ECONOMIC change and uncertainty continue to have an impact on the farmland market in Great Britain. Alongside the traditional core drivers of this market some new influences are on the horizon including regulatory change, a shift towards public money for public goods, enforcement of the polluter pays principle and an increased scrutiny on land value capture. All these will amplify the importance of nurturing natural capital, non-farm income streams, economic AgTech and innovation take-up.

This was the message from Savills as they published their spotlight on the farmland market.

On the farmland supply side they expect the overall long-term trend of constrained activity to remain, but they do predict an increase in liquidity in three to five years’ time. This increased activity is likely to be debt driven following interest rate rises, the phasing out of BPS in England from 2021 and agricultural policy pressures across the devolved governments.

Amenity farms and those with, or the potential for, a variety of income streams will continue to be in demand.

Savills predict that while these events will bring more land to the market than has been the case recently, an oversupply is highly unlikely. Increased supply could adversely affect average land values, but it is important to note there are some underlying strengths to the market.

In a global context the UK economy is relatively stable. Underlying domestic demand for land is supported by amenity and lifestyle buyers, as well as those looking to exploit the multiple opportunities for land use; food, energy, environment/natural capital, strategic development commercial and leisure enterprises

There is always a degree of overseas demand, which is currently buoyed by the weak pound but the availability of rollover cash alongside increased house building targets.

Amenity farms and those with, or the potential for, a variety of income streams will continue to be in demand. In contrast, demand for commercial units in need of investment, without the scope to diversify, is more likely to weaken, unless there are neighbouring farmers looking to expand.

In the longer term, there are likely to be some very significant changes in land use driven by environmental and climate change targets. They do not anticipate a repeat of the significant price increase recorded in the decade to 2014, but they do expect the market to return to its long term historical real-term growth of around 1% per annum (1% above inflation).