Just over 180,000 acres of farmland were publicly marketed across Great Britain during 2016. This, despite the uncertainty prior to Brexit, was very similar to the area advertised in 2015.

Over the full year we recorded a similar pattern across England (121,500 acres) and Scotland (44,500 acres), Wales (14,400 acres) being the exception, where supply increased almost 20% but off a smaller historic total area.

However, there were differences in activity throughout the year and between countries as illustrated in Figure 3 below.

Historic trends suggest that uncertainty creates a lull in market activity and 2016’s market dynamics showed some interesting trends.

At the end of the first half of 2016:

• In England, activity tempered by uncertainty and down -6%
• In Scotland, the opposite, a degree of referendum fatigue may have helped increase activity (+8%)
• Wales showed a similar pattern to Scotland, where activity (albeit from a smaller base where a few farms can distort either way) was up 35%.

But in the second half of the year:

• In England, activity took off and resulted in an 18% increase on the same period of 2015
• In Scotland, conversely, the flurry of activity in the first half of the year ceased and second half activity fell -18%
• Wales showed a similar pattern to Scotland, where activity fell -7%.

Total 2016 activity across the English regions generally followed the national pattern, with variations on the previous year limited to plus or minus 10% – a pattern not often recorded.

Our analysis of farm transactions across GB, where Savills acted for the buyer or seller, continues to show the range of motives amongst buyer and seller remains diverse.

^{Source: Savills Research}

Buyers

2016 recorded no significant change on previous years in terms of buyer profile with the exception of a higher proportion of ‘new’ non-farmer (lifestyle) buyers – those who are purchasing farmland for the first time, although existing lifestyle landowners appeared to have little appetite to add to their holdings.

We believe interest from non-farmers (lifestyle buyers) as the economy picks up may well rise, but our records show that their activity is still significantly below the levels pre Global Financial Crisis (GFC).

Figure 4 shows expansion remains the most significant reason (48%) to purchase farmland and over 80% of farmer buyers are expanding; similar to figures recorded in previous years.

Residential/sporting and buying for investment, are cited by 25% and 18% of buyers respectively. The weak pound has not yet led to a return of overseas buyers in the numbers seen pre the GFC, when 20% of the market came from abroad, but enquiry numbers have increased and it may be deals take place in 2017.

Our analysis of the principal sources of funds used to buy farmland shows there has been an increased use of borrowed money for farm purchases, 30% of all buyers compared with 23% in 2015, suggesting buyers may be taking the opportunity to use ‘cheap’ money while base rates are at a historical low.

The proportion of buyers (7%) using rollover as the principal source of funds was similar to 2015 and is still a long way off levels pre the GFC of over 25%. We expect this source to become more significant as housebuilding increases following improvement in the development sector and government incentives.

^{Source: Savills Research}

Sellers

The proportion of farmers selling in 2016 was lower than in 2015; with a number of potential factors contributing including a softening in farmland values in the short term, uncertainty surrounding Brexit and the short term prospect of an increase in subsidy as a result of the weak pound.

This reduction is balanced by an increased proportion of non-farmer and institutional/corporate sellers. These do not have the same sentimental attachment and tend to sell more regularly as circumstances change.

Figure 5 shows the proportion of sellers citing debt related reasons as the main reason to sell is similar to 2015 but an increasing proportion are selling to retire – a significant 28% in 2016. However, digging deeper into the data shows over 40% of farmers cite retirement as a reason for selling and an additional 20% for debt related reasons.

^{Source: Savills Research}