Farmland UK

Farmland UK Farmland and agricultural land would appear to be the same commodity. Infact, they bear the same relationship as a Greenbelt and greenfield land.

Farmland includes agricultural land. Another term used for agricultural land is 'bareland', meaning that is farmland with no buildings or residencies attached. There is, for example, a difference in the price for 'bareland' and farmland. The RICS rural land market survey in 2004 showed that the average price of 'bareland' across the UK was just over £7,000 per hectare, whilst the price of farmland was nearly £10,000.

The RICS survey concluded that the price of farmland and agricultural land had risen over 30% during 2004. The rising prices had been fuelled by demand from non-farmer buyers and a shortage of supply because of general uncertainties within the farming community. Infact, looking ahead, it is believed that future price rises will be due to the non-farmer buyers e.g investors, because optimism within the commercial farming sector is very low.

There are farmland 'hot' spots in terms of demand. Unsurprisingly, the southeast has the highest percentage of non-farmer individuals wishing to purchase farmland. A staggering 75% of sales in the southeast during August to September 2004, where not farmers. 62% were private individuals or investors, 6% were Institutional Investors, 6% were developers and 1% were miscellaneous purchasers. Compare this with Yorkshire and Humberside, 65% of buyers were agricultural but still 33% were non-farmer individuals.

Why the interest in farmland? Despite recent price rises, agricultural land and farmland is still relatively inexpensive to purchase. It is a tangible and solid investment and though prices have gone up and down, on average land yields a return of 9% per annum. Then, there is the view that due to the current housing shortage in the UK, more houses will be need to be built.

The recent Government commissioned Barker report concluded that the number of houses being built per year would have to increase from 120,000 to over 200,000. These houses have to be built somewhere and though the majority will be constructed on brownfield land, some development will undoubtedly involved greenfield land.

The Government target is 60% of all new development on brownfield land. This leaves around 40% on greenfield land. If you can buy farmland next to existing development and get it redesignated to for residential use, you are onto a winner - in some areas of the southeast, residential land is commanding almost £1m per acre.

- James M

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