Analysis of farm transactions for 2010, where Savills were involved in either the sale or purchase, indicates that there was no change in the main types of sellers of farmland. Notably, these are farmers, non-farming landowners (including private trusts) and corporate/institutional landowners.
Farmers continued to be reluctant sellers in 2010 and accounted for less than half of all sellers (47.5%). Our research shows that this proportion is similar to the previous two years but is significantly lower than in 2006 and 2007, when around 60% of all sellers of farmland were farmers.
In addition:
- 15% of sellers in 2010 were institutional/corporate landowners
(14.8% in 2009) - 37.5% were non-farming landowners (38.3% in 2009).
However, the primary reasons for selling have changed with a shift towards more investment linked sales. 33% of sellers cited selling farmland to invest the capital elsewhere (27% in 2009) as the reason for sale. Of those citing investment as a reason to sell, 90% were nonfarmers or institutional/corporate sellers.
These sellers may well have taken the opportunity to cash-in on the recent significant rises in the capital values of farmland. In some cases the funds taken out of farmland were used to boost other business interests struggling in the current economic climate.
Debts and gains
Debt as the primary reason for selling remains low and relatively insignificant, representing just 7.5% of all sellers in 2010. Despite UK farm debt reaching a record £12billion in December 2010 the continuation of low interest rates has kept bank service charges at a record low as a proportion of total debt. Now just 3% compared with over 10% in 1990 when total debt was just £7.8billion but interest rates were around 14% (see Graph 6 in the gallery).
A higher proportion of Danes were sellers last year compared with the previous three years. This suggests they were cashing in on the continued strength of the UK market to take advantage of rolling gains into falling land prices at home.
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