32 • Considering Te Countryside
Te Countryside Experience • Sunday 12 August 2018
Why not invest in farm land? CLM can help with investments in the low risk world of land ownership
Farmers are known to complain. If it’s not the weather, it’s the ruthless supermarkets not paying enough for milk or the countless rules they must obey before receiving annual subsidy payments. In truth, the last decade has been tough with margins from food production very low or even absent altogether. But despite this prolonged depression, land owning farmers are rarely, if ever, described as poor. In fact, quite the contrary. And the most striking evidence is that the majority of farm land is bought by farming neighbours expanding their own operations. Perhaps it’s hardly surprising: farmers understand farming so presumably know what they’re doing! But an obvious question arises.
If returns from farming have been under pressure for so long, why does the supply of land come no way near to satisfying demand? To start, the process of letting and/
or farming land is often less compli- cated than at first it might appear and there’s the added advantage of very little bad debt in agriculture. In other words, tenant farmers pay their rent. And although returns on invested capital are relatively low — typically 1% to 3% — this is partially offset by the minimal risks associated with land ownership. Tis is reflected by low interest rates for capital borrowed for land purchase, typically less than 4% for a 10-year loan. But other factors better explain
why farm land is desirable. One of the reasons land owners rarely suffer serious financial hardship is because, in relative terms, they pay very little tax. So long as straightforward rules
absentee owners; the company buys, sells and manages land all over the country from its offices in Sussex. Investments can start at around £50k but £1m+ makes much more sense. Agricultural land varies in price from £5k to £15k per acre. Ideally, parcels should be 100 acres or more. In summary, investing in agricul-
tural land can provide more oppor- tunities than you might at first think. It’s vital to thoroughly research and understand all aspects of what you’re buying but as the nation perhaps moves closer to a new period of uncer- tainty, post-Brexit, land ownership could be more attractive than ever.
MATTHEW BERRYMAN DIRECTOR OF CLM LTD
are followed and ownership is struc- tured appropriately, land can be sold at a capital gains tax (CGT) rate of only 10%. Further, roll-over relief could be available, effectively reducing CGT to 0%. And for those with wealth to pass on, land can be transferred from one generation to the next without paying any inheritance tax whatsoever. So, if you’re in a position to invest
consider, for example, who’ll buy the land should you later decide to sell it. If there’s no obvious purchaser, this might be one to pass by. What’s the land best suited for and are there unrecognised opportunities such as development, mineral deposits, suita- bility for vineyard establishment?
Where to buy and how much to spend? Some investors prefer to purchase near home so regular inspection is possible.
Alternatively, specialist firms, like CLM, manage land for Complete Land
Management For every season • Farm and estate management • Rent reviews • Environmental stewardship • Ecological surveys for planning • Vineyard consultancy
T: 07710765323
E:
matthew@c-l-m.co.uk c-l-m.co.uk
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
