With uncertainty being the only certainty what’s happening in the Scottish land market?
From Brexit and political anxieties to sensitive stock markets falling heavily thanks to US-China trade tensions, it’s hard to argue that we’re living in interesting times.
But in my experience, it’s exactly during these unpredictable moments that the resilience of the agriculture sector shines through. By all accounts, the industry seems to be pressing on regardless and — to an extent thriving — despite this political and economic uncertainty.
We’ve seen excellent work in diversification, ranging from agritourism to renewable projects, and we know that the industry continues to work hard to keep pace with policy decisions based on the principle of public money for public good.
Indeed, with the current climate, you’d be forgiven for thinking people would be selling up, cashing in, and settling for an easy life. This doesn’t seem to be the case: the supply of land to the market does not seem to have increased and may be down on earlier years, if early indications are correct.
And it’s a similar story with residential property although geography can make a huge difference. The market in the central belt is extremely strong; however, Aberdeen and its surrounding area are still suffering from the deflated market in the north east, although the latest statistics from the ASPC for the first quarter of 2019 shows signs of modest improvement.
Back in the rural market, farmland and land suitable for forestry remain very popular. Renowned as a ‘safe haven,’ agricultural land has long been seen as a secure investment. Plus, with its inheritance tax benefits, there’s potentially much more to offer investors than just grazing livestock or growing crops. In short, it seems many purchasers are focused on the longer road — and its opportunities — ahead, past short-term uncertainty.
Interestingly too, many of these recent buyers are newcomers to rural life and this brings with it the added opportunity for young and ambitious farmers willing to enter into short-term lets, contract farming or joint venture arrangements.
The mechanics of these transactions, on the face of it, may seem similar to purchasing or selling urban residential or commercial property: it is after all, a case of buying and selling land and what’s on it.
However, there are peculiarities that are specific to rural sales, including issues around boundaries, access, use and planning, as well as the ascertaining the best structure and set-up for an agricultural business.
As such, it’s important for sellers’ solicitors to act with land agents at the outset to prepare a thorough sales pack to avoid unexpected problems further down the line.
For buyers, it’s well worth getting advice on all the options for funding a purchase too. It might be, for example, that high street lenders can’t assist, but alternative providers are well placed to step in.
They say that there’s nothing surer than death and taxes, and land remains a smart investment for both these inevitabilities; however, businesses must be structured and set up in such a way to make the most of the no-doubt considerable opportunities that exist.
There’s no escaping the fact that economic and political uncertainty, not least of which Brexit, looms large; however, we expect the buoyancy we’re seeing now to endure in the land market in the short to medium term, as well as the resilience of purchasers and sellers.
However, we are living in unprecedented times, and chances are not every rural landowner will sit and wait it out. So maybe fortune will favour the brave, after all?
This article previously appeared in The Courier in May 2019.