For many rural businesses, inheritance tax reform and rising costs have been the trigger that has pushed long-deferred decisions into the open, according to Knight Frank.
The land agency said the past year has not been defined by a single shock, but by the convergence of regulatory change, subdued markets and higher operating costs, leaving businesses with less room to manoeuvre.
Drawing on conversations with landowners, farmers and estate businesses across the country, consultants at the company said delay has increasingly become a risk in itself.
While pressure remains, ministers moved to soften the impact of reforms dubbed the “family farm tax” by campaigners, announcing on Tuesday (23 December) that family farms will be able to pass on up to £2.5m in qualifying agricultural and business assets free of inheritance tax following sustained pressure from the farming sector.
What has emerged is not a sudden return of confidence, but a change in behaviour. Viability is being reassessed, uncomfortable realities confronted and decisions taken on the basis of current conditions rather than waiting for reassurance that may never come.
That shift is most evident in succession planning, where inheritance tax has acted as a catalyst for conversations many families had managed to defer for years. Claire Whitfield, a partner at Knight Frank, said the policy changes have forced issues into the open.
“Out of all the challenges around inheritance tax, what it has really created is a need for families to talk,” she said. “Some were putting off discussions about succession and what the future looked like, but this has forced them to broach the subject.”
Once those conversations begin, she said, they quickly move beyond ownership into harder questions about whether businesses are genuinely viable in the absence of reliable support. “Farmers can no longer rely on being supported in the way that they were,” she said. “They need to have a hard look at what works for their business and what doesn’t.”
The same realism is evident in the land and estates market. Will Matthews, partner and head of farms and estate sales at Knight Frank, described a year that continued to function, but without momentum. “There were enough transactions that you could just about get away with it,” he said, “but there’s been no real churn.”
With few owners under pressure to sell and little change in the buyer pool, pricing discipline has become decisive. “If you go out at the right price, you will sell. If your head is still in Covid pricing, it will just sit,” he said, adding that £11,000 to £12,000 an acre now represents a strong result for high-quality arable land. While capital remains available, he said the constraint is confidence. “There is massive wealth out there. The issue isn’t money, it is sentiment.”
Financial pressure is also reshaping advisory work. James Shepherd, a partner at Knight Frank, said 2025 has seen a rise in strategic portfolio reviews, particularly among landowners concerned about cashflow, consolidation and future liabilities. “Clients are worried about costs they may not be able to fund in the future,” he said.
Once those reviews begin, decisions are moving faster as data and digital tools sharpen focus. “Once the data is on the table, the conversation changes very quickly,” James said. “It stops being about possibilities and becomes about priorities.”
Expectations around environmental markets have also been recalibrated. James said hopes that natural capital would provide a financial safety net for agriculture have faded as development slows and policy uncertainty persists.
“The idea that nature markets would bail out UK agriculture hasn’t materialised,” he said, adding that such income works best as a supplement rather than a foundation. “It should be a bonus, not the basis for decision making.”
Regulation and rising employment costs are adding further complexity. Jess Waddington, a partner at Knight Frank, said housing reform has produced outcomes that do not always align with policy intent. “We’re seeing real examples where tenants want long term security, but the removal of fixed terms actually makes them feel less secure,” she said.
She added that minimum wage and national insurance rises are feeding quickly through rural enterprises. “Minimum wage and national insurance rises have a big impact on our clients’ businesses.”
The English wine sector offers a compressed example of how quickly market dynamics can shift when supply catches up with demand. Ed Mansel Lewis, partner and head of viticulture, said a surge in production has created short-term oversupply as vineyards planted between 2015 and 2017 came into production alongside the 2023 harvest. Expansion plans have paused, but pressure has also created opportunity.
“There’s an emerging market for acquiring distressed businesses,” he said, advising buyers to acquire existing vineyards rather than planting new ones. “You avoid the five year wait and the economics are far better.” Despite short-term strain, he added that English sparkling wine now has “an undisputed international reputation”.
Looking ahead to 2026, Knight Frank said decisiveness will increasingly separate progress from stagnation. Claire Whitfield said rural businesses must accept that external rescue is unlikely. “The government is not going to save people,” she said.
Across the consultancy’s rural practice, the same pattern is emerging: where difficult decisions are addressed early, businesses retain flexibility and control. Where they are deferred, options continue to narrow.
2025, Knight Frank suggests, may be remembered as the year waiting stopped being a strategy.
