City bankers, traders and lawyers are sending the price of farmland soaring by spending their enormous salaries and bonuses on farms and country estates, research has revealed.
They are the "lifestyle farmers" who may not know much about agriculture but know they want a big place in the country for the weekend. They now represent nearly a third of all buyers of farmland - and they are forcing up the cost of rural land at the fastest rate for 30 years, according to the survey from estate agents Knight Frank.
The average price of farmland rose by 27.3 per cent in the year to June 2007, the fastest rate of growth since 1977, the survey reveals, with prices rising in the three months to June by nearly 10 per cent.
Average farmland values hit £3,805 per acre in the second quarter of this year, up from £2,988 a year earlier, with demand from what Knight Frank calls lifestyle purchasers - that is, non-farming buyers - rising by 25 per cent in volume terms but by over 50 per cent in value terms over one year. It is clear that the market-distorting effects of the "bonus culture" are now spilling over into the countryside. In recent years, salary levels in the financial services and legal sectors have reached unprecedented levels.
Although no precisely accurate figures are available, informed City observers think that at least 10,000 people in Britain are now earning more than £1m per year, and those salaries are in many cases augmented by substantial end-of-year bonuses for investment bankers, traders and accountants.
It is thought that there may be at least 1,000 people in the City whose annual bonuses exceed £1m, with thousands more pocketing six-figure sums - all in addition to their salary. Much of that great tide of ready cash has been invested in the top end of the domestic property market, sending house prices in London in particular to record levels.
The trend is now having a similar effect in the countryside, with farms being snapped up by people who frequently do not intend to farm the land themselves and often contracting the farming out to a manager. Remarkably, they now represent 29 per cent of all farmland purchasers, behind real farmers on 37 per cent, according to Knight Frank.
"Wealth generation in London, and especially in the City, has contributed to significant additional demand and also has underpinned price competition, especially for farmland tied to residential estates to the west of London," commented Clive Hopkins, Knight Frank's Head of Farms and Estates.
"With residential price growth at the top of the London market hitting 40 per cent and above in some prime locations over the past 12 months, substantial equity is available for bidding up the price of country estates."
Mr Hopkins added: "We forecast that lifestyle buyers and the influence of City bonuses and income will rise still further over the next 12 to 24 months. Farmland values will continue to rise, and we believe 11 per cent growth by June 2008 will be achievable."
Foreign purchasers are also helping to drive up land prices, the survey says. "We estimate that approximately 15 per cent of UK farmland purchases are made by international buyers," said Mr Hopkins.
Leading the overseas purchaser market are the Irish - with 7.3 per cent of all purchases, followed by the Danes (2.9 per cent) and Russians (1.6 per cent).
The 'lifestyle farmers'
* Madonna and Guy Ritchie - The couple bought Ashcombe House, the former Wiltshire home of the fashion photographer Cecil Beaton, in 2001 complete with 1,134 acres of land.
* Alex James - The Blur bassist turned his back on the London music scene to start life anew with his wife and three sons on a farm in the Cotswolds where he manufactures cheese.
* Hector Sants - The former equity analyst and incoming chief executive of the Financial Services Authority, runs a farm near Oxford where he likes to paint and shoot.
* James Oliver - The Edinburgh-based marketing director recently bought a 1,837-acre farm on the Scottish borders and hired a shepherd to look after its 1,000 ewes and 950 lambs.
* Roman Abramovich - The Russian billionaire and Chelsea owner spent £18m on a 1,500-acre West Sussex estate in 2000. He spent a further £1m stocking it with game for shoots.
* Vladimir Lisin - The former welder turned one of Russia's richest men, spent £6.8m to become the new laird of the 16th-century Perthshire Aberuchill castle and its 3,300 acres.Reuse content