Land a ‘safe haven’ for shrewd investors
Date of Article
Jan 10 2013

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10 January, 2013, Rural experts at the south west offices of property specialists Carter Jonas are reporting a £7m increase in land transactions in 2012 compared with 2011.

The firm’s offices in Bath and Wells both say the restricted supply of agricultural land means that it remains a sound safe haven for the canny investor.

Kit Harding, a partner at the Carter Jonas Bath office says that although the heat has come out of the market since the summer peaks in 2012 there is little evidence of downward pressure on land prices.

“Land is a scarce commodity and a valuable resource which can never be increased or replaced. “There is what there is, for farming and for development,” he said.

“Agricultural land values have risen dramatically in recent years and have probably peaked for the time being but for those who bought into the market at substantially lower prices, there is the opportunity to take a profit and re-invest in other assets.”

Sales and purchases both on and off the market across the firm have increased from 10,500 acres in 2011 to 12,800 acres in 2012 with respective values at £117m and £124m.

Carter Jonas cares for more than 900,000 acres through its nationwide offices, acting for many prestigious clients, including the Crown Estate, major charities and prominent private landowners.

Mr Harding says some poorer land in less favourable areas is selling for between £5,000 and £6,000 an acre but in other cases it has been changing hands for between £9,000 and £10,000 an acre.

“It’s evident that location and quality of land are important factors and the large difference shows up in land which has a better location,” he said.

Mr Harding said since 2007 the farming community had become key buyers but equally farmers had been selling the most land.

He quoted expansion as being the biggest reason for buying land, while the biggest reason for
selling was to re-invest elsewhere.

Between 1994 and 2011 the FTSE index had increased by about 85 percent while in the same period land values had increased by 374 percent, he said.

The very favourable inheritance and capital gains tax regime afforded to working farms remains by far the most significant restraint on bringing land to market. This seems very unlikely to change in 2013.

The powerful tax advantages of holding farm land means there will still be little incentive to bring it to the market, ensuring supply remains tight.

The average age of farmers in the UK is now 58. “These affluent baby boomers are considering retirement and, despite the pull of succession, many take the view that realising their assets is the best way to provide for themselves and their families in the future.

“Exactly where values are going in 2013 remains to be seen but we forecast continuing premium prices for the best land in the best locations,” said Mr Harding.

Farms with any sort of angle – potential longer term development prospects or a commercial element – will also prove attractive.

Mr Harding said the country house market has eased this year and the difference between country and London values has widened.

“The pricing gap between London and the regions is now seen to be at its largest for some time and next Spring could be an ideal opportunity to cash in on this increased differential in pricing and move from the capital to the country.”