Have you ever been driving or walking along a country road and seen a sign advertising ‘Woodland for Sale’? And have you ever thought ‘Should I be investing in woodland?’. Investing in woodland is an option that is often overlooked in property investment. So here we’ll look at some of the ins and outs of investing in woodland.
First why might you want to invest in woodland?
Woodland generally is pretty cheap compared to many types of property. According to a recent UK Forest Market Report commercial forestry cost around £6,460 an acre in 2020.
Amenity woodland is cheaper. It is possible to buy a reasonably sized small wood from around £25,000. So it’s a type of property you might be able to buy outright without borrowing money.
Woodland generally holds its value and appreciates gradually over the years. It’s not a volatile investment.
There will always be a demand for timber whether for use in construction, furniture or for fuel. Timber prices generally hold up well in the long term too. They’re currently on an upswing.
There can be tax advantages to investing in woodland. Income from timber sales is free of Income Tax and free of Corporation Tax. Gains in the value of timber are free from Capital Gains Tax too. Woodlands are not subject to Inheritance Tax so they can be a tax free way of passing assets to your family.
You might be able to gain tax advantages by investing in woodland through your pension, that is through a SIPP or SASS.
It’s possible to claim grants to invest in woodland too in some cases. If you expand your woodland by planting on adjacent open land you may qualify for a Woodland Creation and Maintenance Grant. You may also be able to sell carbon credits via the Woodland Carbon Guarantee scheme.
It’s essential to take professional advice on the financial and tax implications before investing, however.
Investing in woodland is an environmentally friendly kind of investment. Trees remove CO2 from the environment and woods also provide essential habitats for animals, birds and insects.
You can use your own woodland yourself if you want to. Woodlands are great for relaxing in nature or perhaps camping. As well as the trees (obviously) many woodlands have rivers, streams and ponds which may be suitable for fishing.
What are some of the disadvantages of investing in woodland?
There are a limited range of uses for woodland (but see later). It’s pretty unlikely you’ll be able to make a fortune by chopping the trees down and building houses for example.
There’s a big difference between investing in what is called amenity woodland and productive, commercial woodland. Amenity woodland – essentially woodland which is primarily for recreational or environmental use – is cheaper to buy and easier to run. Commercial woodland is more expensive and needs expert management and maintenance if it is to make money.
Woodland needs ongoing maintenance. This goes without saying for commercial woodland but even amenity woodland will need periodic care by way of coppicing, felling and replanting. A wood isn’t a hands off type of investment even if it looks like one.
If you are interested in adding woodland to your property investment portfolio what should you do?
As with any property investment, decide what your aims are first. Are you investing in woodland to make money or just for the amenity and environmental benefits it provides?
As with all property investments think long term. Even fast growing trees take 30-40 years to mature for example.
Take expert advice. This especially applies in the case of commercial woodland. Specialist surveyors can offer advice on what to buy, where to buy, woodland utilisation and current values. Woodland managers can provide advice on management and maintenance and the likely costs of it.
Explore the other possible uses – and possible extra streams of income – for your woodland. Increasingly today woodland investors look towards alternative and innovative uses for woodland that will generate a better income from it. Even amenity woodland can be used to generate an income in some cases – subject to any permissions needed and any restrictive covenants which limit what you can do with the land. You could establish a new business yourself or rent your woodland out to someone else to use it in a business.
Income opportunities for woodland include: Using it as a pop up camping or caravanning site. Using it for fishing or even shooting and selling permits. Using it for adventure activities such as all terrain biking tracks, off road driving, paintballing, clay pigeon shooting, archery or tree top rope courses. Using it as a location for educational and corporate training/team building activities. Using it to provide green burials. Or even something more tree-related like selling firewood or charcoal or growing Christmas trees. The concept of off grid living is also attracting more interest at the moment and could be an option.
Whilst woodland clearly isn’t an investment that will suit everyone it certainly offers some attractions. Those who are looking for a more alternative or unusual property investment could do worse than to consider woodland.