FARMLAND values have seen a slight decline amid broader economic and political pressures.
The drop, recorded across England and Wales, reflects ongoing market uncertainty and structural changes affecting the agricultural sector.
According to the latest analysis, arable land values in England and Wales fell by 0.6 per cent in the final quarter of 2025, a slower decline compared to the 1.5 per cent drop recorded in the previous quarter.
Pasture land values also softened, falling by 0.4 per cent, down from a 1.2 per cent decline in the third quarter.
The farmland market has been in a period of adjustment over the past year, shaped by ongoing economic and political pressures.
Sam Johnson, rural associate partner at Carter Jonas, said: "Speculation ahead of the autumn budget kept the markets cautious for several months, yet the measures announced ultimately did little to alter the broader outlook."
By the end of 2025, average arable land values stood at £9,494 per acre, while pasture land averaged £7,778 per acre.
Mr Johnson highlighted that recent policy announcements had brought some stability to the sector.
He said: "In late December 2025, the government announced an increase to the proposed APR and BPR threshold from £1m to £2.5 million, offering breathing space and much-needed stability for many family farms and rural businesses.
"Though only a partial policy reversal, it should help improve market confidence by offering greater clarity and supporting longer-term planning."
Despite this, Mr Johnson does not anticipate a rush to sell assets ahead of the upcoming inheritance tax reforms.
He said: "We are not predicting a widespread sale of assets ahead of the implementation of IHT reforms in April, nor did we see evidence of this at the previous proposed £1m threshold.
"The increase to the threshold announced in December should instead boost confidence in holding or investing in assets, particularly for smaller holdings which are more likely to remain protected from increased tax liabilities."
However, the market remains influenced by structural challenges, including fluctuating commodity prices, tightening margins, and uncertainty around environmental schemes.
Mr Johnson noted that cashflow issues are likely to continue into the new year, driven by rising labour costs and delays to the Sustainable Farming Incentive.
He said: "While this offers some certainty, key details are outstanding."
Access to finance also remains a major concern.
Sophie Davidson, research associate at Carter Jonas, said: "While interest rates have started to ease, they are still high by recent standards, weighing on affordability and sentiment."
Ms Davidson cited an Oxford Economics forecast predicting two Bank Rate cuts in 2026, which could bring the rate down to 3.25 per cent by year-end.
She said: "While this marks a positive shift, financing is likely to remain a barrier to investment by many small- to medium- scale farmers, many of whom may still struggle to access affordable credit."
Despite the headwinds, the outlook for 2026 remains cautiously optimistic.
Mr Johnson said: "Selectivity has increased, but underlying fundamentals remain robust and point to broadly balanced conditions heading into 2026."
Share