Demand for Scottish farms and land remains strong

With the addition of tax uncertainties and other government changes on the horizon, many farm businesses are looking to the future and how they structure their business going forwards.

Looking at the land market overall, sales that did go ahead last year, were driven principally by expansion, with investment and relocation playing big roles too, agents report.

Limited supply drove prices up in eastern Scotland where farms and land were quickly snapped up by well-funded buyers.

Greater caution in the forestry market influenced buyer interest in upland regions, which saw sluggish sales of land that would in past years have had buyer appeal for woodland creation.

Duncan Barrie, a partner and head of farm sales for Galbraith, said: “Demand for Scottish farms and land remains strong, with prices underpinned by limited supply, stability in the lending market and the variety of types of buyers seeking to acquire land for diverse reasons. These factors combined helped ensure a positive outcome for the vast majority of sellers last year.

“The potential impact of the changes to agricultural property relief with regard to inheritance tax has caused huge concern among landowners large and small and has resulted in a period of planning to prepare for the changes coming into effect next year.

“The fear of future IHT liability, along with longer-term unintended consequences of a new tax regime, would be among the main factors likely to disrupt the market over the next 12 months. However, the full effect remains to be seen.

“Good quality arable land and mixed farming units have sold well over the past year, with demand coming from both existing agricultural businesses and non-farming interests, and many such properties attract several competing offers. The market for bare planting land and hill ground for forestry has stabilised after intense activity 18-24 months ago, but some investment funds had returned to the market in the latter half of 2024. Lifestyle buyers remain very active for smaller landholdings but there are equally some well-funded amenity buyers willing to acquire larger units of up to 300 acres plus.

“Prices for hill ground and marginal pasture have varied over the past 18 months, ranging from £1000 to over £4000 per acre, but with growing scrutiny placed on conservation and wildlife designations, soil structure, and access for tree planting and harvesting being key factors influencing demand and pricing.

“Areas of productive secondary arable and good silage ground can reach over £7000 per acre, with parts of the east coast, including Angus, East Lothian, and Fife, continuing to see prices well in excess of £12,000 per acre. However, pricing can vary significantly even in the same area, depending on specific factors connected to each unit.

“There are a number of excellent agricultural properties coming to the market in the coming months, and although record prices are being achieved in the beef sector, for example, cash flows are still under significant pressure, but the appeal of farmland as a longer-term investment, and the ability to expand an existing enterprise continues to underpins the land market.”