The average value of farmland in England and Wales has broken the £7,000 per acre barrier for the first time since June 2019, a new report says.
Knight Frank has released its latest Farmland Index, which has tracked the farmland performance in England and Wales up to the end of Q2 2021.
Prices for bare land rose 2% to £7,065/acre, helping boost annual growth to 1% – the first positive 12-month movement recorded by the index over the past five years.
Strong demand and historically low levels of supply are helping to support values, the estate agency says.
Andrew Shirley, head of rural research at Knight Frank, said environmentally minded buyers were becoming particularly active at the moment.
"This includes a number of Hollywood film stars who have been in touch with our farms and estates team regarding the potential to buy land for rewilding," he said.
"Meanwhile, the potential to earn carbon credits from farmland, not to mention attractive returns from renewable energy schemes like solar PV, is also peaking the interest of institutional buyers.”
In addition, tax-driven buyers looking to rollover their capital gains from land sales for development or compulsory purchase remain keen market players at the moment.
Strong arable and livestock commodity prices have also helped to offset some of the uncertainty surrounding the impact of Brexit.
However, the longer-term implications of replacing the area-based BPS with the Environmental Land Management Scheme (ELMS) are still to play out.
"Much will depend on how quickly farm businesses can adapt to losing their BPS cash by becoming more efficient or substituting it with ELMS," Mr Shirley said.
