Farm letting market stuck in holding pattern as tenanted land shrinks

England and Wales’ farmland letting market remains stuck in a prolonged holding pattern, with new figures showing another year of decline and limited opportunities for growth.

The latest Agricultural Land Occupation Survey from the Central Association of Agricultural Valuers (CAAV) shows the area of tenanted land fell by 2,355 acres in 2024, extending a long period of minimal movement in the sector.

The survey, which tracks decisions on land occupation rather than ownership, found activity in the lettings market dropped back after a brief rise in 2023, returning to the subdued levels seen for much of the past two decades.

While most land leaving the sector continued to be re-let, very little new land was brought into the system, according to the survey's results, published earlier this month.

Just 2,116 acres of previously vacant land were newly let on Farm Business Tenancies during the year, accounting for only a small share of overall activity.

The figures point to a market held in an “unnatural equilibrium”, shaped by years of area-based subsidy payments that have reduced incentives for landowners to change occupation arrangements.

There were some signs of greater confidence over tenancy terms. The average length of new Farm Business Tenancies increased to 3.97 years, the longest average recorded since 2011, while lettings of more than one year averaged just over five years.

Larger and better-equipped holdings continued to secure longer agreements, with lettings of more than 200 acres averaging almost eight years, compared with just over two and a half years for units under 25 acres.

Despite this, the survey highlights how limited the supply of traditional farm units remains. More than 80% of new lettings were of bare land, reinforcing the scarcity of farms with housing and buildings coming onto the market.

New entrants continued to benefit where opportunities arose. The survey found that 29% of lettings involving a change of occupier went to new entrants, with the majority of those agreements running for more than five years.

However, the low overall level of letting activity continues to cap opportunities, limiting both business expansion and access to land for the next generation of farmers.

Unless more private landowners are encouraged to see letting as a positive option, land mobility is likely to remain constrained, making productivity gains and structural change in the sector harder to achieve.