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SamuearlJackson

Farmland down over 10% from peak

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4 hours ago, SamuearlJackson said:

The price of farmland peaked in mid-2015 at £8306/acre and currently is at £7313/acre:

https://kfcontent.blob.core.windows.net/research/157/documents/en/english-farmland-index-q2-2017-4813.pdf

was around 2.5K for years.  Long way to fall again.

Mind you, they're not building any more mud.

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This is more good news.  I talked to a land agent about 20 years ago about agricultural land values.  According to him, at that time, land was worth between £2,000-£10,000 per acre depending on usage and location. Such a wide spread makes simple valuations very difficult, however it would seem that a possible reduction in agricultural subsidies is working its magic.

Edited by dougless

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Agricultural land has started to fall considerably, from a peak of up to £10,000, to about 7 or £8,000 per acre. It has a lot more falling to do in my opinion. I paid over the odds in 1997 for a parcel of land at £4,000 per acre. I think in the not too distant future it will fall down to £3,000 per acre or maybe below.  Cheap credit has ramped  up land values in the same way it has for housing.

 

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A bit of the rise is due to the inheritance-tax efficiency of being a 'farmer'*.  Perhaps there are fewer rich folk coming along that want to buy a place in the country that they can pass down?

My view of land prices (in Wales) is that they're not going down, but perhaps that is due to not really seeing the peak that happened (in the linked dataset) in 2015.

[* IMO the relief of farmland is far too generous.  I'd be content to see it remain at 100% but only up to the first £1m or so (of agricultural value) and also have some kind of taper (ie, you have to have farmed it for 30 years before getting 100% relief).  This would absolutely protect the incomes of historical farming hard-working families**, but would stop the proliferation of farmland as a tax-dodge and also hinder those landed gentry that somehow manage to be treated differently than industrial families -- who, probably, do more to enhance the UK's wealth.]

[** I know some people would say 'f*ck them', but I mean this in terms of keeping the full stated goals of the policy while removing the side effects.]

Edited by dgul

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The rental yield on farm land is dismal (<1.5%) so one can only assume prices have risen because of the IHT exemption, so bubbletastic wouldn't it have made more sense for these millionaire bankers and farmers to leave an inheritance in liquid assets and let the heirs take the 40% hit on anything that doesn't fall within the allowance.

I remember when my uncle bought a sizeable plot of land (20 acres) in Hertfordshire for ~£40,000 must be 30 years ago, two thirds were woodland and he was pretty much self-sufficient for logs, we'd go collecting in his battered Land Rover. It was so much fun. If/when prices allow me to pick up 10acres for similar money I'll be doing the same. Preferably canal side if not somewhere I can pitch a tent away from prying eyes. 

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I was chatting to a dairy farmer not long ago and as it happened we were talking about another dairy farmer who had recently had a ~£2,000,000 milking unit installed.  I asked how on earth is he to justify spending that amount of money on a new milking unit (he would already have one which would do the job) with mild prices being so low.  He told me that the banks are providing multi-generational loans to farmers and that's how he was going to be able to install this expensive piece of equipment.  I hadn't heard of these multi-generational loans until then.  That probably contributes to the bubble price of farm-land too.

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On 8/15/2017 at 11:38 AM, dgul said:

A bit of the rise is due to the inheritance-tax efficiency of being a 'farmer'*.  Perhaps there are fewer rich folk coming along that want to buy a place in the country that they can pass down?

My view of land prices (in Wales) is that they're not going down, but perhaps that is due to not really seeing the peak that happened (in the linked dataset) in 2015.

[* IMO the relief of farmland is far too generous.  I'd be content to see it remain at 100% but only up to the first £1m or so (of agricultural value) and also have some kind of taper (ie, you have to have farmed it for 30 years before getting 100% relief).  This would absolutely protect the incomes of historical farming hard-working families**, but would stop the proliferation of farmland as a tax-dodge and also hinder those landed gentry that somehow manage to be treated differently than industrial families -- who, probably, do more to enhance the UK's wealth.]

[** I know some people would say 'f*ck them', but I mean this in terms of keeping the full stated goals of the policy while removing the side effects.]

Or just abolish inheritance tax?

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