Rural consultancy Savills is predicting a "resilient" year in the farmland market, with an increase in supply partly driven by the ongoing post-Brexit phase-out of EU subsidies, paid via the Basic Payment Scheme (BPS), which are being replaced by a new system of environmental incentives.

As a result, the recent rate of growth in average farmland values is expected to slow, with Savills forecasting a 3pc average annual increase in prime arable land values during the next five years, and 2pc for Grade 3 pasture land.

Harry Kennedy, associate in the rural agency team at Savills in Norfolk (Image: Richard Marsham)

Harry Kennedy, associate in the rural agency team at Savills in Norfolk, said: "We expect more farmland to come to the market this year as farmers reassess their business models and in some cases, where no succession plan is in place, decide to leave the industry because of the continued phasing out of BPS.

"This could mean that values don’t increase at quite the same pace as we’ve seen in the recent past – although they remain comparatively high in a historic context.

"They’re also likely to be highly localised and vary from one area to another depending on factors including location, scarcity and the specific characteristics and assets of the farm in question."

According to Savills, prime arable land in the East of England was worth an average of £10,200 per acre at the end of 2023 – higher than any year end since 2015.

Meanwhile, Grade 3 arable land was valued at an average of £9,327 per acre, while the average value of poorer quality arable and livestock land rose to £7,806 an acre and £2,871 per acre, respectively.

Savills says this is largely driven by "buyers with an environmental agenda", seeking nature payments via new schemes such as environmental land management or biodiversity net gain.

Mr Kennedy said the "maturing market for nature-based solutions" will continue to make farmland an attractive asset for environmental investors.

“We are also expecting plenty of interest from farmers who are looking to expand their existing operations and want to take advantage of neighbouring farmland coming available for what might be the first time in several generations," he added.