Tax benefits notch up value of woodland sales

Commercial and amenity woodland values are rising, says a new report from forestry specialist UPM Tilhill and property agent Savills.

According to figures for deals struck in 2005, the average price achieved by sales of commercial forest, typically Sitka spruce, was £2209/ha (894/acre) – a 22% increase on the previous year.

This was despite a 23% rise in the amount sold to 16,509ha (40,793 acres).

Tilhill’s Simon Hart said tax benefits, not profitability, were driving the increase.

“The price of woodland has jumped to a much greater extent than timber, so consequently returns are low.

There seems to be a whole drove of people looking at woodland who are driven by inheritance tax (commercial woodland qualifies for business property relief).”

There had also been a sharp increase in the price paid for smaller blocks of amenity woodland, which were commanding equal or higher values than the surrounding agricultural land, added Mr Hart.

High-amenity woods near population centres could fetch up to £10,000/ha (£4050/acre), he said.

“People like to own them for their beauty.”