Land Market Rents

The dawning of the New Year is always a good time to reflect on land market values during the previous 12 months, not least because it’s the time of year we get the most enquiries about it.

National statistics show that 2016 saw the land market ease by approximately 10% and certainly within Cheshire and North Wales there are signs of more caution in the market, although not a substantial drop.

The old adage ‘location, location, location’ remains the primary driver for land values. Blocks of land in areas with a number of dairy producers on supermarket contracts, all of whom have expanded in recent years, creates more demand. Arable margins remain cautious and large blocks of arable land will sell, but at lower levels than the prime pasture land in areas with a strong dairy presence.

Similarly, in North Wales the Vale of Clwyd continues to command premium values.

Land rents have possibly eased slightly but demands still exist for good parcels particularly if adjoining another holding.

All too often ‘rent talk’ is based on inaccurate information. It is important to know whether the rents being quoted include or exclude Basic Payment as this could make as much as £70/£80 per acre difference in the rental value.

Caution remains in the rental market place, not least because the full impact of Brexit is unknown. For those taking new tenancies, you must ensure there is some provision to enable rents to be adjusted depending on what happens with Basic Payment post-Brexit.

Similarly, farming businesses who rely on Basic Payment income are urged to review their cost structure and look at how they will continue to prosper if subsidy income is reduced, or even removed in its entirety.

The use of modern technology, enhancements to productivity and so forth are likely to be supported post-Brexit. This could lead to an opportunity to then take advantage of any grant schemes, should they become available.