The opportunities and threats facing the UK’s farming economy in a post-brexit world was a key topic of discussion at a recent seminar attended by local farmers, landowners and rural professionals this week. The breakfast seminar was hosted jointly by property specialists Savills and accountants Greave West & Ayre at GWA’s new premises in Berwick on 23rd March 2017. It was chaired by John Coats, a partner at GWA.
Giles Hanglin, Head of Savills Rural Research, discussed the impact of Brexit on food and farming. He said diversification was an increasing trend, with many farmers moving away from traditional agriculture an increased level of income was now coming from commercial enterprises like holiday lets and renewables. In 2000, 49% of rural estate income derived from agriculture, but this has now reduced to 37%. 43% of income now comes from residential income.
Giles commented: “The future of UK agricultural subsidy support is unclear, as is the likely impact of trade negotiations on the market for farm produce. However, there will inevitably be opportunities that arise for those best prepared post 2020. My message to farmers is to start looking at their businesses now in order to identify opportunities to thrive post reform.”
Andrew Ayre, partner at Greaves West & Ayre, commented that farmland values have had a strong run for the last 20 years having stagnated for the 20 years previously.
He said “They now look to be facing some headwinds and any change to capital tax reliefs, coming with subsidy changes and tougher farm viability, could potentially create ‘The perfect Storm’. However for those seeking to expand, more affordable land may not be a bad thing.”
Andrew also spoke about the 5 year averaging which is now available for farmers but pointed out that this came with extra compliance cost where it was worthwhile to claim. He also reminded everyone that from April 2018 business were also going to have to deal with HMRC’s programme to Make Tax Digital.
Rural agency expert John Coleman, based in Savills Wooler office, reported that the total value of Great British farmland and woodland has increased by 149% over the past 10 years, a better performance than most other asset classes over the same period.
He said: “We are currently witnessing a widening in the range of values achieved and the market has become very spread from sub £7,000/acre at the bottom end of the scale, up to in excess of £12,000/acre at the top.”
“Looking ahead, we anticipate average farmland values to soften slightly in 2017 and 2018: no market likes uncertainty and we are likely to see a bit of caution in the market during Brexit negotiations. We also anticipate an increased number of debt related sales and retirement sales over the period leading up to 2021.
However, looking further ahead we expect to see a 5.5% increase over the next five years as supply and demand rebalance. In a challenging market, preparation, presentation and pricing will be key to securing a good sale.”