Analysis of Strutt & Parker’s Farmland Database shows that 50,000 acres has hit the market in the past three months, taking the total amount launched for sale in 2018 to 96,600 acres (see Figure 1).

This compares to 78,200 acres in 2017 and 87,800 acres in 2016.

Michael Fiddes, Head of Estates & Farm Agency for Strutt & Parker, said: “We’ve gone from very tight supplies earlier in the year to a position where we’ve seen more land put on the open market than at any point in a decade.

“A significant chunk of the land which came forward in Q3 is accounted for by sales by a handful of larger landowners – seven farms marketed in Q3 account for 28,000 acres alone.

“However, even ignoring these, supplies do look to have increased. There have been more farms for sale in the East of England, including six larger than 1,000 acres (compared with two in 2017).

“There has also been a big increase in the South West, with 46 farms marketed, the most since 2010, and 8,000 acres in the North East compared with 2,100 in 2017.”

Mr Fiddes said it was too early to say whether this increase in land supplies was a trend or a blip.

“Whilst it would be easy to jump to conclusions as to why there has been an increase in the supply of land in the market, the underlying factors which have always led to the sales (often known as the three Ds – death, debt and divorce) are still as relevant as ever.

“That said, the prospect of Brexit does seem to have acted as a prompt for some landowners to reflect on their long-term future in land ownership.”

According to the Farmland Database, arable land sold in 2018 has averaged £9,500/acre, which is about the same as in 2017 and 2016.

The average arable price in Q3 was £9,000/acre, although relatively few farms sell in each quarter, so the figure needs to be taken in context.

Prices remain highly variable ranging from a low of £6,000/acre to a high of £15,000/acre, with demand strongest for cereals farms and large farms over 1,000 acres.

Overall, demand is patchy, with a third of the farms marketed in 2017 still available or withdrawn, but the farms that are selling, sell well with most achieving their guide price or more.

Implications of Agriculture Bill

Mr Fiddes said following the publication of the Agriculture Bill, questions were inevitably being asked about its possible impact on long-term values.

“In our view, there are still so many uncertainties it is too soon to come to any firm conclusion.

“Farm profitability is just one of a number of factors affecting farmland values and while the removal of direct payments will have a significant impact on farm incomes, profitability will also be affected by post-Brexit trading arrangements which are yet to be agreed. In addition, we don’t know at this stage how the drop in direct payments might be offset by a new environmental support system.

“We’ve already had two years of uncertainty and on the whole land prices have held up remarkably well. As we approach the implementation of a new British Agricultural Policy we expect this to remain the case and there to be a continuing wide variation in prices achieved.

“Farmers may be less willing to commit to purchasing land, especially on borrowed money, and it is possible that in commercial farming areas the quality of the land may become more important to buyers than it is now.

“However, there has never been a direct correlation between farm profitability and land prices. This is because there have always been people who buy land for lifestyle or tax reasons and there continues to be a good demand from money made outside agriculture.”