Residential property costs have fallen for 5 months in a row, however costs for farmland and woodland look prone to buck the pattern, in accordance with newest evaluation. Penny Churchill and James Fisher have a look.
Farmland has lengthy been seen as a sound long-term funding and, with the typical value of arable land in England now standing at £10,000 or extra an acre, demand has spilled over into lower-quality livestock land and pushed the price of pasture to report ranges. Final week, Savills predicted that land for farming, renewable power and woodland can be the ‘prime picks’ for consumers and sellers in 2023.
Why? Properly, provide stays comparatively low and demand is staying excessive, with a concentrate on ‘Nature-based options’ driving the market. Of all of the sorts of farmland, Savills has earmarked ‘poorer-quality grazing land’ as a prime rural funding decide, with the worth of that sort of farmland growing by 20% since December 2020. Demand will proceed over the subsequent 5 years as ‘stress to re-carbon and re-Nature land intensifies’.
Lack of provide implies that the worth of business forestry land — which has soared lately — will proceed to rise, Savills say, however to not the extent beforehand seen. Forestry markets are actually maturing, with prospects for capital progress extra linked to timber costs.
“Beneath present laws, land that qualifies for agricultural property reduction will be given away with out incurring capital positive factors tax — a extremely environment friendly approach to cross wealth on to youngsters”
Though a lot of the expansion in farmland and forestry land costs is all the way down to the arrival on the scene of the massive establishments, as they rush to burnish their inexperienced credentials, personal wealth is one other large participant out there.
‘It’s not solely the super-rich’, says Rob Fanshawe of shopping for agent Property Imaginative and prescient, who factors out that ever for the reason that Finance Act of 1975, possession of farmland has conferred some terribly invaluable tax advantages. Of those, probably the most important is agricultural property reduction (APR), which gives reduction from inheritance tax not solely on agricultural land, but additionally on buildings and farmhouses which can be actively utilized by the proprietor for agricultural functions. Beneath present laws, land that qualifies for APR will be given away with out incurring capital positive factors tax (CGT), making it a extremely environment friendly approach to cross wealth on to youngsters or different relations.
Though the variety of farmers in England is shrinking quick (one in 5 has left the business prior to now 10 years), there may be nonetheless time for the smaller investor to reap the advantages of farmland possession, says Mr Fanshawe, who recommends a minimal of 200 acres as a wise first buy.
This coincides neatly with the executor’s sale of Garners Sevenex Farms at Nice Missenden, Buckinghamshire, a residential and agricultural farm throughout the Chilterns AONB, which got here to the market final week by way of Savills Farms and Estates. Promoting agent Louisa Batterbury quotes a information value of £7.75m for the late John Garner’s 247-acre farming enterprise as an entire, or in as much as six heaps.
Lot 1, Andlows Farm, includes Andlows Farmhouse, conventional and fashionable farm buildings, two cottages and 69 acres of arable land, pasture and woodland, information value £3.975m. Lot 2 is 73 acres of arable land, pasture and woodland, information value £850,000. Lot 3, Nairdwood Farm, includes Nairdwood Farm Cottage, conventional and fashionable farm buildings and 50 acres of naked arable land, information value £1.25m.
Lot 4, Broom Barn Land, is 49 acres of naked arable land, information value £625,000. Lot 5 is a two-bedroom home in Prestwood with potential for an extra website, information value £600,000. Lot 6 is a three-bedroom cottage in Prestwood, information value £450,000.
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