Farmers remain the single biggest group of buyers of farmland in England, but now account for less than 50% of transactions - with private and institutional investors playing a growing role in the market.

Michael Fiddes, Head of Estates & Farm Agency for Strutt & Parker, said analysis of the Farmland Database showed that farmers accounted for less than half of all land transactions during the first three quarters of 2016.

“Farmer buyers now account for just under 50% of the market, the lowest level since we started tracking the market in 1996. Agriculture has been going through a very difficult time with lower commodity prices putting severe pressure on cashflow and profitability. As a result, farmers’ ability to service the debt needed to acquire land has become more challenged.”

Mr Fiddes said while there had been a drop in arable land values between the second and third quarter of 2016, he believed it was influenced more by a fall in farm profitability than the outcome of the EU referendum.

“Three months after the EU referendum result, it is still too soon to say what the effect on farmland values has been. While Q3 saw a 7% drop in arable land values compared with Q2, the majority of the land exchanged over the past three months was under offer prior to 23 June.

“The Brexit debate has contributed to a slowdown in the amount of land coming forward – about 30% less has come to the market in 2016 compared with the same period in 2015 – but there is no real evidence of deals falling through as a consequence of the ‘leave’ vote. We will have to wait a while longer before we can assess the full impact.”

Mr Fiddes said non-farmer and rollover buyers (the latter being individuals with money to spend after selling land for housing development) continued to play a growing role in the market.

This means in the right areas of the country farmland is still selling very well. However, demand can be very localised and the amount of unsold land on the market has increased in recent months.

As we head into Q4, Mr Fiddes said he expected to see more land coming to the market than during the last three months of previous years.

“There is evidence that sellers who have waited to see the impact of Brexit on values are now feeling sufficiently confident to proceed – even if some are choosing to market privately, rather than launch their farms publicly.

“However, as we have been saying for some time, location, rather than quality, is the critical factor in what people are prepared to pay for land which has contributed to a widening range of values.”

Charlie Evans, South West region spokesman said: “There are fewer buyers in the market than in recent years, but there are enough and land is selling. Some are tax-driven buyers looking for farms with a low residential element, while others are lifestyle buyers after a good house. Large mixed farms and best-in class sporting estates are most in demand and there is also a shortage of commercial arable farms in the region. I am expecting more land to come to the market next spring.”

Strutt & Parker’s Farmland Database tracks private and publicly marketed farmland over 100 acres in England.

It records ‘sold’ prices as well as ‘guide’ prices, so is more accurate reflection of actual market conditions as guide prices can overstate or understate the prices that buyers are willing to pay.

The average price of farmland sold in England during the third quarter of 2016 was £9,300/acre. This compares to a market high of £10,700/acre in Q2 of 2015.