Land agents believe farmland demand and values will prevail against uncertainty created by the prospect of independence for Scotland, however the estates market is seen as more vulnerable.

Land ownership has been under the spotlight in Scotland since the country gained its own parliament in 1999. Reforms for crofters and the tenanted sector have given landowners and investors food for thought.

With some core Edinburgh businesses considering relocating to the north of England in the event of independence, there are new concerns about tax, EU status (an independent Scotland may have to reapply), and attitudes towards wealth.

It is still too early for details, not least because options on degrees of independence are still being mooted. But worries are dominated by the potential for fiscal and legislative change that will affect landownership, occupation and personal wealth.

Yet growth in Scottish land values outperformed that for the rest of Great Britain last year, according to Savills, despite the marketed acreage increasing by around 20% to well over the “normal” 40,000-acre turnover – the biggest supply since 2006.

Commercially viable arable farms are always scarce, with fewer than 25 offering more than 400 acres in 2012 and top prices rivalling those in England at £10,000/acre or more; buyers were paying £7,000/acre at the lower end of the range.

Scottish values generally sit at a 10-15% discount to those in England, so these prices could plateau – but demand remains strong.

Most farms have been selling, although the south-west and the north-east look more vulnerable than other areas. These two regions have a wider range of land types, are more commonly valued between £1,500 and £3,000/acre and are no longer supported by Irish and residential demand.

Scottish estates may prove more vulnerable to the threat of independence. The number sold in Scotland in 2012 fell to 14, with a combined value of £37m (one of the lowest outcomes on record) compared with 22 sold in 2011 for £86m.

“The main concern is going to be what it costs to run. It is always going to be a considerable outlay, and if everything from tax to fuel is going to go up [with independence], that will affect property prices.”
Charles Dudgeon, Savills

This market, while high-value, is tiny. “International buyers are not in the least bit affected. If you have done well in Malaysia, Korea, China, you only want a trophy property,” says Charles Dudgeon of Savills. “Many are expats with roots in Scotland and see it as ‘coming home’.”

“The main concern is going to be what it costs to run. It is always going to be a considerable outlay, and if everything from tax to fuel is going to go up [with independence], that will affect property prices.”

Commercial farm buyers, meanwhile, follow good value, he says. “If it is cheaper here than it is somewhere else, they will still buy. So the only real reason to hide behind independence concerns is if you are trying to chip a bit off the price.” However, the gap is already widening between better and poorer quality land – and extra uncertainty will not help.

Robert McCulloch of Strutt & Parker acknowledges other threats to market confidence, including the impending reform of the CAP, and the impact of the Wildlife and Natural Environment Act 2011, which makes landowners and managers liable for the actions of their employees.

“But my overriding feeling is uncertainty about the general economy and the eurozone crisis far outweighs worries about the possibility of independence,” he said.

Ran Morgan of Knight Frank believes all these factors, plus the continued appetite to own land rather than sell it, mean there could be less on the market next year. “It would be very easy to talk ourselves into a state over this, but if the market is fragile it is largely down to other factors. The market is tough because the economic condition are tough.”

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