Farm Mortgages And Finance For Non-Farmers

A growing number of town and city dwellers are choosing to buy farm properties for a variety of reasons, with the result that the average price of UK farmland has risen by 9 percent during 2006 to more than £7,000 per hectare (over £3,000 per acre).

In addition to those people moving to the countryside to live, ‘land banking’ companies that buy farmland and resell small plots to individual investors are prospering and continuing to stimulate land prices.

‘Lifestyle’ Farm Buyers
The general perception of better quality of life and lower crime rates in the country appeals to all age groups, from families with young children to those who have retired. These ‘lifestyle’ farm buyers come from diverse backgrounds.

Many are people who have seen their urban properties increase rapidly in value, giving them the opportunity to sell up and escape the rat race into a ‘rural idyll’. Individuals with City bonuses to invest have also been attracted into the market, partly because of its favourable inheritance tax regime. Many self-employed people, too, have realised that improvements in communications technology and the spread of broadband internet access in rural areas means that they no longer have to live in town centres to run their businesses.

Are ‘Lifestyle’ Farmers a Good Bet For Mortgage Lenders?
The dilemma for farm mortgage providers is whether these ‘lifestyle’ farmers are able to generate sufficient income from their farms. Equestrian properties, in particular, can be a minefield. Many ‘horsy’ people believe that they have sufficient experience to run a livery stable or similar enterprise, but even if they have enough equine knowledge they may not have the necessary business acumen to make the enterprise a success.

Mortgage lenders are likely to be more amenable to granting a farm mortgage if the buyer has their own capital to invest in the property and also additional sources of income.

Summary
 an increasing number of ‘lifestyle’ farmers are purchasing farm properties;
 farm mortgage lenders are having to change their lending criteria to accommodate the changing demographic of farm buyers.

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