Slowing price falls and fresh policy clarity are signalling a potential turning point for the farmland market as it heads into 2026.
Farmland values in England and Wales continued to ease in the final quarter of 2025, but the softer rate of decline suggests a market beginning to regain balance after a year of adjustment.
Average arable land values fell by 0.6% in the final three months of the year, a marked improvement on the 1.5% drop recorded in the previous quarter. Pasture land values followed a similar pattern, declining by 0.4% compared with a 1.2% fall in Q3.
By year end, average arable land values stood at £9,494 per acre, while pasture land averaged £7,778 per acre.
The past year has been shaped by economic pressure and prolonged political uncertainty, much of it centred on speculation ahead of the autumn budget.
“Speculation ahead of the autumn budget kept the markets cautious for several months, yet the measures announced ultimately did little to alter the broader outlook,” says Andrew Chandler, head of rural agency at Carter Jonas.
A late policy shift, however, has helped stabilise sentiment. In December, the government raised the proposed agricultural property relief (APR) and business property relief (BPR) threshold from £1m to £2.5m.
“In late December 2025, the government announced an increase to the proposed APR and BPR threshold from £1m to £2.5 million, offering breathing space and much-needed stability for many family farms and rural businesses,” Mr Chandler says.
While he describes the move as “only a partial policy reversal”, he believes it provides greater clarity for longer-term planning and asset decisions.
Fears that inheritance tax reforms would prompt a wave of forced land sales have so far failed to materialise.
“We are not predicting a widespread sale of assets ahead of the implementation of IHT reforms in April, nor did we see evidence of this at the previous proposed £1m threshold,” Mr Chandler says.
He adds that the higher threshold should instead encourage landowners, particularly smaller holdings, to retain or invest in assets.
Policy clarity alone, however, has not removed the underlying financial pressures facing farm businesses.
Commodity price volatility, tightening margins and uncertainty over future environmental schemes remain key considerations for buyers, particularly those reliant on farm income.
“Cashflow challenges are expected to persist into 2026, driven by increasing labour costs and the delayed launch of the Sustainable Farming Incentive,” Mr Chandler says.
While the scheme is due to open to small farms in June and to all farmers in September, he notes that “key details are outstanding”.
The cost of finance is also continuing to weigh on activity across the market. “While interest rates have started to ease, they are still high by recent standards, weighing on affordability and sentiment,” says Sophie Davidson, research associate at Carter Jonas.
Oxford Economics forecasts two Bank Rate cuts in 2026, bringing rates down to 3.25% by the end of the year. Ms Davidson says that while this represents a positive shift, borrowing costs are likely to remain a barrier for many small- and medium-sized farmers seeking to invest or expand.
Despite these pressures, activity is expected to remain steady, albeit increasingly selective. “Selectivity has increased, but underlying fundamentals remain robust and point to broadly balanced conditions heading into 2026,” Mr Chandler says.
Well-located, high-quality assets are continuing to attract competition, while buyer profiles are shifting.
“Non-agricultural buyers – particularly institutional and environmental purchasers – are playing an increasingly prominent, and often national, role,” he says. Less exposed to day-to-day farming pressures, these buyers may look to capitalise on a period of lower land values.
Rising interest in natural capital is further influencing demand. “This is further supported by growing interest in natural capital opportunities, such as carbon credits and biodiversity net gain (BNG),” Mr Chandler says.
He notes that plans to bring Nationally Significant Infrastructure Projects into the scope of BNG from May 2026 could create significant opportunities for landowners nationwide.
Taken together, the slowing pace of price falls, improved policy visibility and growing non-farming demand point to a farmland market that is no longer retreating, but recalibrating — with opportunity increasingly defined by quality, scale and buyer type.
