“Price of farmland hits record high” scream the headlines today across all the media. The BBC, Scotsman, Herald, and local media from the Deeside Piper to the Kilmarnock Standard.

All these stories have two things in common. First, they are virtually identical. Journalists have simply reproduced a press release. Second, they are all inaccurate. What is going on? The answer is that vested interests are successfully capturing the news agenda. In this case it is the Royal Institute of Chartered Surveyors (RICS) and they are on a roll.

Ten days ago, RICS issued a media statement entitled “RICS July 2013 Residential Market Survey” which was widely reported in the press as a recovery in the housing market with rising prices and more buyers entering the market. In reality, the survey (copy here) was a “sentiment” survey based on asking RICS members for their opinion. This is analysed as a “net balance” – a figure between -100 and 100 where -100 means all members think that a variable will decrease and +100 means they all think it will increase. As the small print makes clear, “Net balance data is opinion based; it does not quantify actual changes in an underlying variable”

The vested interest is relevant here because of course members of RICS earn their living by charging fees. In the case of land and property transactions, they typically charge a percentage of the selling price. So the opinion of RICS members is not an objective opinion.

Nevertheless, their Residential Market Survey received massive coverage. So much, in fact that two days ago, the RICS proudly announced that it had generated “our greatest number of media hits ever in one day“. I am sure their members are delighted that their membership fees are buying such good coverage of their own opinions.

So to today’s reports in the media about farmland prices. The BBC report claims that,

“The price of farmland in Scotland hit a record high in the first half of 2013, according to research by surveyors.

“The Land Market Survey by the Royal Institution of Chartered Surveyors (RICS) indicated land values had trebled in less than a decade.

“It calculated the average price of land in Scotland was now £4,438 per acre.

“Surveyors reported the price was being supported by demand from farmers and investors.

“Their report predicted further price increases were likely, with the market “far from finding its level”.

The press release from RICS claims that,

“£7,440* per acre across the UK, hitting a record high for the eighth consecutive period. The cost of land is now more than three times that of the same period in 2004 when an acre cost just over £2,400.”

That asterisk is important. It was not there when I first looked at the press release but was added after I phoned the RICS press office to ask what the following footnote referred to. The footnote says,

* Opinion based measure, £ per acre (based on median surveyor estimates of bare land only containing no residential component, not subject to revision).

Looking at the Rural Market Survey report, itself (which is only available if you register as a RICS site user), things become clearer. The basis for the claim that “prices had trebled in less than a decade” is based upon “an opinions based measure (which is a hypothetical estimate by surveyors of the value of pure bare land).”

It is also a UK wide figure and thus says nothing about the farmland market in Scotland.

The “RICS spokesperson” states, in the RICS media release that,

“The growth in farmland prices in recent times has been nothing short of staggering. In less than ten years we’ve seen the cost of an acre of farmland grow to such an extent that investors – not just farmers – are entering the market. If the relatively tight supply and high demand continues,  we could experience the cost per acre going through the ten thousand pound barrier in the next two to three years.”

What she really means is that the cost of an acre of land according to the opinion of her members. And when she speculates that the cost per acre could go through the £10,000 barrier in the next two or three years – that too is simply the opinion of those with a vested interest in precisely that outcome.

And that trebling only relates to England and Wales, not to Scotland.

Oh, and finally, that £4438 per acre price that the BBC reports the RICS “calculated”?

That’s just an opinion too but reading the press reports today you would not know.

So why does the media give such prominence to the self-promotional opinions of vested interests?

20 Comments

  1. On the other hand this might not be all that welcome. It merely points up the iniquities of the land market and makes the case for a land tax unanswerable. As a farmer and landowner I think the value of land is ludicrous but I don’t know what to do about it.

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  2. Of course the price of farmland will have magically increased at the thought of the ARTB for tenant farmers appearing back on the agenda!
    Recent land comparisons have been inaccurate, comparing poor quality soil in areas of Tayside with prime soil in the Borders for example plus neglecting to consider the soil improvements, drainage etc undertaken by the tenant farmers at his own expense over a period of many years.

    Why does the media give such prominence to the self-promotional opinions of vested interests?
    Look at who own and control the media.

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  3. Pingback: Views From The Boatshed

  4. Farmland value is fuelled by several factors .
    Roll over money where an owner of land sells land for development . The large amount of money has to be spent within 3 years or it will be taxed . It is usually spent on farmland .
    Inheritance Tax . Farmland is exempt . Making hoovers is a classic example of buying land for this purpose .
    Neighbouring farm of owner comes up for sale and you already have 30 big windmills generating £20000 EACH per year
    These are just some reasons why farmland is being driven upwards .

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  5. Basically lazy journalism again from the press.

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  6. Was the LIBOR scandal not something like this? In other words, that LIBOR was not empirically derived from actual market evidence but was a sort of straw poll of what the banks thought it ought to be?

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  7. The answer is simple and pretty obvious. The media get their money from advertising and they tend to publish stories that advertisers like and will want to be associated with. Equally they don’t publish stories if they risk losing advertisers by doing so. Increasingly advertising and editorial are becoming blurred with ‘advertorials’ paid for by vested interests. Newspapers especially are increasingly desperate to get advertising revenue and some will even offer to create ‘copy’ for payment. Pretty well every newspaper has a property section and will welcome any story talking up rising profits from the estate agents and solicitors who might then spend more on advertising.

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    • Well said John! Straightforward desperation!
      The housing market is often subject to similar ill-founded hype.
      RICS members derive much of their income as agents in the buying and selling of property, farmland included. They are also agents for considerable advertising spend.
      After a prolonged period within a very slow market, these guys have land and property on their books which has been slow to shift. Stagnation in the marketplace will not earn bread for those dependent on commission from it.
      “Buy now, land will get cheaper” is not a slogan likely to boost a sale.
      “Land is dearer than it was and will get dearer still” might tempt someone to nibble at the backlog.
      Cheap copy and more again when a sale is finally made in these desperate times.

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  8. Opinion based reports, published to read like calculated fact! Creating a need, that’s what their up to, always keen to get the bit in about outside investors, creating an air of panic for seller and buyer alike. As for the media support, well i suppose the elite club is there and you have to keep things tight and they are al shaking hands. Solution? blast it all apart, complete dismantling of a system that is entirely obsessed with greed, inflated value and protectionism.

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  9. They are up to the same trick regarding land tenure.
    The more short term insecure tenants there are, the more opportunities they have to earn fees.
    Thats why they oppose the ARTB.
    That would end their gravy train.

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  10. Alex Sutherland

    It has been said that estate management is the second oldest profession so perhaps it’s not surprising that RICS behaviour has some similarities with the morality of
    the first!

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  11. has anyone seen the BBC Scotland news report of David Cameron on Jura? http://www.youtube.com/watch?v=_FnXaiH-vi4.perfect example of BRITISH broadcasting, plugging the toffs link with Scotland. Just a pity the interviewer didn’t ask about off shore tax dodging Estate owners.
    If you want a good laugh, watch at around 2mins in where DC is asked why he doesn’t shoot deer anymore, Q.”is it because it upsets people?” you can see him thinking, Tory Party? family loyalty? popular vote?

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    • As I remember it, he had a sore back or something. But you are right, I can still see the politically correct wheels turning in his face.
      To be fair to BBC, you could take your pick whether it was a plug for or a poke at the toffs.
      I reckon most viewers would opt for the latter.

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  12. When the BBC is allowed to conduct interviews of this sort, it is usually as a result of being invited by the PM’s media people who think it would do him some good. They set the rules of access what can and cannot be talked about and the broadcaster has to agree or they don’t get anything. The terms this time would have been – its a personal insight into the PM – his human side, his love of Scotland but NO POLITCS!

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  13. Helen Armstrong

    The RICS report may well be based on opinion but it wouldn’t surprise me at all if land prices were increasing incredibly fast since it’s the only invetment that is not ikely to lose it’s value in the coming decade or two. Even though stock market prices are increasing right now there’s likely to be another crash in the near future since debt levels are still unsustainably high. So those with money, and who are in the know, invest in land even if they have no interest at all in managing it. That’s the crime – rich people buying land as an investment who don’t care about how the land is managed, nor about the people who live on it or make use of it.

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  14. Alex Sutherland

    Of course I remember the RICS contribution to the2003 Land Reform Act. Access rights and right to buy would fatally devalue landed estates and all property not to mention the out breaks of vandalism and thuggery caused by freedom of access over land after dusk – I kid you not these guys had their heads so far out of sight up their own anatomy there was no scope for daylight and the possibility of claims against their human rights were being bandied around.

    Anyway, would you believe, a few years later the figures emerged that investment in land had out performed the stock market during this dangerously incendiary period of political fiddling with the established order of things! And the outbreaks of harm and destruction never really took off and the countryside is still a lot safer place to be on a Saturday night that many urban or inner city locations. We’re all in this together and the countryside belongs to you and I through many years of tax relief and support.

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  15. Land prices have risen due to lots of reasons, one of them being the govt buying farms for forestry.
    This forces farmers to compete strongly for other available land.
    Farmhouses and cottages should have sect 75 restricted occupancy slapped on all of them.

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  16. Alex Sutherland

    Section 75 agreements are a planning restriction and can be easily overturned by the local authority.
    What Councillor is going to vote to evict a young family if they have fallen foul of this arrangement?

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  17. Any small areas of land, cottages and houses in my area are either bought buy the estates or city folk wanting a holiday home. Young families are forced to the towns, to rent and often under housing benefit. Mini clearances within communities. To make matters worse the holiday homes are now being let for self catering, the payment going to someone in Edinburgh, while locally run B&B suffer. Hector is right some sort of restriction is needed on these buildings.
    But the best solution of all, is to somehow have a ‘top to bottom’, ‘side to side’, complete redistribution of ownership of land, with residency requirements, price of land could then come down. And instead of our populations dwindling amidst the wilderness created by super rich absentee lairds, we could have a proud and exciting community where anything is possible

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  18. Farm support must be applied to one farm per farmer and two dwellings tied to that holding. Sustainable agriculture and sustainable communities. Job done!

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  19. Section 75 is the answer, IMPOSED by the local authority.
    Anyone switching a rural property from residential to a holiday home, 2nd home, etc should have to seek planning permission .
    Its almost too late for this measure, but better late than never.

    Reply

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