Are you hankering after a taste of the Good Life? You are not the only one.

So-called lifestyle farmers - City traders and investors who use their wealth to pursue agriculture as a hobby - bought more arable and grazing land than career farmers last year.

As a result, the price of farmland has shot up at its fastest rate for 30 years, bucking the downward trend dogging residential and commercial property values.

During the first three months of this year alone, the average price paid for farmland rocketed by 10%, and arable land has jumped from £4,000 an acre in January 2007 to £5,500 an acre today, figures from estate agent Knight Frank show.

The value of farmland rose by 28% in the second half of 2007 and Knight Frank believes prices will continue to rise by between 10% and 20% this year.

Many property investors are therefore questioning whether they should trade in buy-to-let and commercial properties for agricultural land instead.

Jeremy Zeid, an arable market specialist at estate agent Carter Jonas, said: “Both private and institutional investors are realising that while the values of their residential and commercial property investment have fallen over the last few months, agricultural land prices are on the up. I think this has led to an acknowledgement that it pays to have a mix of different types of property within your portfolio.”

Those scared away from the stock market by the sub-prime lending debacle are also investing in farmland after seeing the impressive returns of the last year or so.

Zeid said: “If anything, the credit crunch has strengthened the agricultural-property market - even though some of the City money has dried up as a result.

“Some people will have seen millions wiped off their stock-market investments, but those who have placed money into the agricultural sector will be delighted with their returns.”

High-net worth individuals looking to find a new home for money they might have invested in stocks and shares before the credit crisis are not the only reason land values are soaring

They are also being fuelled by food prices hitting an all-time high at a time when very little farmland is coming up for sale.

The price of wheat and other cereals has more than doubled in the past 12 months. According to mortgage broker Savills Private Finance, the amount of land coming onto the public market each year has plummeted from about 600,000 acres in the 1960s to 125,000 acres today.

Zeid added: “Supply is still fairly limited, although we do expect a bit more to come onto the market between now and Christmas.

“What's more, the fact that farmers are now making reasonable profits due to high cereal prices means that many of them are desperate to get their hands on more arable land. We recently had seven buyers fighting over one arable plot in Lincolnshire.”

You do not have to physically buy land to benefit from the farmland boom, though.

Property firm Braemar is offering those who want to get a slice of the action without putting their wellies on the chance to invest in a UK farmland-investment company that qualifies for inheritance tax (IHT) relief.

You must have at least £10,000 to invest in the company, which plans to list on one of the junior London markets this autumn. You can invest through a self-invested personal pension or offshore bond as well as in cash.

As with AIM-listed companies, only those who hold the investment for two or more years will qualify for the IHT relief.

Braemar chief executive Marc Duschenes said: “There has been a phenomenal amount of interest from investors.

“Generally speaking they fall into three categories: older people who are using the investment as an inheritance tax planning tool, slightly younger people investing toward their pensions and younger, high-net worth individuals such as stockbrokers and sportsmen who recognise that this is a great way to diversify their portfolios.”

Interested parties will be able to invest in the company within the next week or so.

Duschenes said: “We have now raised enough money to buy two farms and we are currently assessing a shortlist of five properties.

“We will be looking to raise more money between early May and the beginning of July, with an initial cap of £20m. There is only so much farmland around to buy, after all.”

The farms on the shortlist are in Lincolnshire, Cambridgeshire and Hampshire and are purely arable.

“The land will be used to grow cereals to take advantage of the current high wheat prices,” Duschenes said.

The scheme is not suitable for those likely to need the cash back in the short term as it will be difficult to cash in your investment until the company goes public later this year.

There is also the risk that price rises are unsustainable.

Justin Urquhart Stewart of Seven Investment Management believes soft commodities such as wheat are overpriced.

He said: “Food prices have ballooned in recent months and are now at record levels. I suspect that this is unjustified and prices will start to drop off later this year as a result.”

However, bulls point out there is scope for UK land to rise further because it is some way behind other countries.

Elsewhere in Europe, such as Denmark and Ireland, for example, arable land is already worth more than double that in Britain. Buyers from these countries are therefore heading over here to cash in on the boom.

Duschenes said: “If you look at land values in those countries, you can see that prices here still have a long way to go, which is one reason we think we are only just at the beginning of a long-term bull run.”

What are the tax rates?

Actively farmed land potentially qualifies for 100% relief from death duty, which means it should fall out of your estate for IHT purposes.

If you farm the land yourself you qualify for 100% relief on the land after two years. The same is true if you sign a contract with a farmer to do the work, as long as you share in the profits and losses. If you let the land to a farmer, you qualify after seven years.

The farmhouse is a grey area in inheritance-tax terms. Land Tribunal judges have said farmhouses should be exempt only if the owners farm the land on a day-to-day basis.

Times Recommends

• How to turn yourself into a model borrower
• The art world is no longer a safe haven
• Stampede for safe but sorry returns