Farmland Review 2024 by fishergermanllp

Farmland

REVIEW 2024

Review of 2023 Outlook for 2024 Rural Planning Update Biodiversity Net Gain Update

Welcome…

to the latest edition of our Farmland Review

2023 saw a series of major economic and political challenges, resulting in a somewhat varied marketplace across the country. Whilst values rose over the first half of the year, more muted growth was reported through the second half of the year. Increased supply both on and off market led to more opportunities in 2023 for the wide range of buyers we interact with. However, potential taxation reforms, increased interest rates, high input costs, reducing BPS payments, and a general election looming in the next 12 months, led to buyers taking a more cautious approach to the marketplace. A trend we will likely see carry into 2024. The buyer profile across the farmland marketplace remains diverse, as more environmental, conservation and non-agricultural investors seek land

2 | Farmland Review 2024

for uses within the emerging ‘natural capital economy’. Sustainability and the protection of our natural resources is now a key component of many discussions with prospective purchasers. Interest from renewable energy investors has strengthened further. In this edition, Matthew Allen looks back over the 2023 farmland market. Our feature article is provided by Robert Hurst who looks back over a 40-year career in farm sales and acquisitions with some remarkable milestone moments. Nia Borsey from our National Planning team provides a very helpful rural planning update, showcasing the added value our specialist advisory teams provide to our Farm Agency team. David Kinnersley provides a critical agribusiness update, and Tom Beeley provides his views on Biodiversity Net Gain and options/income

streams available to landowners. Patrick Ellicott rounds up our outlook for the 2024 farmland market with predictions for the year ahead. Early engagement and preparation remain key for those considering a sale or acquisition in 2024 and beyond. I hope you enjoy our Farmland Review and please do get in touch if we can assist you in 2024.

Richard Gadd National Country Agency Team 01295 226283 richard.gadd@fishergerman.co.uk

Farmland Review 2023 The main headline of 2023 has been a period of economic stagnation which in turn has seen people carefully assessing their options when considering a sale or purchase of farms and agricultural land. The statistics would say that there has been a slight upturn in volumes and prices, but the picture is wide-ranging across the country.

Supply

Buyers

Over the course of 2023 we have seen an increase in supply of agricultural land by about 15% but with significant regional variations. We have seen more bare land opportunities as vendors look to reduce debt with a noticeable impact of bank pressure on a lot of farming businesses. This has led to more 50- to 100-acre blocks of land pushing supply rather than larger-scale equipped farms. We have seen some larger one-off estate or larger block disposals, many of which have traded off-market. We have seen a noticeable increase in arable supply vs mixed or grassland farms.

Many private and investor buyers expected further supply increases throughout 2023 and thus perhaps held back a bit during the year to consider their options. They were also particularly conscious of increased borrowing costs and continued high input costs. Strategic land buyers remained active in 2023 with a slight tailing off similar to the rest of the market from mid-year onwards. There were certainly fewer farmer buyers in 2023 and from Q3 onwards we certainly saw much more caution from them around large investments with a general election looming and high borrowing costs with more stringent serviceability-led criteria from the banks.

Demand We have seen continued strong demand for well-located and sensibly guided land. This follows on the back of a strong end to 2022 which carried through into Q1 and Q2 of 2023. However, when interest rates hit highs of 5%+ in the early summer we saw a noticeable shift in demand right across the property market and a much more cautious approach from buyers. For the right agricultural property there was still good demand but the prices being achieved were a little more conservative. That trend has continued through the latter half of the year.

Vendors We have seen further retirement sales throughout the year from those without succession options as they look to retire a littler earlier than perhaps planned as BPS falls away completely and with continued uncertainty about the financial benefit of environmentally led future schemes. This comes on the back of a very average harvest without much surplus cash which has led to a significant number of discussions with potential sellers looking closely at their options and business direction for 2024 and beyond.

Values We saw further capital growth up to the mid year point in 2023 with arable values exceeding £10,500/acre for England with some exceptional figures being achieved for the best blocks. Values started to stabilise in the second half of the year with more consistency of the range of values being achieved. In all honesty we have probably seen a very small softening in average values compared to 2022 but this would still sit above £10,000/acre in most places. However, there are wide regional and national price variations for similar quality of land which can be particularly distorted if there is rollover interest. Grassland values have continued to soften but with limited transactional evidence except in the northern counties.

Matthew Allen National Country Agency Team 01295 226287 matthew.allen@fishergerman.co.uk

Farmland Review 2024 | 3

A reflection of the agricultural land market over a 40-year career In January 1981 Margaret Thatcher had been Prime Minister for two years having succeeded Jim Callaghan, the Labour Party leader, in 1979. Queen Elizabeth II was in the 29th year of her 70-year reign. Inflation had fallen to 13% from over 20% in the previous year. Interest rates were at 12% and UK feed wheat prices were £107 a tonne.

Despite record unemployment in the UK – over three million – enter Robert Hurst to the land agency profession. As a recently qualified chartered surveyor I joined the practice of Martin Maslin Agents, Estate Agents, Auctioneers and Valuers, of Grimsby and Market Rasen in Lincolnshire.

area of land which is marketed today. The financial institutions, pension funds and life assurance funds were active in the market throughout the 1970s and continued into the 1980s, buying mainly large arable farms in the Eastern Counties, many by sale and leaseback arrangements and by 1982 buying nearly 40% of all let farms on the market.

As 2023 draws to a close I also draw to a close a career of over 40 years as a land agent, auctioneer and valuer working in Lincolnshire and the wider East Midlands with the past 15 years with Fisher German based in Newark.

In 1988 the EEC introduced voluntary setaside of 20% and later in 1992 this became compulsory at 15%. The early 1990s were a difficult time with lower farm subsidies, compulsory set-aside and low product prices. This led to a dramatic fall in demand and a consequent fall in values for farmland.

British politics in the 1980s was dominated by the Conservatives with Margaret Thatcher at the helm. The European Economic Community (EEC) was grappling with the ever-increasing costs of the Common Agricultural Policy which was the largest draw on its budget. Surpluses in production led to the introduction of quotas, most notably for milk.

I well remember a 1,530-acre Grade 3 arable and beef farm in South Lincolnshire with five houses and two ranges of farm buildings, which had been on the market for 18 months at £1.8m, sold in 1993 for around £1.5m. What amused me most about that sale was that on the farm was an old military Nissen hut used for the storage of cars. The building housed a 1950s Maserati which had been raced by the Argentinian Formula 1 driver, Juan Manuel

The agricultural land market during the 1980s was relatively stable with values hovering around £2,000 an acre for most of that period. More than 400,000 acres was publicly marketed during the early 1980s, four times the

Fangio. The car was worth £3m, twice the value of the whole farm. Even Grade 1 silt land dropped in value with a notable 1,000-acre farm in South Lincolnshire south of the Wash selling for around £2.5m, a bargain in today’s terms when a farm of that quality could be expected to achieve a price of up to £15m.

Average farmland values across England (all land types) (opinion-based) – 1980 to 2023 £10,000 £9,000 £8,000 £7,000

£/acre

£6,000 £5,000 £4,000 £3,000 £2,000 £1,000

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

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1982

1981

1980

£0

Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

4 | Farmland Review 2024

the gradual reduction in the subsidy payment being replaced by the Environmental and Land Management (ELM) Scheme and other environmental stewardship type arrangements such as a Sustainable Farming Initiative (SFI). These are based on the principle of giving payments to farmers for providing public and environmental benefit and will not provide the same level of net cash benefit to farmers as enjoyed under the Basic Payment Scheme. Over the decades agricultural farms and estates have been a prized possession of the wealthy. Whilst many of the old traditional estates have diminished in size over the years, there have always been individuals whose fortunes have come from non-farming backgrounds who have been keen to own land and estates. Over my career the land market has had its ups and downs with different investors entering and leaving the sector at various times.

Black Wednesday in September 1992 when the UK crashed out of the European Exchange Rate Mechanism devalued the pound sterling which inflated agricultural commodity prices in the UK. This, along with a good harvest in 1992, low interest rates and increased farm incomes, and farm values started to recover steadily from the mid 1990s. In the late 1990s, with uncertainty over the impending changes in farm subsidies, the market started to weaken. The 1990s also saw part of the mass withdrawal of the pension and insurance companies from their agricultural investments providing opportunities for sitting tenants to buy their holdings at significant discounts, some realising the capital gain with onward sales with vacant possession.

where I achieved a price of £12,500 an acre, a record price at that time.

As the green agenda and the push for a decarbonised economy grows we are seeing an emerging market for land to be used for biodiversity net gain and for carbon offsetting. It will be interesting to see how this market develops alongside the need for more reliance on home-produced food.

Once the Single Farm Payment had been introduced this seemed to unlock the market, certainly in the main arable farming areas where increases in values were fuelled partly by an invasion of Danish and Irish buyers. In Lincolnshire alone the Danes purchased nearly 30,000 acres in a four-year period from 2005, bringing arable land values well over £5,000 an acre for Grade 2/3 combinable crop-growing land.

In the early 2000s confidence in the farming industry was low as it waited for the outcome of the changes of the subsidies introduced in 2005 when direct support for arable, beef and sheep was replaced by the Single Farm Payment.

Then came the financial crash of 2008; and, whilst the market took an initial hit, by 2009 the land market proved to be remarkably resilient to the UK’s economic recession. Investment in agricultural land has been seen as a safe haven when financial markets are in turmoil and that factor certainly kept the market buoyant with demand outstripping supply over the next few years, with values for Grade 2 achieving over £10,000 an acre and in many areas Grade 3 between £7,000 and £9,000 an acre.

But one event in 2001 was a highlight for me: the public auction sale of 80 acres of some of the very best Grade 1 silt land north of Boston in Lincolnshire, locally known as Toft Cream,

The 2016 vote to leave the European Union (EU) again created uncertainty but the real effect of Brexit was not felt by farmers in the UK until the end of the Basic Payment Scheme and

Please note: The values referred to in this article relate to arable land as opposed to ‘all land’ types as shown in the land value graph

Robert Hurst Lincolnshire 01636 642504 robert.hurst@fishergerman.co.uk

Farmland Review 2024 | 5

A Selection of 2023 Farm Sales If you would like to learn more about these sales or the transactions taking place in your area please call us for a market update.

SOLD STC

Deerleap Farm, Leicestershire A very accessible amenity farm with equestrian facilities, traditional and modern farm buildings and well-managed woodland. In all about 113 acres.

SOLD

Land at Telford, Shropshire A well-located mixed grassland and woodland holding in rural Shropshire with environmental scheme potential. In all about 94 acres.

SOLD STC

Land at Old Whittington, Derbyshire

Land at Cherry Willingham, Lincolnshire

Two parcels of arable land and woodland with potential for alternative uses. In all about 89 acres.

Arable land investment opportunity with stewardship income and option agreement for battery storage facility. In all about 162 acres.

SOLD

Land at Weedon Lois, Northamptonshire

Manor Farm, Warwickshire

A productive arable holding in a ringfence, with planning consent for a new agricultural building. In all about 210 acres.

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A mixed arable and grassland farm with modern and traditional buildings subject to tenancy. In all about 242 acres.

PART SOLD & PART SSTC

Hill Top Farm, Derbyshire A fully equipped dairy farm with renewable energy income in the Peak District National Park. In all about 287 acres.

SOLD

Land at Apley, Lincolnshire A mixed arable and grassland holding in a ringfence. In all about 129 acres.

SOLD STC

Yew Tree Farm, Staffordshire A 44-acre grassland farm in a rural yet accessible position.

Rural Planning Update Agricultural Permitted Development Rights – England Permitted Development Rights (PDR) are a true benefit to farmers and landowners, creating leverages in allowing development to be carried out quicker, cheaper and easier. Now, there may be scope for new allowances and change on the horizon. On 24th July 2023, the UK government published a consultation on proposed changes to PDR in respect of agriculture in England. The consultation sought views on changes to the rights on allowing for agricultural diversification and development on agricultural units. The aim of this consultation was to provide further flexibility for farms to undertake works on their units and act as an enablement for farm diversification without the requirement of a full planning application. On the whole, the proposals include agricultural PDR expansions for: • Residential conversions (Class Q) • Agricultural Diversification and Flexible uses (Class R) • Farm Buildings (Class A)

Housing Delivery Class Q currently allows for conversion of agricultural buildings to create up to five residential dwellings at a maximum potential floor area of 865sqm. The consultation is proposing increasing this to a maximum of 10 dwellings and floor area to 1,000sqm including allowing extensions under PDR.

Agricultural Diversification and Flexible Commercial Uses The government is pledging to support the rural economy, increasing flexibilities around change of use of existing agricultural buildings to commercial uses. Currently, Class R allows the change of use of a building and any land within its curtilage to a flexible use under Class B8, C1 and E. There are some significant changes proposed within Class R Part 3: It is proposed to extend this right further than Use Class E, to allow for outdoor sports, recreation or fitness, in turn allowing buildings and land within its curtilage for activities such as outdoor sport. Total floor space which can be changed under Class R is being reviewed from 500sqm to 1,000sqm, including varying the trigger point for when prior approval impacts the proposed development under Class R from the current 150sqm

The consultation is proposing to expand the types of buildings, e.g., buildings in forestry or equestrian use) which can benefit from this right or a similar new right. Ability to change the use to General Industrial (B2) limited to the processing of raw goods on site (excluding livestock). This would support farm shops where locally grown produce can be processed on site for direct sale. The proposals are seeking to allow for a mix of permitted uses on the same site; this would help make it easier to gain uses such as farm shops.

Agricultural Buildings Class A currently allows new agricultural buildings up to 1,000sqm. As part of the consultation the government is proposing increasing the size limit to 1,500sqm (subject to being above 5ha) enabling farms to respond to challenges faced in the agricultural sector and erect buildings which can align with modern practices. The consultation responses are now being analysed. I am sure the proposed changes in the consultation are welcomed by most farmers and landowners. The proposals would certainly provide multiple benefits to enable expansion of units without the associated planning costs or importantly timescales considering delays which are being faced by Local Planning Authorities (LPA) now.

Second homes and short-term lets – spotlight on England and Wales More consultations! At present, it is possible to change the use of a residential dwelling into a use as a second home or short-term holiday let without obtaining planning permission. The government opened a consultation in April 2023 on introducing a new C5 use class for shortterm lets. This follows in Wales’s footsteps following their amendment to planning legislation in 2022 introducing specific use classes for second homes and holiday lets (Use Class C5 and C6 in Wales). The proposed new planning measures will allow local councils to have greater control on any future increase in the number of short-term lets in their area. Although not proposing to require planning permission to change this use formally (C3 dwelling house to C5 short-term let can be done under PDR), where local issues

are recognised, PDR could be removed by the LPA by the introduction of an Article 4 direction (again following in Wales’s footsteps). It is not wholly clear how large these areas could potentially be but is likely to apply to the smallest possible geographical area, focusing on those areas or streets with the highest number of short-term lets. It is no secret that many second homes purchased in Wales are located in the rural area. Gwynedd Council is the first LPA to consult on implementing Article 4 across their entire county (to revoke right to change the use between C3, C5 and C6 without planning permission), with on average 9% of dwellings in 2021 being chargeable as a second home. This is quite a significant move when Gwynedd is the second largest county in Wales.

It is clear that England may well be following Wales, and that Wales may be heading towards further Article 4 directions to reduce the change of use through planning powers. While shortterm lets can support the rural economy and tourism sector, it is important that a balance is struck with meeting the needs of local communities especially in rural areas both in England and Wales.

Nia Borsey Associate 01244 617981 nia.borsey@fishergerman.co.uk

Farmland Review 2024 | 7

Agribusiness Update UK farming has had another whirlwind year in the agricultural transition plan. Following on from skyrocketing fertiliser costs, we have seen a return to more reasonable prices but also a reduction in commodity prices. The 2022/23 year in farming saw an interesting time following the scorching harvest 2022, seemingly a distant memory in the wet 2023 harvest which saw an out-turn of very average yields. The grain prices have mostly seen a downward trend after the introduction of the Black Sea grain deal in July 2022 that since expired in July 2023. Whilst we have seen some reduction in energy prices, there have been increases in interest rates and a cost-of-living crisis, all of which will influence farming businesses. The post Brexit agricultural policy is slowly taking shape. We have seen the introduction of: • The Annual Health and Welfare Review – funding for an annual vet visit for farmers with cattle, sheep or pigs. • The Farming Equipment and Technology Fund – partial funding for new equipment for ‘productivity & slurry’ and ‘animal health and welfare’. • Calf Housing for Health and Welfare Grant – grant to build, upgrade or replace calf housing buildings to deliver health and welfare benefits. • Landscape Recovery – funding for projects that support net zero, protected sites and wildlife-rich habitats. • 2 023 Sustainable Farming Incentive (SFI) – funding to help increase farm income and productivity whilst enhancing the environment.

However, we have also seen the 2022 SFI being discarded, and the deadline extended for the final Countryside Stewardship applications in August 2023, which meant the delay of the roll-out of the 2023 SFI. SFI 2023 applications are now open. The scheme includes six standards which are: • nutrient management • integrated pest management • hedgerows • arable and horticultural land • improved grassland • low/no input grassland

Option

£/ area Total agreement (ha) Value or £/ha

NUM1

589

£589

IPM1

989

£989

SAM1 (agreement)

£95

In total 23 actions are available. Many of these are similar to actions that had been available through Countryside Stewardship Mid-Tier schemes with the addition of some new actions, some of which are listed in the following table:

SAM1 (samples & plan)

5.80

200

£1,160

IPM4

£2,565

AHL3

590

£2,950

SAM3

382

£9,550

LIG1

151

£755

Management payment

£1,000

Action

Payment

NUM1: Assess nutrient management and produce a review report

£589/ Assess current approach to nutrient usage and effectively agreement plan how to manage nutrient usage more effectively.

IPM1: Assess Integrated Pest Management (IPM) and produce a plan

£989/ Understand the benefits, costs, impacts, and risks agreement of current approach to crop pest, weed and disease management for your land and effectively plan how to adopt appropriate IPM methods.

Action Aim

SAM1: Assess soil, produce £5.80/ Understand the condition of your soil and effectively plan soil management plan and ha + £95/ how to increase its long-term health and productivity. test soil organic matter agreement IPM4: No use of insecticides

£45/ha

Do not use plant protection products containing insecticide to support an IPM approach by managing crop pests sustainably.

AHL3: Grassy field corners and blocks

£590/ha

Provide an intact grass sward throughout the year without tracks/compacted areas to provide year-round habitat for wildlife and support IPM approach.

SAM3: Herbal leys

£382/ha

To provide varied root structures, to help improve and maintain the soil’s structure, biology and fertility.

LIG1: Low input grass

£151/ha

Grassland producing a sward with flowering grasses and wildflowers from late spring and during summer, a variety of plant heights by autumn, with covering of flowering grasses and wildflowers left to go to seed and tussocky grass allowed to develop.

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In addition, an annual management payment of £20/ha on the first 50ha in SFI will be paid. We have put together an example of a 200ha mixed farm, comprised of 170ha arable land and 30ha grassland. We have selected some of the most popular actions, which are shown below with their potential income. The implementation of a modest SFI scheme on this farm with no changes to existing management could generate almost £100/ha.

Total

£19,653

In the next 12 months we are hopeful that more SFI actions will become available with the rollout of the Countryside Stewardship Plus Scheme and the continuation of funding for new equipment. Our agribusiness consultants are committed to ensuring client businesses are as prepared as possible for the years of transition and are well placed to offer relevant and structured advice.

David Kinnersley Agribusiness 01905 459427 david.kinnersley@fishergerman.co.uk

Biodiversity Net Gain Update With government confirming that mandatory Biodiversity Net Gain will be applied to the planning system in England from January 2024, Senior Associate Tom Beeley provides insights from Fisher German’s early experiences in this new sector of the land market. Although not yet fully introduced, BNG is already creating demand for biodiversity offsetting amongst developers and with it opportunities for landowners to diversify into long-term habitat provision. Information continues to trickle out from government about how this complex new system will operate although further detail particularly around the application of BNG within local planning policy is needed. From discussions with developers it is clear that the majority are getting to grips with the application of BNG. Development site design will play an important role in minimising the need for offsetting. However, provision on-site needs to be balanced against the practicalities of longterm management of habitat provision within development and the impact on site viability. For those considering becoming a biodiversity offset provider there are a number of aspects to consider. Firstly biodiversity offsetting is not the only route to receiving an income for habitat provision, and in some instances more suitable means of funding environmental work may be available through Countryside Stewardship or the wide array of grants for woodland creation.

Unit pricing Government has published indicative pricing for the Statutory Credit market to provide an option of last resort where a 10% net gain cannot otherwise be achieved. Statutory credits pricing ranges from £42,000 to £650,000 per credit depending on habitat type. To access these credits, developers will need to purchase two credits for every unit of habitat offset they need. In effect, offsetting a single habitat unit via the statutory market will cost at least £84,000. Statutory credits are an unattractive proposition and deliberately so with government keen to ensure their use remains an option of last resort. Statutory credit pricing provides an indication of ‘worst case’ offset costs for developers and private market habitat offsets will naturally be below this level. We have seen a wide range of prices emerging from private habitat unit providers. Factors such as cost of delivery, provider, type of unit, location and supply and demand will ultimately determine the value of units on the private market, and the application of BNG at a local policy level will be another important factor. It is important to remember that these unit prices do not represent pure profit with significant costs of establishment and management over 30 years needing to be deducted.

Habitat types It is important to understand that habitat units are not universal. Trading rules within the biodiversity metric used to assess net gains require that offsetting must be provided on a like-for-like or better basis. Habitat loss must be replaced with habitat of a similar distinctiveness and condition elsewhere. It is not sufficient for a developer to simply provide a larger area of lower-quality habitat elsewhere to offset the loss. This is an important distinction when it comes to considering the market for, and supply of, habitat units. Some types of habitat will be more difficult and costly to offset than others and some types of unit may be more easily supplied by the market. For example, grassland and hedgerow units might be relatively attractive to supply on farmland as they sit alongside existing farming practices, requiring only relatively minor changes to land management.

Habitat enhancement over creation BNG policy incentivises enhancement of existing, distinctive habitats which are in suboptimal condition. Enhancement of existing habitat might be a more attractive proposition than the creation of new habitat units once delivery costs are taken into account.

Local Nature Recovery Strategies Spatial multipliers within the metric incentivise delivery of the right habitat in the right place. These multipliers take on added significance when considered in the context of Local Nature Recovery Strategies (LNRS) being developed across England. LNRS will identify existing

priority habitats and areas where opportunity to connect and expand habitat exists. Offsetting sites located in these strategically important locations benefit from multipliers enabling more habitat units to be generated per hectare, providing more value. Local authorities are beginning to develop LNRS with the ambition to have them published by 2025 with opportunities for landowners to engage.

So what can landowners do to explore this market? There are various development models available to explore biodiversity offset provision. As well as opportunities to develop habitat banks in hand, an array of habitat developers are emerging. These operators will enter into agreements with landowners to establish habitat banks either on a lease basis – paying a rent and management fee – or under a promoter style arrangement sharing income from unit sales. In most instances the landowner will continue to manage their land, but under a legally binding management agreement to achieve the necessary habitat improvements, Each model comes with different considerations and will suit different circumstances. Fisher German has worked with a number of clients to develop strategies, and take forward opportunities. If you would like to explore biodiversity offsetting or other natural capital opportunities we can provide independent advice to help you understand and explore the market.

Tom Beeley Market Harborough 01858 411227 tom.beeley@fishergerman.co.uk

Farmland Review 2024 | 9

FGAuctions

Certainty and transparency are what sellers want when signing up to sell by online auction – and, on average, sellers are getting 31% over their guide prices”

Online Auctions

Tom Dennes, Head of Auctions

This simple statement sums up why selling by online auction is proving so appealing to sellers. An auction can provide a great alternative to the traditional method of selling by private treaty as it can avoid lengthy delays and uncertainty, quickly securing a buyer at a price determined by the market.

The online auction process provides complete transparency – a full legal pack is prepared before the auction can commence, thus disclosing all legal aspects of the sale to the buyer and their advisors in one bundle. It only remains for the buyer to inspect the property, consult and appoint their lawyer and then come to an informed decision about making a purchase. Critically, each sale is an individual sale, not linked to a huge auction day – offering maximum flexibility, you remain in control. The auction will run for typically four weeks, at the end of which both the buyer and seller will achieve certainty when the auction ends and the clock goes to zero (once the reserve has been met). No change of mind. No additional legal fees following aborted sales. No frustrating delays. As a result, selling property by online auction goes from strength to strength, with transaction numbers up by 30% year on year, a remarkable growth area for Fisher German. As a business, we started to offer online auctions as a new service line before the Covid-19 pandemic, with rural, residential and commercial clients all seeing the benefit of this method of sale. It appeals to private sellers as well as public bodies and charitable institutions who need to be able to demonstrate that the best price has been achieved in the open market. In response to the massive increase in demand for online auction sales, earlier in 2023 we set up a new

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trading name for our online auction business, FG Auctions. Some examples of recent successes include a 23-acre parcel of pastureland, a few miles north of Banbury in Oxfordshire. Our clients had been approached by a number of local people asking to buy the land with a wide range of prices offered. Keen to secure the best price, and not to have to choose one buyer over another, Fisher German advised a sale by online auction to realise the best open market price. Having first identified that there was no planning potential, the land attracted 61 bids and sold for nearly 45% over the guide price, selling for £376,035 against a guide price of £260,000. That represents nearly £16,500 per acre – it’s safe to say that the seller was thrilled! A growth area in the last year is commercial online auctions – our Knutsford office offered for sale an office block in Sandbach which attracted a lot of interest, finally selling for £526,500 after 81 bids, more than 1.5 times the guide price of £340,000. Acting on behalf of one of Fisher German’s utilities clients, after a review of their nonoperational assets, FG Auctions were instructed to sell a semi-detached cottage in a fabulous location overlooking a reservoir near Rugeley. The sale surpassed client expectations going 15% over the guide of £275,000 and finally selling for £315,500. And for the buyer, how does it work? When it comes to bidding, you can do so from the

comfort of your own home sitting around the laptop with other family members and watch the bids being submitted on screen. As soon as the reserve is met, the screen tells you, meaning that any subsequent bids will reset the timer for five minutes allowing you plenty of time to discuss your next bid with those around you. When you’re waiting to see if you’ve placed the winning bid, five minutes can feel like an age! But if you are the successful buyer, when the timer goes to zero, that’s the legally binding exchange of contracts. This offers more certainty and security than the more common private treaty sale, where getting to exchange of contracts can sometimes be a long and fraught process, taking typically four months or more at the moment. Online auctions offer the seller the chance to sell their property in a fast, transparent and certain manner – in this increasingly challenging market, that could be good to know. Turn to your local property professionals, Fisher German, to find out how online auctions can help you.

Tom Dennes Banbury and Thame 01295 226290 tom.dennes@fishergerman.co.uk

Looking ahead

The 2024 Farmland Market

Our predictions for the year ahead: • Further increase in supply during 2024

Early evidence suggests increased supply in 2024 with values holding firm. Buyers

Vendors

Strong demand for land and farms is expected to continue into 2024 from a variety of buyer profiles. ‘Rollover’ buyers will continue to seek commercial-sized land holdings, often outside of their current geographical regions. Traditional farming buyers will likely remain motivated for local and neighbouring opportunities to expand their current holdings despite increasing pressure on borrowing and high input costs.

The vendor profile for 2024 is likely to be similar to what we have seen throughout 2023.

Non-farming, private and amenity buyers will continue to drive demand for smaller residential farmsteads, bare land and property with diversified income streams or the potential to ‘add value’. Amenity buyers will remain principally location-driven and seek those opportunities to ‘add value’ perhaps through conversion of traditional buildings or smaller leisure developments. These buyers will often pay a premium for smaller acreages where the land may be used for more personal enjoyment purposes. However, with current borrowing costs, and cost of living pressures, we will likely see a slight softening in demand, and more caution, from such private and amenity buyers. Following confirmation from the government that Biodiversity Net Gain will be enforced by planning policy from January 2024, we expect to see a continued demand from national and local developers and investors looking to offset and meet their BNG requirements. This demand will continue to be location-driven with a particular focus on poorer-quality agricultural land.

• Continued demand from carbon-, green- and conservation-led buyers • More caution from amenity and lifestyle buyers in the marketplace

We anticipate the majority of supply to arise from small- to medium-sized farming enterprises, likely offering the whole or part of their current holdings in order to reduce borrowing costs and/or lower loan repayments. A good proportion of supply is likely to come from retirement sales and we anticipate some farming operations to bring forward their retirement plans before subsidy payments reduce further. We expect to see a number of vendors cite input cost inflation seen through 2022 and 2023 as a motive for sale in 2024. We will likely see some landowners disposing of smaller acreages in order to fund diversification schemes to generate additional nonagricultural income from renewable energy and other projects. We foresee an increase in debt-related sales following this input cost inflation and with higher borrowing costs.

Volumes We expect to see further increase in the supply of farmland to the market in 2024 from 2023 levels. With BPS payments declining from 2023 and further pressure on energy and input prices, we anticipate many farming operations will look to dispose of land to raise capital. The increasing average age of the UK farmer, often with no succession potential/options in some cases, will lead to an increase in retirement sales and supply of small- to medium-sized farms and bare land. With interest rates at their highest level in 15 years, we expect to see an increase in debt-related sales with proceeds of land sales going towards reducing historically high borrowing costs. Poorer quality agricultural land remains in demand from environmentally focused and investment buyers; we would expect to see an

• Increased supply of smaller scale opportunities across the marketplace

increase in lower-grade and hill farmland being marketed. In line with the trend of the last few years, we anticipate a good proportion of trading will occur off market and thus not truly reflecting the true volume of land transactions.

Values Whilst location generally dictates land values, both scale and quality play significant roles. Average values increased through 2023, strengthening between 2-5% in many regions. Looking ahead, with increased supply, we expect muted capital value growth. Larger scale commercial farms and estates with modest residential assets will continue to perform well, with price increase expectations for those located more favourably. Smaller-scale (50-100 acres) bare land opportunities will likely attract strong values in 2024 from the full range of buyer types, as these smaller parcels remain more affordable. We do expect more modest price movements for those less accessible and poorer quality holdings which do not lend themselves to conservation- and carbon-led opportunities. On the whole, we maintain a positive outlook for farmland values across the country. For anyone considering a sale in 2024, early preparation is key. Please do not hesitate to contact us, in confidence, to discuss your objectives and we would be delighted to advise accordingly.

Patrick Ellicott National Country Agency Team 01530 410829 patrick.ellicott@fishergerman.co.uk

Farmland Review 2024 | 11

Chester

Cwmbran

Doncaster

Exeter

Glasgow

Head Office

Hereford

High Wycombe

Hungerford

Knutsford

Liverpool

London

Manchester

Market Harborough

Your key contacts: Richard Gadd National Country Agency Team 01295 226283

Stuart Flint National Country Agency Team 01295 226281

richard.gadd@fishergerman.co.uk

Alasdair Dunne National Country Agency Team 01295 228750

01530 410829

Newark

Newcastle

Richmond

Stafford

Matthew Allen National Country Agency Team

Thame

Molly Skinner Bedford

1 Ashby Ashby de la Zouch de la Zouch

Ashford 2 Ashford

Banbury 3 Banbury

Bedford 4 Bedford

01530 410840 thomas.blake@fishergerman.co.uk

Joy Brankin-Frisby Market Harborough

24 5

26 13

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7 7 thomas.parker@fishergerman.co.uk

1 12

1 12 1 12

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17 Liverpool Liverpool

Birmingham 5 Birmingham

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25 ThameThame

edward.clark@fishergerman.co.uk

Hereford Hereford 13

Worcester Worcester 26

01565 745326 21daniel.hayhurst@fishergerman.co.uk

joy.brankin-frisby@fishergerman.co.uk 8 8 15

Christian Sanders Worcester

3 25

6 4

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Ben Charsley 20 Banbury & Thame

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Thomas Parker Doncaster & Newark 19

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Edward Clark Chester

molly.skinner@fishergerman.co.uk

25ben.charsley@fishergerman.co.uk 14 14 18 18 2

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Office Network

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14 14HighHigh Wycombe Wycombe

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15 15Hungerford Hungerford

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16 16Knutsford Knutsford

4 Bedford Bedford

17 17Liverpool Liverpool

5 Birmingham Birmingham

18 18London London

6 BuryBury St Edmunds St Edmunds

19 19Manchester Manchester

7 Chester Chester

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8 Cwmbran Cwmbran

21 21Newark Newark

9 Doncaster Doncaster

22 22Newcastle Newcastle

01295 236009

Matthew Barker West Midlands 10

Thomas Blake Ashby & Stafford

01234 827119 23

matthew.allen@fishergerman.co.uk

Worcester 22

SEPERATED SEPERATED VERSION VERSION FORFOR USEUSE IN IN BROCHURES BROCHURES

01295 226287

patrick.ellicott@fishergerman.co.uk 11

stuart.flint@fishergerman.co.uk

alasdair.dunne@fishergerman.co.uk

Patrick Ellicott National Country Agency Team

10 10Exeter Exeter

23 23Richmond Richmond

11 11Glasgow Glasgow

24 24Stafford Stafford

01905 677351

01905 459433

12 12Head Head Office Office

25 25Thame Thame

christian.sanders@fishergerman.co.uk

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13 13Hereford Hereford

26 26Worcester Worcester

Farmland Review is intended to be an informative guide. It should not be relied on as giving all the advice needed to make decisions. Fisher German LLP has tried to ensure accuracy and cannot accept liability for any errors, fact or opinion. January 2024.