There’s a shortage of supply and continued demand from wealthy investors both from the UK and overseas looking for large tracts of land, as well as country estates, but these days it’s increasingly rare that the two types of buyers will fight over the same thing. One is very driven by the opportunities afforded by buying and owning land when it comes to wealth planning; for the other, the driver is more about lifestyle and status.
What they want to buy
When it comes to buying land for investment, the golden rule for buyers is the simpler the better. This is an investment, not a lifestyle purchase. The optimum size would be 1,000 acres, preferably neatly ring-fenced, of good quality arable land. The location doesn’t matter too much as long as the soil is good for crops (livestock is more complicated than arable) but there are premiums paid for this sort of block that lies within 2 hours of London as owners quite like to be able to go and see their land from time to time. Further premiums are paid for tracts in key counties such as Hampshire, Oxfordshire and Gloucestershire: if an existing estate or wealthy neighbours can buy up adjoining land, they’ll likely pay much more for it.
Estate buyers, meanwhile, are much more interested in the house and the amenities that come with it. The ideal estate for today’s market is about the same size, 1,000 acres or so, but it will be mixed: approximately 200 acres of parkland in the middle, a good mix of arable and livestock land as well as plenty of well-planted mature woodland which makes the most of the land contours so that it’s both attractive to look at and will benefit the shooting. To cap it all off, a river should run through the estate. In the past, there was an appetite for an enormous gem of a house but these days a pretty Georgian manor house of between 10,000 and 15,000 sq ft is ideal —and that should come with a few cottages and farm buildings. Critically, there should be no road noise, no footpaths and no pylons interrupting the views. The reality is, of course, that this doesn’t exist. If you can tick seven out of 10 boxes, that is good.
Who are the buyers?
There are lots of drivers for the investment land market and buyers come from a mix of professions, entrepreneurial, corporate and international backgrounds but the common theme among them is that they want to invest their money into something that is both tangible and safe. There are various reasons why buying a large tract of land makes sense from a wealth planning point of view. Firstly, someone might have sold land for development—not uncommon these days with the drive to build more houses—and if they then re-invest the proceeds from that sale into buying more land, known as a ‘qualifying asset’, they can roll over the capital gain on the initial disposal.
Another reason you’ll see a lot of successful entrepreneurs coming into this market is to do with Inheritance Tax (IHT) planning whereby if you invest in land and own it (and, importantly, control or run it) for at least two years, you can pass it down to the next generation without paying any IHT on your death. That makes land very attractive for wealth preservation. Not only that but it’s a very tangible asset, you can enjoy it, touch it, walk on it or run a shoot from it—and that’s comforting in this volatile era.
Despite the threat of reduced agricultural subsidies following Brexit (even though they have been guaranteed by the current Conservative Government until 2022), there is the firm belief among many people that the population is going to continue to grow and people have got to eat and in two or three generations’ time there’ll be more people than land to produce food for them, so it’s a very valuable commodity long term–a pound of wheat is more valuable than a pound of gold if you’re starving.
Those interested in estates, at the moment, are largely international. Traditionally, British buyers dominated—I think it’s deeply ingrained in all us Brits that if you’ve been successful, you want to own your private bit of the countryside. So, over the last 15 years, the market has been dominated by British buyers—largely hedgefunders, entrepreneurs and those who’ve been successful in IT. Since, Brexit, however, I’ve noticed a higher number of international buyers coming into this market including those from the Middle East, Americans and one or two Russians with a taste for the English way of life (driven by the security the UK offers, the stability the investment offers and the weakened pound).
What’s on the market?
Very little, in the case of land. In 25 years of working in this world, I’d say the market is as tight as I can remember it. With estates, the story is similar. In a typical year, there might be between five and seven available publicly and the same number again privately. I can think of five or so available privately and currently none on the open market. But of course, there are always doors that we can knock on – the catch is that there would be a premium to buy them.