Farmland prices forecast to keep on growing

Similarly, when it comes to renting extra land, local farmers are becoming ever more discerning, leading to wide variations in Farm Business Tenancy rent levels.

Arable rents in particular are showing significant divergence, ranging from about £80 per acre to more than £500 per acre. Prices are driven based upon a variety of factors, including location, soil type, irrigation and suitability of the land type for high-value crops.

Last year's very poor harvest and bad autumn weather means land quality and drainage infrastructure have become particularly important to farmers' rental decisions.

For example, good quality vegetable land with irrigation is commanding far more than secondary land for cereals across the region. In addition, a new market is emerging for maize to feed anaerobic digesters and as a consequence this is increasing demand for suitable land.

Farmers are also progressively more driven to spread their costs over a larger acreage and are prepared to pay a premium for shorter-term lets on farm land.

The most popular Farm Business Tenancy term we are seeing is currently five years, which accounts for a total of 23 per cent of the market.

If the current market conditions continue, I suspect that we shall see more Farm Business Tenancies agreed on a three to five year term, with shorter time periods between reviews and break clauses to allow for greater business flexibility for both the landlord and the tenant.

In some cases, open market tenders are vastly exceeding rent reviews and furthermore there is still no sign of rents dropping back, which is surprising given the weaker grain prices of 2013 and continued uncertainty for commodity prices.

Some people are perhaps a little nervous about high farmland rents, but the market is telling us that others are clearly prepared to pay.

However, the 33 per cent average increase in rents that was seen in 2012 is unlikely to be repeated in the near future.

Rhydian Scurlock-Jones MRICS, Savills, Telford