Seeing the wood among the trees: How to make an income from your woodland

Go onto any farm or estate with an element of woodland and it will most likely be one of the most unloved and wasted resources on the holding.  It really begs the question – are we undervaluing the value of woodland?

The reasons are primarily historic and almost purely related to the poor financial returns.  Some very generous grant schemes in the 80s encouraged new plantings, but many did it for the grant on offer with little input since.

Things are a changing

In many ways, woodland ownership is becoming a more important part of a farming business as an income driver and an appreciating asset.  In 2019 over 14,000 hectares of commercial forestry were sold with a market value of over £121 million.  Analysis of the 2019 forestry market by land agents Savills shows the average gross value increased by 17% to £9,900 per hectare, which translates to an increase of 25% per net productive hectare to £13,100.

The advent of carbon credits adds further potential value

The carbon sequestration ability of woodland is very highly rated.  As climate change moves up the political agenda, and we start to understand how farming support adapts post-single farm payment to deliver public good we may see an increase both in the earning capacity and asset value of woodland.

The appetite for wood burning stoves shows no sign of abating

Our local gas fitter can remember taking old stoves out when mains gas arrived and is now going back to the same houses to cap the gas in preparation for a new wood burning stove to be installed.  The modern stove is a very efficient piece of kit but it does rely on a constant supply of firewood.  There now seems to be a market for all types of forestry products from prime timber to thinning’s to woodchip.

Woodland staycations are on the rise

In the ‘new’ world of Covid-19 and increased demand for socially-distanced staycations, a woodland siting for mobile accommodation such as shepherds’ huts can be very effective and relatively easy to get up and running.  There is also a real demand for ‘Bear Grylls’ wild camping in a woodland setting where provided you will allow a camp fire all you have to offer is a pitch.

Don’t underestimate the potential earning capacity of any piece of woodland, regardless of size and also remember income derived from the ‘sale of felled and growing timber, underwoods, thinnings and all other such receipts’ remains exempt from income tax.  Now there’s an incentive if there ever was one.  If you’re looking to buy woodland, why not talk to us if you need a loan.

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By Ian Bell, Head of Farming & Rural Engagement

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