Series of factors and uncertainties have hit Scotland’s lucrative land market
POLICY uncertainty, high interest rates and rising input costs have led to “subdued activity” in Scotland’s rural land market, a report has found.
Interviews with land agents throughout the country, carried out by the Scottish Land Commission and Scotland’s Rural College for the annual Rural Land Market Insights Report, underlined how exposed the land market is to economic fluctuations, as well as a lack of clarity on the policy agenda.
These factors were cited as supply and demand for rural land “noticeably decreased” throughout 2023, found the report, which highlighted a “marked decline” in overall values, particularly for estates and marginal hill land.
The exception was prime arable land where values remained “steady”.
Land agents attributed the slowdown to multiple macroeconomic factors, from rising and persistently high interest rates to elevated input costs, particularly energy and lower commodity prices, which have affected timber and agricultural produce.
The interviews also suggested that some of the decline was due to policy uncertainty, including around the land reform agenda, a new agricultural subsidy regime, environmental targets, and natural capital market regulation.
“Reviewing the past three years of reports, it is evident that the first report (focusing on the 2021 market) captured a period of intense competition driven by natural capital interests and commercial forestry,” said James
Mackessack-leitch, policy and practice lead at the Scottish Land Commission.
“The second report highlighted a more slowly rising market, but this most recent report shows a clear decline in natural capital buyers and commercial foresters due to increasing uncertainties on the demand side. What this report does is highlight how exposed Scotland’s rural land market is to fluctuations in the economy both nationally and globally, as well as how responsive it can be to fiscal and public policy.
“This underlines the need for ongoing reform, including the measures proposed in the Land Reform Bill, but there is a need for more joined-up policy that regulates and intervenes to shape the land market in a way that protects public interest.”
The latest report found that off-market sales of estates decreased in 2023 compared with previous years, although off-market sales of farmland rose slightly, continuing a pattern seen in 2022. It uncovered a new trend of semi-off-market sales, where agents privately advertise land to a select group of buyers.