UK Farmland - post election reaction

Agriculture was one of the sectors of the UK economy that had, in the short-term at least, the most to lose from a hard Brexit.

Last night’s election result seems to suggest that the power of those calling for a softer Brexit, with the UK, for example, potentially remaining part of the single market, will have increased. Farmers on either side of the Irish border were especially vulnerable to a bad trade deal, so the Conservative’s reliance on Northern Ireland’s DUP for a parliamentary majority could have a bearing on negotiations with the EU.

This would certainly reduce the potential impact of Brexit on UK farmers given that the EU is our major trading partner for agricultural commodities. Sterling also weakened slightly following the election result, which makes UK agricultural exports more competitive on EU and world markets.

So, on the face of it, the outcome of the election could be seen as positive for the farming sector and, by association, agricultural land values in England and Wales, which have fallen by around 10% over the past 12 months.

The weakening of the SNP’s grip on power in Scotland also suggests a second independence referendum is now much less likely, something that will offer confidence to potential investors into Scottish agriculture. Ran Morgan, Knight Frank’s Head of Farms and Estates in Scotland, said the result meant farmland values could firm by as much as 10%.

However, to temper the above, it’s worth noting that the prospect of Brexit hadn’t really affected the farmland market, despite the potential impact on agricultural support payments and trade, as much as some people had expected. 

The previously mentioned fall in values was largely down to a long-term drop in commodity prices, something that the ongoing weakness in sterling had already started to reverse.

However, Jeremy Corbyn’s much-better-than-expected performance and the uncertainty of a hung parliament could make some potential buyers nervous. It was widely reported in the press, although denied by Labour, that the party was planning to introduce an annual tax on property, including farmland.