The average prices of freehold forestry in the UK rose 35% to 40% on the previous year, according to a 2008 Forest Market report.
The report, which covers the year to September 2007, reveals that forest owners have seen the value of their woodlands more than double over the last four years.
It provides an annual snapshot of the UK commercial forestry market on properties larger than 25 hectares. Currently, UK forests produce about 8.5 million tonnes of timber annually, which satisfies just 15% to 20% of the country’s needs. To meet this demand, timber production is expected to rise by at least 50% over the next 15 to 20 years.
The tax position for commercial woodland ownership remains constant and is an important factor in the freehold market, especially for new investors and their advisers.
Exemption from UK taxes provides encouragement for medium-to-long periods of commercial woodland ownership. On average, commercial forest ownership lasts between 12 and 15 years, with inheritance tax relief remaining a significant influence and motivation.
Tax-free timber income is also an incentive to buyers, particularly those purchasing older woodlands and looking for income to supplement pensions.