Property fund eyes up healthy land market

A new property fund is hoping to take advantage of the buoyant market for agricultural land.

Rural investment specialist FIM has just opened its Farming fund, which it says will allow investors to take advantage of the 100% inheritance tax relief available on farmland as well as offering the potential for low-risk capital appreciation.

The fund will buy farmland that will be managed by Velcourt under a profit-sharing agreement. This is important because investors must be exposed to some day-to-day risk to qualify for the IHT reliefs after two years.

Let land only becomes eligible after seven years

FIM’s Colin Lees-Millais said: “Since the last Finance Act (when Gordon Brown clamped down on family trusts) it has become increasingly difficult to protect your money from inheritance tax.”

Mr Lees-Millais said the fund had an overall requirement of at least £2m and a £20,000 minimum for individual investors. The closing date is the end of January 2006 and he said he would be looking to start buying property in the spring. “Arable farming will be the core of the business.”

It was too early to say how much land he would be looking for, said Mr Lees-Millais, but he did not think it would be enough to distort a market that is already seeing more demand than supply.