Budget changes unlikely to alter land prices.

According to land agents, the budget changes are unlikely to stall the increase in the price of farm land.  The latest results of the Knight Frank Farmland Index show that English farmland values rose by 6.9% in the second quarter of 2010 which takes growth over the last 12 months to 19.7%.  The average price of farm land is now £5,769/acre (£14,250/ha) - the index's highest recorded level.

However this average does nothing to illustrate the vast differences in the price of individual blocks of land.  We sold a block of land just outside Whitchurch last week for an average of nearly £8k/acre (see our blog 23rd June).  Part of the reason that this particular block of land achieved so much over the average was the determination of two neighbouring farmers to buy it illustrating the auction process at its very best.

Demand for farm land remains higher than its finite supply and as more and more farmers expand in order to survive, we may still see prices continue to rise.

Whilst capital gains tax (CGT) was increased from 18% to 28% for higher rate tax payers in the Budget, it is unlikely to stop investment in farm land - 28% CGT is still better than 40% income tax. 

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