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Woodland can be an attractive investment

Date: 07 Jul 2016

Citywealth

Christopher Findley, partner at Bircham Dyson Bell, also says that without subsidy, UK agriculture will face a deep recession and bankruptcy on a large scale.

How will Brexit impact UK agriculture?

The agricultural industry faces the removal of the Common Agricultural Policy and all its subsidies, compliance regime and environmental legislation. Farmers will need to have their concerns addressed quickly and urgent fiscal and political decisions are needed. Without any support UK agriculture will face a deep recession and bankruptcy on a large scale.

Do you expect radical changes in legislation?

Farmers have long criticised Brussels, who produced the framework legislation which UK legislators ‘gold-plated’ with ‘over-detailed’ rules resulting in a very strict compliance regime and unnecessary red tape. It is false hope to think that Brexit will lead to a bonfire of regulations and to a regulatory ‘light touch’ in respect of farm subsidy compliance and environmental control. It is likely that many aspects of the subsidy and compliance regime will be rolled over.

Is arable land still a good investment?

Arable land is used as a tax efficient investment, given that in-hand farming gives relief from Capital Gains taxation and on Inheritance Tax. The income yield is low, but with zero interest rates it is holding up. This is likely to be curtailed post-Brexit. Pasture land is less attractive as an investment because livestock process are volatile and livestock farming involves commitment to labour and more active management of the asset. Woodland is in some cases also attractive as an investment.

Where are the investment hotspots in the UK and internationally?

South East England has traditionally been a strong priced area due to climate and also possibility of alternative uses and development potential of land. Good Quality Grade 1 or 2 land in East Anglia Lincolnshire and spots like Holderness peninsula attract the best prices.

What are the incentives for UHNW individuals to invest in agricultural land?

Security for overseas buyers investing in a safe political country, fulfilment of desire to have the protection of land surrounding their main house, a foothold outside the London property market and tax breaks for Inheritance tax and sheltering capital gains.

What trends do you see in agriculture?

The amount of land suitable for agricultural production worldwide won’t grow exponentially with population growth. The continuing need for food security in a fast changing global agricultural commodities market means that productive land is going to be sought after. It provides a steady but low income return with tax breaks and with capital protection even if land prices per hectare fall, one hectare of land will always hold its value against another hectare of land.

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