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Farmers log heightened interest in woodland and forestry and its all down to timber!

Esme Shakeshaft

A recent resurgence in firewood and timber prices combined with strong returns for investors is leading to heightened interest in UK woodland and forestry, leaving many investors wondering if money really does grow on trees..

In 2014 it was reported that there were strong returns in woodlands and forestry funds as they reached an 8% average per year over the past two decades, according to figures from the UK Forestry Index. However Estate Agents and Property Consultants, Strutt & Parker revealed that ‘forestry had made a return of 18.4% a year, in the past decade alone.‘

According to Farmers Weekly, standard prices of hardwood for firewood range from £30/t to £40/t , which is apparently double what they were 10 years ago. Conifer prices for sawing have also reportedly increased to between £20/t and £35/t. Woodland ownership offers a number of tax efficient benefits, including Business Property Relief from Inheritance Tax where the woodland is managed as a business, capital gains tax and tax free income, so this combined with the increase in pricing has left some farmers considering whether to bring their trees back into management.

Farmers Weekly estimate that ‘there are over 1m hectares of unmanaged trees in the UK and these reside predominantly in the South East of England and are situated on large estates.’

In 2008 during the financial crash the weaker pound made timber more valuable. Post – Brexit has left many wondering if we will see a similar occurrence ..

With commercial forestry doing well, depleted returns from agriculture are leading farmers and landowners to take advantage of planting incentives by establishing trees on marginal land or newly acquired plots.

It has been reported that one of the largest privately owned woodlands in Surrey recently sold for well over £4m, when it had a guide price of £3.85m.

With interest in forestry and woodland heightening the most important return should be the pleasure they bring, but woodlands can also be fantastic investments