UK farmland still good investment
Farmland values have stayed consistent, despite numerous challenges, but what does the future hold?
2 minutes to read
When Rachel Reeves, the Chancellor of the Exchequer, increased the amount of Inheritance Tax that would need to be paid on agricultural property, many commentators said farmland values would fall sharply.
However, the price of agricultural land in the UK has dropped only marginally since the Budget last autumn when Ms Reeves announced the introduction of the family farm tax.
According to the Knight Frank Farmland Index, which tracks the value of bare agricultural land, prices dropped just 1% in the first three months of 2025, and by only 1.9% over a 12-month period.
On average, one acre of land is worth just over £9,000/acre, but many of the sales we have dealt with recently have achieved much higher prices. £15,000/acre is not uncommon.
Prices vary across the country. According to our county-by-county analysis of arable and pasture prices (see table), some of the highest land values can be found in south-west England, with the lowest in the north-east.
It is worth pointing out that the first £1 million of an agricultural estate will still be exempt from Inheritance Tax and, for a married couple, other allowances could push that to £3 million if the property is left to a child or grandchild.
Even above these thresholds, Agricultural Property Relief will still apply, albeit at a much lower rate than before, meaning IHT will only be paid at a rate of 20%, compared with the normal rate of 40%.
For many purchasers, however, IHT is not a big issue because they are either buying farmland via a fund or a corporate structure.
Some of the most active buyers in the current market are acquiring land for its natural capital value.
These include Oxygen Conservation and Nattergal, which create carbon or biodiversity net gain credits that can be sold to businesses looking to offset their carbon footprints or replace biodiversity lost to development.
As natural capital grows in value, this will also increasingly be reflected in the capital value of agricultural land.
Find out more about the farmland market as well as industry updates and properties on the market in The Rural Report, available here:
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