The demand for UK farmland continues and Savills has well over £6 billion of buyers’ funds registered looking to invest in land and farms. However, as previously noted, this demand is focused towards the good commercial arable farms, where investment returns and tax benefits are the key drivers.

According to our analysis of farm transactions, where Savills acted for the buyer or seller, farmers continue to be the highest proportion of traders, representing over 50% of buyers and 46% of sellers in 2012, with expansion cited as the main driver for buying.

Non-farming ‘lifestyle’ buyers continue to be a presence in the market, in 2012 the majority were existing landowners with the proportion of new ‘lifestyle’ buyers down at 19%; the lowest level since 1998 and compared with a peak of 42% in 2004.

Overseas buyers

Overseas buyers, who have dwindled in numbers during the past few years, became more active and were from a diverse range of countries as shown in Graph 2. On the selling side the Danes represented almost 6% of sellers; similar to 2011.

The motives behind purchases and sales are shown in Table 1. Our research suggests that more sellers are moving out of farming for personal reasons. The numbers were significant in 2012, whereas relocation represented a much smaller proportion of sellers. Buying for investment and for residential or sporting reasons increased in 2012 compared with 2011.

Cash is still king

Our research shows that, as the predominant means of purchase, ‘cash is still king’, with cash from all sources, including rollover funds being the principle source of funds in just over 70% of all transactions.

Rollover money is still the main funding source in almost 15% of all transactions, driving purchases for Inheritance Tax reasons.

Debt or loans are a significant feature in around 30% of transactions, a proportion which is relatively unchanged since 2006. It is surprising perhaps that this proportion is not higher taking into account the availability of cheap money for secure purchases, such as land.