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Home » Latest News » Why are people investing in farms in 2016?

Why are people investing in farms in 2016?

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According to a recent article by Farmers Weekly, farm auctions in England and Wales have performed surprisingly well this year.

Of course, land is always in demand – especially high-quality grassland in good locations – but the farming industry as a whole is going through some challenging times.

That’s why this news is so surprising; 2016 thus far does not seem like an opportune year in which to buy property with a view to going into farming for the first time. Similarly, although some agri-businesses are doing well, one would not expect to see a surge in farmers buying land in order to expand.

With all that in mind, why are so many farming properties exceeding the expected price at auction?

Location, location, location

The farms selling for higher prices are those in the best locations; while this is to be expected, when that location is close to a town or city, or convenient for commuting, it is possible the buyer is not necessarily intending to go into farming. They may be buying the farm as an investment, intending to sell it when prices rise, letting it out for holidays and other activities in the meantime.

Read more: Why hail damage insurance is vital to UK farming

Change of purpose

Many of the properties that have sold well also had potential for conversion to residential use. In some cases, a permit is already in place, while in other cases one can clearly see how a farm could be viewed in this light – especially when the buyer is described as a ‘lifestyle developer from London’ or similar.

Many of the properties that have sold well also had potential for conversion to residential use

Permission having already been granted to convert agricultural buildings into residential building is often listed as a strong selling point at auction, and properties with such permission tend to sell at a higher price than others.

Significant development

So what should we make of this development? If more farms are being sold for conversion than continued agricultural use, it could be worrying for the farming industry in the UK. On the other hand, ongoing investment in rural property shows a faith in the market, which is good for the wider economy – although it remains to be seen whether, post-Brexit, we will see a significant slump in property prices, as many experts have predicted.

If you’re planning to follow the trend and invest in a farm, it’s vital that you have the right farm insurance – whatever you’re intending to use the farm for. We can help you to get the right cover for your needs, so you can protect your investment.

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