Townies boost price of farmland

Town dwellers increasingly see the countryside as an investment

The price of UK farmland has rocketed due to wealthy town dwellers looking to invest or relocate, says the Royal Institution for Chartered Surveyors.

The average price per hectare is now £10,000 compared with £7,000 last year.

According to the RICS, it is due to a shortfall of land coming onto the market along with increasing demand.

But, it says, increasing interest rates will make it harder to borrow for such investments and the market is likely to slow down over the next few months.

City slickers

Until now, farmland has attracted investors because it has afforded much better returns than property or the stock market.

The RICS found that overall prices have risen by up to 30% in 12 months and 130% since the early 1990s.

Investing in farmland also gives relief from inheritance tax.

Another possible explanation is non-farmers buying neighbouring farmland to protect the expensive residential property they have purchased.

RICS rural spokeswoman Sue Steer said: "More and more people are being turned on by land as an investment vehicle.

"These are not just downshifting city slickers but also those looking for a viable investment alternative to bricks and mortar or the stock market."