H&H Land & Estates Associate Director and Head of Land Agency (Yorkshire), Robert Jauneika, looks back at the close of a year that ends with significant changes in the UK land market.

In 2024, the property and development land market has experienced a resurgence, driven by easing inflation, lower mortgage costs, and increased confidence in the sector. However, rising labour and material costs continue to pressure developers/housebuilders, and new regulations like Biodiversity Net Gain and potential changes to Agricultural Property Relief (APR) from Inheritance Tax are affecting market dynamics.

Following the continued easing of inflation and the Bank of England Base Rate (leading to some decreases in mortgage interest rates/costs), development land transactions have picked up again, albeit still haunted by the significant rises seen in labour and materials costs across the country. 

Predominantly due to generally higher £/square foot housing prices, there is currently strong demand from developers for land in good locations, particularly across much of North Yorkshire.  Developer's margins are under pressure from the increased costs relative to the not-quite-so increased housing prices. This disparity is making higher revenue areas even more desirable for most developers, while making some of the lower revenue areas very tight in terms of viability. This of course then has a a knock-on impact on land value.  We have dealt with a number of schemes where previously agreed minimum land values have becomes difficult, but not impossible, to make viable due to these increased additional costs.

We have just seen the updated NPPF announced, with Labour suggesting they will look to remove red tape from parts of the planning process. The proof will be in the pudding!

Biodiversity Net Gain (BNG) came into effect properly this year, and all ongoing development transactions (where the planning application had not already been submitted prior to the start of the year) have been impacted by this new regulatory burden, which itself comes with its own cost to development.  Significant areas of land are required to deliver BNG on large scale residential housing sites, and the most efficient delivery of BNG is something that needs careful consideration. Developers are largely still getting their heads around this, and the best ways to implement it.

We have seen a significant increase in property sales activity, with the second half of the year seeing large intakes in new sales instructions. This has been driven largely by growing confidence in the market, decreasing lending costs and a slightly more stable political and economic backdrop. Buyers for rural and agricultural property remain slightly more cautious than in the previous few years, however, and we are nowhere close to the pace of the post-Covid market.  

There is a larger disparity than previously in terms of the higher quality properties doing particularly well at market, and those that offer significant opportunity for enhancing value, such as refurbishment projects.  The key to sales success is down to ensuring that the property is priced correctly form the start to maximise interest levels.  

The introduction of changes to APR in relation to IHT could, and in my view probably will, have a fundamental impact on the demand for farms and agricultural land and therefore its value. Many clients are now deciding what the most appropriate solution is in terms of holding land going forward, to ensure that it is protected, as far as possible for the next generation.

This is an area we anticipate being particularly busy advising clients on in the coming months, particularly with regard to potential valuation advice and where the property may be being moved into a Trust for example. For this to happen efficiently and successfully, a collaborative team approach is required, with dialogue between Surveyor, Solicitor and Accountant to produce the best plan for the particular holding in question. 

2024 has been the first full year of our new H&H Land & Estates Northallerton office, and we have had very successful first year. We have received a significant volume of new instructions from a range of both new and existing clients, from across North Yorkshire, from Whitby to Harrogate, and I would like to thank everyone for their support and business.

As we look forward to 2025, which is I believe going to be another year of change and opportunity, I would like to offer my best wishes to all for the festive season.