What can we expect from the rural sector as we progress through the agricultural transition from a pre-Brexit Common Agricultural Payment system to a “public money for public goods” system? Savills data on farm machinery dispersal sales shows how two nations are responding to the transition.

In England, the transition began in January 2021, and Figure 7 shows a 110% increase in farm machinery dispersal sales between 2020 and 2021. Since 2021, sales have fluctuated but remain considerably higher than in the pre-transition period. The picture is one of consolidation, where business structures and production systems have been reviewed, leading to a sale or reduction of machinery in favour of contract farming agreements, tenancies or the sale of the farm itself.

This consolidation will likely continue as the impact of the IHT reform and the reality of no further direct payments bite.

In Scotland, the data paints a different picture. The agricultural transition was delayed by a policy of “simplicity and stability”; the transition began in 2025, but the more substantial changes are planned for 2026 and 2027. Machinery dispersal sales, which had been rising steadily since 2020, fell by 32% in 2025. As the transition gathers pace, we can expect more business restructuring and consolidation within the Scottish farming sector, which could lead to a noticeable rise in machinery dispersal sales over the next few years. These sales may lead to the sale of all or part of the farm, as well as to additional tenancies and contract-farming opportunities. As direct payments are phased out during the agricultural transition, farmers and landowners across the UK are re-evaluating their business strategies. Now, land must generate enough profit to support both income and reinvestment. With less government support focused solely on agricultural production, many farmers and landowners are exploring alternative land uses that can deliver higher returns or benefit from capital appreciation.

Development prospects

Property development is a major opportunity and driver in the farmland market. When the Labour Government took office in 2024, it set an ambitious target to deliver 1.5 million new homes by the end of the parliamentary term — about 300,000 homes per year. While there are doubts about the goal’s feasibility, the Government remains committed, relying on significant reforms to the National Planning Policy Framework (NPPF) currently under consultation, the Planning and Infrastructure Act, and other legislative changes to speed up planning and development.

Development consents have been in decline. Since 2021, the number of residential units granted planning consent has dropped by 40%, reaching its lowest level in the last seven years in 2025 (see Figure 8). This sharp decline has led to fewer sales of development land. It has a knock-on impact on the farmland market, as those selling development land often reinvest in agricultural land to defer capital gains tax. Our data shows a 60% reduction in the proportion of farmland buyers motivated by rollover relief since 2019.

If the upcoming NPPF reforms are successful, they could reverse this trend, boosting development land sales and increasing capital flows into the farmland market. Typically, demand for farmland is stronger near development hotspots, driving competition and higher prices. But many farmers seeking to replace their lost land and reinvest are willing to consider the right farm further afield as well.

Developing nature markets

Biodiversity Net Gain (BNG) is now an established market with over 1,400 off-site units allocated to development projects. Its remit will expand this year to include Nationally Significant Infrastructure Projects, and exemptions for smaller sites are expected, although the details are still to be confirmed. Nature recovery is clearly moving beyond BNG.

The Planning and Infrastructure Act introduces a Nature Restoration Fund in England, initially focused on reducing nutrient impacts in watercourses through Environmental Delivery Plans. Natural England will lead delivery in partnership with private nature markets, creating new opportunities for landowners.

The revised Environmental Improvement Plan sets ambitious peatland restoration targets for England: 280,000 hectares by 2050, with an interim target of 40,000 hectares by 2030, supported by £85 million for habitat and water infrastructure. In Scotland, £250 million has been committed to restoring 250,000 hectares by 2030. With 80% of Scotland’s two million hectares of peatland degraded, restoration is a national priority, and the recent budget allocated £28 million for 2026/27.

Woodland creation is also a policy goal and backed by strong incentives. England’s interim target is to increase tree canopy and woodland cover by 0.33% by 2030, with the overall target of 16.5% coverage by 2050. This is supported by grants such as the England Woodland Creation Offer, which provides capital grants for establishment and £400 per hectare annually for 15 years. Rising demand for carbon and biodiversity benefits, combined with funding and timber income, makes woodland creation commercially attractive. However, constraints remain. In Scotland, applications require environmental impact assessments, and in England, prime agricultural land, peat soils and sensitive habitats must be avoided, with most planting on grade three or four land, or reclamation sites.

GB farmland supply and value forecasts

Farmland is a long-term asset class, with less than 1% of the total available agricultural land in Great Britain publicly marketed each year. Individual parcels of land are not transacted regularly, with many farms and estates owned by generations of families, institutions, organisations and either farmed in-hand or tenanted (30% of the sector). Changing land use can be a long-term game too; achieving development opportunities can take up to 15 years, if not longer.

So, what affects land values? In America, land values are influenced by agricultural profitability, and there is often a direct positive correlation. This is not the case in Great Britain, where the correlation with agricultural profitability is weaker because there are more competing uses and amenity interest is stronger. As a result, land values have been and continue to be influenced by the simple principles of market supply and demand. This is why we often see dramatic differences across and within regions of Great Britain. Figure 9 shows the annual percentage change in average farmland values across England’s regions. Prime arable land in the West Midlands decreased by 6.4% in 2025, yet increased in the North of England by 3.2%. Grade three arable land decreased by 5.4% in the South West, while rising by 3.4% in the South East. For grade three pasture land, we saw the largest decrease in the South West (2.1%), compared with the highest increases in the East Midlands (3.3%) and the South East (3.1%). Overall, average land values in Great Britain fell last year but by less than 1%.

Reviewing land values, Figure 10 shows a slight dip during the “Brexit period” from 2016 to 2020, followed by a steady increase to 2023, before stabilising. A range of buyers have been active, and we expect this will continue. With land being a finite resource and in demand to meet government targets across development, agriculture, energy and environment, values will remain firm. Savills forecasts that the stabilisation from 2023 will continue until 2027, when values will begin a period of steady increase, provided the strategies and plans expected in 2026 improve policy certainty and the outlook for the sector’s profitability, resulting in a confidence uplift. We expect the volume of land marketed will increase from 2027 to fund larger farming businesses’ IHT liabilities.

_{Read the articles within Spotlight: The Farmland Market below.}