Agricultural mortgages in 2026: lenders, LTVs and what they want to see

The terms have not moved much. What has moved is the tax position sitting behind every succession-driven borrowing decision, and the spread between sectors on the income side, which is now wide enough that two neighbouring businesses can present as entirely different credit risks.

Both of those change what an underwriter is looking at. The loan product itself is the easy part.

The headline terms

AMC, part of Lloyds Banking Group and still the reference point for long-term agricultural lending in England and Wales, publishes its Long-Term Loan terms as follows.

The 60% is the number to plan against. On £2,000,000 of land that is £1,200,000 of facility, and it is a ceiling rather than an expectation.

Eligible purposes are broader than people assume: buying land including sitting tenant purchases, business restructuring and succession planning, new buildings and building improvements, refinancing existing borrowing, diversification, and sustainability and new technologies. There is also a Clean Growth Financing Initiative offering fee-free lending for projects that reduce water, waste, energy and emissions impact.

The operational point: a 30-year fixed margin on a 60% LTV facility is a different instrument from a five-year commercial term loan repriced at review, and the difference matters most to businesses whose income has just proved how variable it is.

What they want to see

The application asks for financial accounts, bank statements and budgets, and is worked through with a local Agent or Regional Agricultural Manager rather than a call centre.

That list is short and easy to underestimate. In practice the budget is the document that decides it, because accounts tell an underwriter what happened and the budget tells them whether the facility services. Three things are worth getting right before the meeting.

Present the enterprise split, not the farm total. A mixed business carrying a dairy enterprise and a cereals enterprise in 2026 is two very different stories averaged into one unhelpful number.

Show the delinked payment run-off explicitly. Where it still features in the income line, an underwriter will model its removal whether or not you have, and Defra’s farm business income series is the benchmark they will reach for.

Have the succession position on paper. Since April this is a credit question as much as a tax one, for the reason in the next section.

The income picture underwriters are reading

Defra’s Farm Business Income forecasts, updated on 8 September 2026, give the 2025/26 position by type. The spread is the story.

Dairy at £224,000 against cereals at £17,000 is a factor of thirteen. A cereals business presenting 2025/26 accounts is presenting a two-thirds fall on a year that was already down, and the serviceability case has to be built on something other than the most recent trading year.

The practical consequence: for cereals and general cropping, expect the conversation to move to a longer averaging period, to the balance sheet, and to whatever diversified income the business carries. For dairy, the risk is the opposite one, of a facility sized against a 45% uplift that the milk price does not sustain.

The £2.5 million cap, and why it is a lending question

This is the change that has redrawn succession planning, and it is worth stating precisely because the figure was widely reported at a different number when it was first announced.

HMRC’s guidance, last updated on 6 April 2026, states that on or after 6 April 2026, the combined amount of 100% Agricultural Relief and Business Relief allowed against a person’s estate cannot exceed £2.5 million. Above that, the excess attracts 50% relief.

Run the arithmetic. On qualifying value of £3,500,000, the excess over the allowance is £1,000,000. Half of that is relieved, leaving £500,000 chargeable, and at 40% that is £200,000 of inheritance tax. The effective rate on everything above the allowance is 20%.

Three details that change the planning:

• The allowance is transferable. Any unused portion passes to a surviving spouse or civil partner on a claim, and where the first death was before 6 April 2026 the full £2.5 million is treated as transferred.
• Lifetime gifts count. Qualifying property given away on or after 30 October 2024 is brought into the allowance where death falls within seven years, and the allowance is applied in date order starting with the earliest such gift.
• The occupation tests are unchanged. Two years where the owner, their company or their spouse farmed it; seven years where someone else occupied it. Relief is 100% where the owner farmed it, where land was under short-term grazing licences, or where a tenancy began on or after 1 September 1995, and 50% otherwise. The detail is at IHTM25500.

Why this is a lending question rather than only a tax one: an estate facing a six-figure charge on assets that generate £17,000 a year has to find the money from somewhere, and borrowing against land at up to 60% is one of the few places it can come from. AMC lists business restructuring and succession planning as an eligible purpose, and loans transferable to the next generation exist precisely for this.

Rates

Bank Rate has been at 3.75% since the decision announced on 30 July 2026, held on a 6 to 3 vote with three members preferring 4.0%. Variable facilities price off that. The relevant question for a 30-year facility is not where Bank Rate is this quarter but whether you want the margin fixed for the life of the loan, which AMC offers, or the flexibility to repay early without a break cost.

There is no universally right answer. There is a right answer for a business that knows its own volatility, and the Defra table above is a reasonable proxy for it by sector.

The counterweight

Two arguments against borrowing into this, stated properly.

Sixty per cent of land value is a ceiling, not a target, and land value is not income. A facility sized against the asset rather than the enterprise is exactly how businesses get into trouble in a sector where income fell by two thirds in one year in one of its largest segments. The serviceability test the underwriter applies is the one worth applying to yourself first.

And borrowing to meet a tax charge converts a one-off liability into a thirty-year fixed cost. For some businesses that is straightforwardly the right trade, because the alternative is selling land. For others, particularly where the qualifying value sits only modestly above the allowance, a combination of spousal transfer, earlier lifetime gifting and insurance gets there without a facility at all.

Frequently asked questions

What LTV can I get on an agricultural mortgage? AMC publishes up to 60% of land or property value on its Long-Term Loan, from £25,001 over 5 to 30 years.

What is the agricultural relief allowance now? £2.5 million of combined 100% Agricultural and Business Relief per estate for deaths on or after 6 April 2026, with 50% relief above it, and unused allowance transferable to a surviving spouse or civil partner.

What is the effective inheritance tax rate above the allowance? 20% of the excess: half is relieved and the remainder is charged at 40%.

How long must land have been owned and occupied? Two years where farmed by the owner, their company or their spouse or civil partner, and seven years where occupied by someone else.

Which farm types are under most pressure on serviceability? On Defra’s 2025/26 forecasts, cereals (down 66% to £17,000) and general cropping (down 50% to £54,000).

Updated on 11 September 2026.

Sources

• AMC agricultural finance and mortgages, Lloyds Banking Group
• Gov.uk, Agricultural Relief for Inheritance Tax, updated 6 April 2026
• Defra, forecasts of Farm Business Income by type of farm, England 2025/26
• Defra, farm business income statistics
• Bank of England, the interest rate (Bank Rate)

Sequality Farm Finance writes for people running farm businesses. It is not tax, legal or financial advice, and reliefs turn on the facts of each estate.