land parcels and farms greater than 50 acres, the amount of land offered for sale in the north is around 5% up on last year and similar to the 10-year average.

“Northumberland is offering more farms for sale than it has done for the last 12 years. However, North Yorkshire and Co Durham have remained relatively quiet, down more than 6% this year, while Cumbria is even quieter.”

While rising interest rates have slowed the general rate of growth in land values, premium prices are still being offered with an increase in available land expected at the end of this year and heading into 2024.

“Prime arable land has traded in the north between £10,000 and £13,000 per acre, whilst grassland prices have settled at between £8000 and £9000/acre,” he said.

“Marginal land and upland grazing have benefitted again by competition from the forestry sector with land capable of supporting commercial plantations trading between £4500 and £6000/ac.

“Expectations are that there will be more land available in the second half of the year and going forward into 2024.”

However, he warned that buyers are likely to face increased funding costs and the possibility of a change of government in 2024 may cause them to offer less.