A leading real estate expert has claimed that farmland prices may plummet after Brexit as farmers that are reliant on subsidies from the EU are forced to leave the industry.
Andrew Shirley, Head of Rural Research at Knight Frank, has said that increased debts partnered with lower prices for produce as a result of the falling pound could see a number of rural businesses struggle if subsidies are removed, leading some to sell up creating a glut of farmland.
The average value of agricultural land in England and Wales fell by just 0.5 per cent to £7,435/acre in the first quarter of 2017, but whether this has a direct link to Brexit is unclear.
“How quickly this scenario happens will depend on multiple factors,” said Mr Shirley.
He believe that the Basic Payment (BPS) subsidy scheme for farmers will probably fall by 20 per cent after the UK leaves the bloc and may continue to decline after 2020.
His views are shared by fellow real estate expert George Chichester, a partner at Strutt & Parker’s farming department.
He has said: “Subsidy support will be less and trade tariffs may well apply, and even if not, then our markets are at risk of being undermined by cheap imports from elsewhere in the world.”
Mr Shirley added that looking forward it is hard to predict the longer-term impact of Brexit.
“The real issue that will affect values is supply,” he said. “How quickly that happens will depend on how multiple factors, including commodity prices and interest rates, interact.”