Savills research suggests today that there is a window of opportunity for local land buyers across the East Midlands.

The short-term cost of borrowing money has dropped below the income generated from farming assets, according to Mark Ashbridge of Savills Private Finance.

He continues: "Farmland values have been resilient during the recession, rising an average of 5.9% last year in comparison with falls of about 15% for residential property and 40% for commercial property, so lenders are keen to lend against it on favourable terms."

Anthony Oliphant of the Savills Farm Agency department in Nottingham comments: "This analysis of potential earnings set against the cost of borrowing may be short-lived, since interest rates are bound to increase to more normal levels. But it might represents an excellent opportunity for farmers and landowners to expand or invest in their holdings in the short term, and with five-year fixed rates at around 5% they could extend the era of cheap money for a few years at least."

He continues: "The farm land market in the East Midlands has recently been characterised by a lack of supply. This has ensured good demand for well-equipped commercial farms with interest generated locally, regionally and nationally. Purchasers will still pay a premium for large farming units of over 750 acres".

This is supported by Savills UK analysis of farmland buyers. According to the recently published Savills Agricultural Land Market Survey, the proportion of farmers who purchased farms and land increased to 60% last year from just over 50% in 2008.

The key reason cited by farmers for buying was expansion (43% of deals compared with 32% in 2008), which is supported by the fact that last year's market was dominated by sales of commercial farmland. Just 28% of farms were purchased for residential or sporting reasons.

Andrew Chandler, also of Savills Nottingham adds: "This year in the East Midlands we expect the demand for commercial farms to continue. However across the UK we are already seeing renewed interest from the financial sector for estates and farms with residential dwellings."

As a means of purchase, rollover money was scarcer in 2009 than in previous years. Just 1% of purchasers used cash from development gain and 14% used rollover from the proceeds of sales. The low cost of borrowed money encouraged the use of loans to fund purchases in 30% of cases, compared with 24% in 2008.