Wednesday, April 24, 2019

Nervous but resilient land market as 2018 beckons

December 21, 2017 by  
Filed under Property

Tight supplies are likely to help sustain land values going into 2018, with uncertainty and good local advice providing opportunities for both buyers and sellers, suggests David Jones, head of agency at property professionals Robinson & Hall.

Only some 11,000 acres were publicly marketed in the first quarter of the 2017, he says. But the market made up lost ground with in excess of 95,000 acres being offered by the half-year mark, putting the statistics back on trend.

Nevertheless, for those looking for larger complete farms, pickings have been thin on the ground. This is likely to be the case going forward – although there are still good opportunities out there, says Mr Jones.

“The weak pound has increased the value of subsidies and commodity prices and has provided some sort of respite on farm debt. Interest rates remain low, despite every prediction, and pressure from the banks is limited.”

Uncertainty surrounding major political events and policy changes has remained at the forefront of buyers’ minds, says Mr Jones. With less than 15 months before the European Union, the prospects for agriculture remain uncertain.

“The government has indicated support will continue until the end of the current government, which could be 2022. This may have calmed the nerves surrounding the immediate implications of Brexit, but caution remains.”

Nevertheless, considerable rollover funds continue to chase a small number of larger farms and local demand for smaller blocks can, in some cases, be considerable. But without local interest, sales of smaller blocks can be difficult.

The market continues to show a very large variation in prices, both regionally and locally. Arable land might be sold at £7,000/acre, or at £14,000/acre – equivalent to a 100% variation for a very similar commodity.

Supply

The Local and Neighbourhood Plan process continues to provide opportunities for well-sited land. There remains consistent demand from housebuilders for all development sites, ranging from single plots through to schemes of 1000+ dwellings.

“Many strategic land promoters are actively looking for new sites to promote, over both long and short term, particularly in regions where the local authority does not have a minimum five year housing land supply,” says Mr Jones.

Terms vary considerably and attention needs to be paid to every element of the promotion agreement because the devil is often in the detail, he adds.

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