There has been a perceptible shift in how people are looking at land. It has been dubbed the ‘Thunberg effect’ and, as a result, the profile of clients approaching us seeking land and forestry is changing.
No longer is it solely for financial, tax or lifestyle reasons. Some buyers are saying it is “to give something back”. But is that really the extent of it?
There is no doubt landowners are embracing different management approaches. Rewilding and regenerative farming – where farmers work with the land’s natural biological systems to increase soil fertility, sequester carbon and enhance biodiversity – are fast gaining traction.
With biodiversity and offsetting becoming more important, could grouse moors, peat bogs and lowland grazing, with their natural stores of captured carbon, become income-generating assets in their own right?
The concept of putting a value on nature is not new. The Environment Bank allows landowners to receive income in return for wildlife-friendly land management to compensate for the impact of property developments. Land available for nature conservation means a capital payment to commence work and annual payment for ongoing work for the landowner.
Forestry offers another way in for those with a keen eye on the inheritance tax advantages. Currently, 13% of the UK is wooded, compared with the European average of 37%. It is estimated that 30,000 hectare needs to be planted each year – triple the annual rate – as part of a “green industrial revolution” proposed by Boris Johnson.
In 2020, a total of £200.18m of forestry properties traded – the highest value on record – with average values of £15,962 per stocked hectare, up 39% on 2019.
The government’s Woodland Carbon Guarantee allows landowners to sell woodland carbon in the form of units – a financial value given to each tonne of carbon stored – to the government over 35 years at a guaranteed price protected against inflation.
Investing in land and forestry for now is a clever move for those who want to promote a clean environmental bill of health. But as the value of carbon storage goes up, could it also prove financially sound?
Philip Harvey is senior partner at Property Vision