Demand for farmland decreases as fears over Brexit grow

Demand for farmland in the West Midlands has further decreased, having now been declining for the last 24 months, according to a new study.

Respondents to the latest RICS / RAU Rural Land Market Survey have cited uncertainty over Brexit and insecurities over future subsidies, as well as low commodity prices as the key factors hindering the market.

Alongside the decline in demand, availability of mixed-use rural land has also decreased across the region, with 30% more respondents noting a decline in availability, as opposed to an increase.

Despite the decline in residential land available for sale, 10% more respondents reported an increase in availability for commercial farm land.

The fall in demand for rural land over the past two years has impacted prices. Farmland prices are now on average, £8,650 per acre(H2 2016), down 4% since the start of 2015, albeit prices did pick-up over the latest six-month period.

Nevertheless, RICS said the slowing of the market was predicted to lead to a decline in prices over the next 12 months.  

Almost a third (30%) more respondents expect prices for land with a residential component to fall rather than rise, and the price outlook is even weaker for commercial farmland, with a net balance of 40% of respondents expecting values to decline over the next 12 months.

RICS has laid out the priority areas for rural surveyors and land agents ahead of the EU negotiations; recognising the huge role that farming and land management will have in a post-Brexit economy.

The institution said the forthcoming move away from the Common Agriculture Policy represented an opportunity to reset the British agriculture and environmental policy framework.

RICS has called for:

•    Government to guarantee funding of targeted direct financial support beyond 2020 where it is required and provide an availability guarantee of labour
•    Enhanced funding to be make available immediately for UK applied agricultural and horticultural research and agri-tech development.
•    Government to “rural proof” all national polices, recognise the highly diverse nature of rural land-based businesses and ensure rural development funding is available to support and develop the establishment and growth of rural businesses post Brexit.

Further calls included in the policy framework are:

•    Government to provide policy and financial support for flood protection and mitigation measures to protect good quality agricultural land as part of a national strategy for food security.
•    Government to provide policy measures for reliable access to seasonal workers, including the provision of a clear and practical set of employment and associated welfare regulations. Agricultural and horticultural work should be recognised by temporary visa and work schemes to enable sourcing of suitable staff from both inside and outside the EU.
 
RICS Policy Manager, North and Midlands, Geoff White said: “The vital contribution of the English rural economy to England’s future economic success must not be overlooked, especially as lower commodity prices and higher costs continue to impact on output values.

“England’s landscape and environment needs to be protected and enhanced and its ability to deliver a range of public goods must be recognised and rewarded. Government must provide policy and financial support for Environmental Stewardship measures to enhance landscape quality and biodiversity in general, and to ensure the continued agricultural utilisation of moorland and other upland areas in particular.”