Author: Jeanette Dennis

Date: 21st March 2011

Back in September 2010, we were told that the stock of available arable land per person was roughly half of what was available in the 1950s. Which is quite a shocking perspective when you think that that is our means by which to feed ourselves.

That was the conclusion of research carried out by Tom Stephenson in the Sunday Telegraph last year. And it was one of the reasons given by him as to why perhaps we will not see any fall in land prices in the UK, and if anything there will now be a steady increase.

Stephenson’s reasoning on land pricing made sense; he pointed out that the predicted population growth of 1% per year means that Britain will see the numbers of mouths to feed increasing, and more acres used for housing will mean less land available for food production.

Couple that with the increase in demand for meat consumption (meat prices last year hit a 20 year high), and with 7kg of grain required to produce 1kg of meat, you soon see what will happen: only higher crop yields will be the answer, to feed the increase in population numbers, on an ever reducing land area.  

Or does this now mean the inevitable introduction of GM crops?

Last year (and this has continued to date), Ashton Graham Solicitors have seen land prices on sales and purchases significantly in excess of £8,000 per acre for Grade II/III arable land in East Anglia.  And a lot of these transactions have not come to the open market.

Buyers who are able to pay “cash” and can conclude a deal swiftly will always have the advantage in this type of market.  It means that they may pay slightly lower than the current market rate.

Banks are tending to be more flexible about lending against farmland, but they still require unusually high levels of security.  This reflects the current state of the financial market.

If increasing population numbers are added to increasing food demands, coupled with a significant tax incentives (for example, 100% relief from Inheritance Tax on agricultural land values), it means a fall in land prices or rents is unlikely in the near future.

It is the view of Ashton Graham Solicitors’ Agriculture and Estates Team that 2011 looks set to be a year of increasing land prices, and also increasing land rents.  

A lot of rent notices were served in 2010, which will need to be agreed (or argued) this Autumn. With that in mind, it is useful to remember that once a rent review notice has been served, it cannot be unilaterally withdrawn without the agreement of the recipient.

So, if the market starts to change significantly this Spring, as happened back in Spring 2008, any tenants who have served notices in 2010 may start to become worried.   

For further information please contact  Jeanette Dennis or Jonathan Long for an initial informal chat.