Scottish farmers squeezed out of the land market

Proof that Scotland’s farmers are being squeezed out of the land market was revealed in a report published yesterday.

The assessment of land sale trends drawn up by the SRUC for the Scottish Land Commission showed that non-farming investors were becoming a dominant force in Scotland’s land market - as high demand for tree planting land and other carbon offsetting projects combined with low supply to push overall prices up by 30 per cent.

The report showed that in the past year corporations, investment funds and charitable trusts snapped up more than half of all estate sales - while many smaller units were purchased by ‘lifestyle’ buyers- and also highlighted that there was a big increase in the number of foreign-based purchasers.

Drawing on published market information and interviews with sector experts to provide a current picture of buyer and seller motivations, the report was designed to provide the Commission with a better understanding of the land market and what was driving it:

“Emerging carbon and natural capital value is an increasing influence, but other drivers, particularly high timber prices and forestry values remain significant,” said Hamish Trench, Chief Executive of the Scottish Land Commission.

The report found the growing role of non-farming investors had resulted in land values being increasingly influenced by long-term investment potential and corporate environmental, social and governance (ESG) considerations.

This saw average farmland values – which have traditionally been low in many of the more marginal areas - rise by 31.2% in Scotland in 2021 while the rest of the UK saw an uplift of only 6.2%.

Off-market also made up a growing proportion of land market activity – and the SLC noted that this trend could constrain access to land for individuals, communities and businesses – a situation which it claimed raised questions about transparency of the land market and raised fears that Scotland’s already concentrated pattern of land ownership could fall into even fewer hands.

The report recognised that speculation currently played an important role in the land market as investors looked for a safe haven in a turbulent global economy and gambled on future carbon values rising.

Predicting continued strong growth in land values the report pointed to continued low supply and high demand, high levels of private wealth and corporate interests seeking land, long-term policy on climate change, and increasing pressure on global timber markets and food supply chains.

Trench added that the market influenced not only who owned Scotland’s land, but also who was able to make decisions and who benefited from land and its economic, social and environmental value.

And he said that with so many factors coming into play there was not simple answer to allow the market to be shaped in the public interest and a joined up approach in policy as well as responsible practice on the ground was required:

“To inform our advice to Scottish Government we will be holding a series of events and discussions with stakeholders to discuss the findings of this report and its implications for both policy and practice.”