Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Farmland and farm rents

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
88V8
Lemon Half
Posts: 5769
Joined: November 4th, 2016, 11:22 am
Has thanked: 4097 times
Been thanked: 2560 times

Farmland and farm rents

#491775

Postby 88V8 » April 5th, 2022, 10:48 am

Not sure where to post this... our local farmer has need of capital, and we're considering buying some of his pasture to help him out.

Other than its benefit as an IHT shelter (which is irrelevant to us) farmland has generally been a poor investment, but the land in question wraps around our cottage so we feel an incentive to protect it from falling into 'the wrong hands'.

Where can one get sight of current farmland prices?
Knight Frank have something on the Farmers Weekly site https://www.fwi.co.uk/business/markets-and-trends/land-markets/find-out-average-farmland-prices-where-you-live and Savills have a more general chart here https://www.savills.co.uk/landing-pages/rural-land-values/rural-land-values.aspx.
Is there anything better?

And in terms of renting it back to him, if we decide to charge him rent at all, what are typical rental levels?
There Is this guidance from DEFRA https://www.gov.uk/government/statistics/farm-rents/farm-rents-england-2020
Any better sources?

It would class as unimproved pasture.

This is a sector of which I know very little. Any experience appreciated.

V8

ReformedCharacter
Lemon Quarter
Posts: 3120
Joined: November 4th, 2016, 11:12 am
Has thanked: 3590 times
Been thanked: 1509 times

Re: Farmland and farm rents

#491812

Postby ReformedCharacter » April 5th, 2022, 12:00 pm

88V8 wrote:Not sure where to post this... our local farmer has need of capital, and we're considering buying some of his pasture to help him out.

Other than its benefit as an IHT shelter (which is irrelevant to us) farmland has generally been a poor investment, but the land in question wraps around our cottage so we feel an incentive to protect it from falling into 'the wrong hands'.

Where can one get sight of current farmland prices?
Knight Frank have something on the Farmers Weekly site https://www.fwi.co.uk/business/markets-and-trends/land-markets/find-out-average-farmland-prices-where-you-live and Savills have a more general chart here https://www.savills.co.uk/landing-pages/rural-land-values/rural-land-values.aspx.
Is there anything better?

And in terms of renting it back to him, if we decide to charge him rent at all, what are typical rental levels?
There Is this guidance from DEFRA https://www.gov.uk/government/statistics/farm-rents/farm-rents-england-2020
Any better sources?

It would class as unimproved pasture.

This is a sector of which I know very little. Any experience appreciated.

V8

I'm not a farmer, but FWIW qualified as a farm manager > 40 years ago. When I looked at the land prices on your first link I thought that they must be per Ha until I looked more closely :)

A few random thoughts:

A more accurate guide to current prices would be to look at recent auction prices in your area.

Although you say you are not interested in IHT mitigation AFAIK you actually need to farm or pretend to farm the land to qualify. It is my impression that IHT mitigation has been a major factor holding up farmland values.

It would be hard to accurately value rental levels because they are likely to vary due to local demand and the size of the land available. Land is popular for those that keep horses here. Again, you would need to ask around in your local area.

Farming and consequent land values are difficult to predict as it seems that since we left the EU, land use policy is going to change considerably along with associated incentives.

As you don't seem particularly keen to profit from your potential land purchase but to protect your existing home from encroachment, something that would potentially retain the value of your home it seems like a good idea. I can't see it being likely that you would lose money on the value of the land over time, you might even do well from it. As Mark Twain said, 'Buy land they aren't making any more of it.'

RC

PhaseThree

Re: Farmland and farm rents

#491826

Postby PhaseThree » April 5th, 2022, 12:30 pm

I can't comment on the GB pricing (I'm in Northern Ireland) but the concept is very sound
We own 3.5 acres of pasture land immediately around our new build house which we bought to ensure we had control over our surroundings and to kill off any further development ideas. I think we paid around £20K 8 years ago and used the land to "dump" the soil from the house build saving us significant "muck-away" costs.

We let a local farmer use the land free of charge to graze cattle and sheep (basically free four legged grass mowing). I have no interest in being in anyway responsible for the stock so a non-commercial transaction makes the most sense to me. The only constraint I place on the land is that it is farmed at a low intensity to encourage the local wildlife. This seems to work, we get a good range of bird life along with hares and other occasional visitors.

The fact that the land is attached to the house puts the value of the house up by more than the purchase cost - there is always significant interest in houses with attached land for small holding and equestrian buyers.

From my perspective I get a good if non-financial return from the purchase.

Hallucigenia
Lemon Quarter
Posts: 2617
Joined: November 5th, 2016, 3:03 am
Has thanked: 166 times
Been thanked: 1718 times

Re: Farmland and farm rents

#491839

Postby Hallucigenia » April 5th, 2022, 1:09 pm

88V8 wrote:Other than its benefit as an IHT shelter (which is irrelevant to us) farmland has generally been a poor investment, but the land in question wraps around our cottage so we feel an incentive to protect it from falling into 'the wrong hands'.


If you're in a position to do it, then this in its own right is Just Worth Doing - the land is worth so much more to "the house" than it is to the farmer. For me just having that control over what happens immediately next to the house is worth the price alone, but also having "a bit of land" is attractive to future purchasers who might want to put horses there, put down a tennis court, or even put a granny flat or bigger development on it. A relative saw the purchasers of the relative's old country cottage completely ruin it by putting two ugly houses in the garden, they regret not putting a covenant on it preventing development and that might be something to consider if that's important to you.

Another relative was in this sort of position, the previous owners had been creeping into the adjacent woodland - compost heap, bonfire etc - and the septic tank was also there (I guess because the house was originally part of the farm and nobody thought about the septic tank when it was sold off?). So the opportunity came up to buy a strip of about an acre around the house out into the untouched woodland and I'm not sure what the price was but I imagine it was expensive by the standards of the market price of woodland - but both sides could see that it was worth much more to the house.

So don't necessarily expect to pay a straight "market price" for an odd parcel of land, just because it is worth so much more to you. But yes, look around at local auction prices is the only way to really do it. Or perhaps better, get professional advice from a land agent - if you still have any old school "family" estate agents left then in rural areas they often have a small land agent division rather than go to the big boys like Knight Frank.

As for rent - I know of two cases where 0.5-1.5 acres of rough pasture were let to fatten a few lambs for an annual rent of "one lamb", which suits the farmer and may be considered "tax-efficient"... My local farm shop does a full lamb butchered for £140 to give you an idea of what that's worth.

One other thing to consider is boundaries - the second relative had the additional cost of putting up a new fence because a new boundary was being created. And if there's hedges then they need cutting annually - in one of the rental cases I refer to above, there's about 300m of hedge to cut which the owner has to do and is a PITA - try and get a deal where the farmer cuts the hedge along with the rest of his land if you can.

DrFfybes
Lemon Quarter
Posts: 3731
Joined: November 6th, 2016, 10:25 pm
Has thanked: 1171 times
Been thanked: 1964 times

Re: Farmland and farm rents

#491843

Postby DrFfybes » April 5th, 2022, 1:22 pm

88V8 wrote:Not sure where to post this... our local farmer has need of capital, and we're considering buying some of his pasture to help him out.

Other than its benefit as an IHT shelter (which is irrelevant to us) farmland has generally been a poor investment, but the land in question wraps around our cottage so we feel an incentive to protect it from falling into 'the wrong hands'.

V8


If you can afford it, just do it.

Really, don't worry of you pay slightly over the odds, having control of it can be priceless.

Neighbouring properties come with approx 1 acre plots, as does ours. One neighbour split off their woodland when they sold the house, an area of woodland and some outbuilding which fetched £30k as a best offer. One other neighbour tried to buy it, consulted a land valuer who suggested £20k, so he offered a bit more, but never heard back to up their offer.

It has since got planning for a glamping site, been sold again, reapplied for a campsite, and last changed hands for 5 or 6 times the original sale price 5 years ago. One owner hacked down trees in the woodland to create an entrance to the outbuildings bit, then applied for Planning and as the entrance was already there it went through. They also illegally connected to a water supply, and have generally caused misery and disruption, and they're still at the planning stage.

Paul


Return to “Investment Strategies”

Who is online

Users browsing this forum: No registered users and 7 guests