Resilience and realism required in 2026 farmland market after year of adjustment

Carter Jonas says it expects farmland demand to stay strong in 2026, but that expectations over the values that can be achieved should remain realistic.

The national property consultancy reported earlier this year that the average prices being paid for farms and land had softened for the first time in five years, and that a return to growth is not likely without more confidence being instilled into agriculture.

Looking at the next 12 months, buyers are still expected to be active where quality land, equipped farms, and well-located parcels are offered.

But holdings with issues – or those where there are few neighbouring or nearby farmers looking to expand – are likely to see reduced interest.

“Some segments of the farmland market remain resilient,” says Andrew Chandler, Head of Rural Agency at Carter Jonas. “This is especially true for best-in-class assets which remain scarce and can attract national interest, resulting in a divergence in prices.

“Well-positioned, high-quality assets continue to command strong values, while secondary and tertiary land is seeing downward adjustments. Crucially, however, overall market performance is contingent on local factors, with supply and demand dynamics varying widely even at the regional level.”

Clarity before confidence

As 2025 closes, farmland owners are assessing whether the market’s recent shift signals a moment to act or a reason to wait. Land values have been on an upward trend for 17 consecutive quarters before coming back slightly in 2025.

A confluence of factors has contributed to the change in sentiment. Against a backdrop of impending inheritance tax (IHT) changes, uncertainty surrounding the Sustainable Farming Incentive (SFI) and another year of average harvests, caution has become a dominant theme.

November’s budget failed to deliver any significant concessions on IHT for landowners, meaning that for those who are yet to define their long-term tax plan, swift action is required.

Andrew said: “We do expect IHT to act as a catalyst for action for those who need to address succession issues and tax planning. Businesses and families who haven’t discussed the future of their assets need to take advice and make decisions quickly.

“That said, we are not predicting – nor have we seen evidence of – a widespread sale of assets before the Finance Bill takes force in April.”

The policy landscape

Inheritance tax is just one factor which has knocked the industry’s confidence.

A lack of clarity over the future of the SFI and other environmental initiatives have left many businesses unable to plan. Rises in the cost of employing staff and maintaining let property are also eating into farm and estate profitability.

In 2025, buyers were undoubtedly more cautious because of mounting pressures across the agricultural industry. They became increasingly selective and price-sensitive, which means preparation and ensuring farms are in the best possible condition before launch is more essential than ever – a trend that is likely to continue into 2026.

Speculative pricing may have paid off in recent years, but those days are gone, Mr Chandler adds.

“There’s a requirement for people to look forward, not backwards, in terms of values,” he says.

“In areas that are oversaturated with land and farms for sale, we are advising competitive, realistic pricing from the outset and, in some cases, repricing.

“Over-pricing in the current environment is likely to disadvantage an asset, reducing interest and potentially leading to longer sale times or price reductions later on.

“We’re advising sellers to ensure land and property is properly valued, realistically priced, and brought to the market issue-free to avoid deterring a thinner pool of purchasers.”

Market performance

For those who make the decision to sell, land values may have slowed following years of record highs, but well-positioned and high-quality land and farms remain in demand.

Well-located commercial farms with competing buyers are still attracting above-guide bids, but for poorer ground or isolated units, sales are proving slow and not attracting the interest needed to drive up values.

The decline in average arable land values accelerated to 1.5% in Q3, following a slightly more modest decline of 1.1% in Q2.

Similarly, average pasture land values declined by 1.2% in Q3, a steeper fall than the 0.7% decrease recorded in the last quarter. Average arable and pasture land values now stand at £9,556/acre and £7,806/acre, respectively.

Although land values have also declined year-on-year (average arable values have fallen by 1.7% in the 12 months to Q3, while average pasture land values are 1.1% lower) this is only the first annual decrease since Q4 2020, marking 17 successive quarters of continuous growth before the two most recent quarters.