Buyer's Property Market?

The market in my area seems to be heading rapidly in favour of the buyer. I have in the last week got two properties under offer for clients at discounts greater than 15% off the asking price. There is a lot of property out there that has received no offers since marketing began in the early Spring and both selling agents and vendors are becoming increasingly nervous of what may happen next year and , naturally, a good offer deserves serious consideration. This is partly because they were over priced to begin and partly a reflection of the market but selling agents are now quite openly keen to do deals at realistic prices. I would not say the market for country property is showing any signs of distress but there is a clear readjustment in price downwards and some sellers who have been less cooperative are now chasing the market down hill.

Market forecasts seem to endorse this view.  Knight Frank recently reported that "Prime country house prices fell 1.2% in Q3 2011, contributing to an annual fall of 1.7%. The most resilient sector over the past year has been the country cottage market, which has only seen prices fall 0.7% over the past 12 months." All this is true but at my level can be analysed further on a geographical basis. Ther is a lot of good property for sale in the south west which is struggling to find buyers despite the element of scarcity and vendors are having to decide if it's better to sell now to a good purchaser as there is no certainty the Spring market will blossom in 2012.

Savills have reported that "Second home markets in the South West have been particularly hit by weak market sentiment, though the townhouse markets have fared better. Taken together, values are down -2.9%" and that year on year values have fallen by 5.6%. Based on my recent experiences better discounts are available in the market place, you just need to know a property's true worth which is often supported through strong due diligence.

Salmon Fishing For Sale

I may shortly have a tretch of fishing for sale on the River Exe, Devon - double bank, named pools, etc. Get in touch for more details if you know anyone who might be interested? hugo.busby@busbypc.co.uk

Farmland prices continue to rise.

"Farmland prices break £20,000 per hectare barrier" was the recent announcement from Smiths Gore who went on to report "Prices have continued to rise – for the seventh quarter in a row – due to the small amount of land for sale.  Although there was a flush of land marketed in the first half of the quarter, supply dropped back sharply in the second half to just 5% more than a year ago. Although constricted supply remains the dominant factor in the market place there has been a more subtle change in the type of supply, with more arable farms coming on to the market as vendors hope to cash in on high commodity prices".

The RICS have recently completed their Rural Land Market Survey and report "Farmland prices reached an all time high during the first half of 2011, as land availability failed to match growing demand. Chartered surveyors estimate that the average price per acre increased to £6,115 during the first half of the year, reaching all time record levels for the second consecutive period. Interest from potential buyers of commercial farmland continued to surge ahead, with 50 per cent more respondents reporting increases rather than decreases in demand. Surveyors report this is driven largely by increasing demand from commercial farmers who are looking to expand production on the back of elevated commodity prices. Alongside rising demand, land availability increased for the first time in three years. 27 per cent more respondents reported rises rather than falls in commercial farmland coming onto the market, while a net balance of seven noted an increase in residential farmland availability. Although positive, these increases were not enough to keep pace with the growing level of demand.

During the first six months of 2011, all areas of Great Britain experienced rising farmland prices, with the exception of the North West and Wales, where prices dipped. However, farmland in theses areas was also the most expensive, with surveyors reporting prices of £6,938 and £6,500 per acre respectively. Given the imbalance between supply to the market and demand, surveyors predict the recent trend in farmland prices to continue over the next twelve months, with strong growth expected in the commercial farmland market but a flatter trend in the residential sector". In summary the report stated:

• Farmland prices reach all-time highs, but pace of growth moderates due to rising availability.
• Surveyors expect commercial farmland prices to continue rising strongly, but expect prices of residential farmland to stabilise.
• Commercial farmers remain keen to expand production but activity levels are more subdued in
the residential sector.

This really only confirms what we already know.

• That farm prices and land prices are still strong.
• That location and quality of property are relevant.
• That there are regional variations.
• That land prices are driven by demands for arable ground.
• That commercial farmers are hungry to expand with only a limited supply and as the value of their holding grows, finance is readily available.
• That the implied tax advantages of owning land is encouraging other buyers.
• That in these uncertain times farmland is seen as a safe asset class in which to places cash.

What I can tell you is that a lot of land is being sold privately as you don't need to look far afield for interested parties. Good luck.

Private Property Sales and Rentals

There was period in the last 12 months when I felt sellers and landlords thought it best to go to the open market in order to exploit the best sale price or rent for their property. The concept of "off market" deals had dried up.

These people preferred to act privately to avoid the general public, neighbours, etc knowing their business or, indeed,  suffer the humiliation of failing to reach expectations. Some vendors were attracted by the chance of a premium and purchasers/tenants liked the idea of exclusivity - and in the past this worked well. Then demand faltered and this combined with buyers/tenants looking for a good deal on one hand and an inability to commit on the other resulted in coming to the market. 

Recently, I have noticed the trend returning to off - market transactions and much of this years success has been done quietly , privately and without time and third party pressures. In all cases, the reason has been that both landlords and potential vendors who have approached me have been more interested in the right person and on the right terms and, refreshingly, were only after fair market value so good deals were done.

  

Salmon or trout anyone? Finding game rivers for sale.

"Happy is the man who has his own river bank, and if it is attached to his home he is fortunate indeed. "

The former is true but acquiring the latter is not so easy. I heard another less eloquent phrase from a friend - it goes "If you stood me in front of a ditch with a rod I'd have a go for a fish". What he  means is he loves fishing as do all of us who participate. I'll have a go anywhere and am blessed with a small stream at the end of my drive, so small you can step over it in parts which holds the best head of wild brown trout I've ever encountered in the south. I recently acquired some fishing for my friend off market, and although not the best beat in the world brings a lot of pleasure with it. It lies in a beautiful and private part of Dorset. 

But aside from the sheer enjoyment heading down to your own river to catch a fish, how much is the ownership of fishing rights going to cost you?

First you have to find something that's available and much of the good fishing rarely comes to the market. It almost requires constant vigilance on preferred rivers to track it down. I have found hard work pays off and by literally working down the riparian owners of a river you might just have some luck. I did this recently in Devon and found two good beats on the Taw and Torridge available privately. However, do your research and be diligent. Just because its a river that is known to have good runs of salmon and seat trout or a good head of brown trout does not mean you will catch them on your beat. It is essential there are catch returns and holding pools, fish passes and good water levels. I remember some years ago a salmon fishery in Devon being marketed with new huts, fishing piers and a glossy brochure but no catch records. Someone had bought this, spent the money, and found all the fish run straight through and hence was trying to offload it to some other ill informed person. You can pick up a lot of information by asking around locally - fishing clubs or fly fishing instructors.

In Scotland, rivers are valued according to a formula that is based on what they call “bags” — the number of salmon “bagged” in an average year. Detailed records are kept of every fish and the average for the previous 10 years worked out. This is then multiplied by a figure per fish caught.

When it comes to the valuation of fishing in England, rather than basing values on multiplying numbers of salmon and sea trout as in Scotland, gentler criteria apply. Scenery and access can play almost as important a part as the numbers of fish hiding in a chalk stream.

Values of good fishing in England have risen more or less mirroring prices of the best residential property in recent years. Stretches with healthy populations of indigenous brown trout can command £450 a yard for the prime chalk streams in Wiltshire and Hampshire if both banks are included down £125 per yard in Dorset. So what is known as a “beat” — measuring, say 1,500 yards — could cost more than £600,000.

Recent sales of fishing, I have looked at for clients in the last 12 months or so have varied from the river Frome in Dorset and the river Wylye in Wiltshire to the rivers Taw, Torridge, Mole and Dart in Devon. So although scarcity is an issue, beats can be found to buy both with and without land.

The advantage of owning the land means you physically own the river bed as opposed to the rights which is important for maintenance, habitat improvement and general access. Improvements could include removing silt, shoring up the river bank, repairing sluices and perhaps constructing groynes to control the flow of water. The main job, however, involves keeping the bank clear of excessive growth and cutting weeds in the water, which can very quickly take over if neglected. Owning the land also means you might be able to add a fishing hut or parking. The effort is usually worthwhile if an income is to be derived from the river bank. One rod on a good trout river can command a daily “rent” of between £50 to £150, sometimes more depending on the time of year.

If owning a river does not appeal you can either buy a rod for a season or join a club or just a day ticket. Sometimes you can buy a share in a beat allowing you to fish certain days but this does restrict choice. A 3/8 share is available on the river Dart and the fishing rights are over a stretch incorporating 12 salmon pools with 6 further secondary salmon lies. It also has a productive sea trout pool with other additional sea trout lies.

Fox Grant have 1,111 yards of double bank fishing for sale on the river Wylye at a guide of £175,000 with 9.27 acres of woodland and access track available too for £35,000 which is worth a look.

.

Thinking of buying amenity or commercial woodland - plenty to consider.

Why would I invest in or buy woodland?

Woodland is not the first thing that comes to mind when people think about investments. Many people buy because they like the idea and want a private place of their own in the countryside. However, over the past decade, interest in woodland has been increasing and prices have been increasing at a rate of 5-12% per year, depending on location. Historically woodland had a value of approximately 50% or less of agricultural or farm land. Over the years the demand for what is called "amenity land" has driven the price up and price per acre is more or less in line with farmland regardless of it's physical quality. For example, siting of woodlands i.e. on hill tops or lowland areas was often a reflection of poor or wet soil which were not best suited to growing grass or cereals.

Much of the woodland I have recently acquired for clients has been for amenity purposes with prices in the region of £5,000 to £6,000 per acre (£12,355 to £14,826 per hectare). These figures also come into play when I have bought farmland although there would be some adjustment up or down depending on standing timber values, sporting (shooting) potential or amenity and aesthetic values. The value of a stand of mature oaks or beech in a parkland setting will be far greater than a young plantation on a poor piece of farmland.

What are the benefits of investing in woodland?

Firstly for personal enjoyment, whether sporting or conservation. It is also tangible and can have some potential tax advantages. At the present time the Inland Revenue divides woodlands into those which are either “Commercial woodlands” or ”Amenity woodlands”. Commercial woodlands are entitled to several tax benefits, namely capital gains tax, income tax and inheritance tax.
 

Owners of Commercial woodlands are entitled to the following tax benefits:

Capital Gains Tax: As your timber grows it will increase in value. This increase is exempt from capital gains tax, but any increase in the value of the land is not exempt.

Income Tax: Any income or profit generated from your woodland is exempt from income tax. Forestry grants are not taxable (except for annual income from the Farm Woodland Premium Scheme). There is no tax relief on the interest payments on secured loans.

Inheritance Tax: Commercial Woodlands (including both land and timber) qualify for 100% Business Property Relief provided they have been owned for at least 2 years. Both Amenity and Commercial woodland can be made a lifetime transfer over 7 years.

To qualify for Business Property Relief you will need to show proper accounts (you do not have to make a profit now, but there has to be an intention to try and make a profit in the long term).

If you are not actively selling timber (or just using it yourself) your woodlands will be classified as “amenity woods”, and you will not qualify from the above tax benefits. If the wood has mature trees there is some potential to earn some revenue from timber sales, which is tax free. However, there are limits on how much you can fell each year and replanting or natural regeneration is required. Bear in mind if you extract a good crop of timber - it will be a lifetime before you get the next. Removal of timber requires careful consideration, especially amenity woodland, as you may wish to preserve the overall appearance and thinning needs to be selective.

You may be able to qualify for Inheritance Tax exemption if your woodland is thought to be of outstanding landscape or nature conservation value such as SSSIs.

With increased interest in woodland recreation and fuel wood production, the traditional definition of commercial woodland is changing.

Grants and Licences: Woodlands in the UK are protected by the Forestry Act 1986 which requires anyone wishing to fell trees to have a licence from the Forestry Commission which is subject to various conditions.

You don’t need one for cutting small quantities of wood and over a year you can fell up to 20 cubic metres for your own use. This is the same as a large lorry load, so for routine maintenance or for cutting a bit of firewood you will not have to worry. However the volume allowed goes down to just 2 cubic meters per quarter if you are selling it.

The legal definition of a “tree” is any tree or shrub which has a diameter of more than 8cm when measured at a point 1.5 metres from the ground. Smaller than 8cm and you can cut as many as you like. Before you can apply for Forestry Commission grants you will need to register your woodland with the Rural Payments Agency.

Whatever you choose to do owning woodland can provide great pleasure but remember they do not manage themselves.

The farmland market. What's happening now?

The latest RICS Rural Land Market Survey reports that prices for farmland in the United Kingdom reached a record high in the last two quarters of 2010 as demand for commercial farmland grew strongly against continued shortage of available land. Farmers are keen to expand production to take advantage of elevated commodity prices. However the survey goes on to say residential farmland (land attached to cottages, farmhouses and country houses) is experiencing more subdued growth. In financial terms, residential farmland reached a high of £6,879 per acre (£17,000 per hectare) and bare farmland a price of £5,867 per acre (£14,500 per acre). These are averages and there are strong regional variations. For example I have seen bare pasture land in North Devon on behalf of clients that struggles to reach £4,500 per acre whilst in North Dorset it is achieving in excess of £6,000 per acre.

 

Opinion amongst local agents continues to be the same, increasing demand and lack of supply, which can only drive prices upwards at this point in time. If you look in Farmers Weekly or  a search on the Internet you will see how little land is available in the south west. A dairy farm near Sherborne, which happens to be a very good one, is guided at £9,302 per acre including 50 acres of woodland, buildings and a 4 bedroom tied house. Over the last year all the acquisitions of farm and amenity land has supported this upwards trend. It can be difficult to negotiate downwards for a client when there are several waiting in line behind you. However, if you are unfamiliar with the buying of land is it always a good idea to talk with a local agent or, indeed a farmer, as there are good reason why prices vary not only geographically but field by field. You should always look at such factors as access, water, drainage, fences, soil type, hedging and public rights of way, sporting rights along with many other issues.

 

 

Good news and bad news - still looking for a country house in the south west?

The property market is starting to wake up following on from the Christmas break and the bad weather around that time.

The good news

On my travels around the counties in which I operate, I am pleased to report that local and national agents have been out and about providing many appraisals for potential vendors. One office in Dorset had seen as many as 50 properties in January of which 11 are now on the market and some of the remainder should follow in the Spring. This is encouraging . I have also seen an increased number of off market properties some of which are very nice. It always delights me when you can find unmodernised properties such as farmhouses and cottages in great private locations.

The bad news

I have tried to buy two very different properties for clients in the last week. Both were sold subject to contract in under a week and in excess of the asking price to cash purchasers. The speed of these transactions went against the current perception of where the market is meant to be at. There are no signs in this part of the world that prices are falling or the market is struggling. As I always say, good property always sells. The disappointment for me is that one of the properties was only the second I had seen in a few months suitable for this client but I and my client were not prepared to get into a bidding situation. It may fall through. On the other hand, I have made a very fair offer on another property for a client which for various reasons has not been accepted despite little interest from others. I do have to add that every purchase is different and there are often reasons for this.

It is early days yet and it remains to be seen what will happen to prices as more comes to the market but with the visible competition in this part of the country - who knows?

The current state of the property market - time to think about buying?

The Royal Institute of Chartered Surveyors has recently been in the press reporting surveyors views of the market.

• The Independent: Lack of buyers pushes property prices lower
• City A.M: House price drop for November
• BBC News Scotland: Scottish house prices 'fall again', surveyors say
• Belfast Telegraph: Property prices 'continue to fall'
• Mirror: House prices slide in snow say estate agents
• The Telegraph: Home owners face repossession amid struggle to sell properties

Now, if you have sold and are waiting to buy, this may all sound like good news especially if you are a cash buyer or have a significant deposit to satisfy the banks increasingly stiff lending criteria. However, bear in mind that this is on a national basis and looks at all the property types such as flats and houses in all parts of the country. This data can often skew the real picture in specific areas. It would be true to say that price falls are mainly being seen in inner city areas and lower cost housing. Here in the west country, prices for good property are not showing any major signs of falls in value. And as I always say quality housing always sells well. Yes, a lot is over priced and you need to do careful research, especially in the countryside as values vary a lot from county to county, area to area and village to village. The same house in north Dorset could achieve a lot more than, say, a house in parts of east Devon.

If you are in the mid price bracket of £500,000 to £1,000,000 the spring could offer some good opportunities. I have recently seen a number of properties in this price range that are coming to the market early on, so if you are prepared you might just get lucky.

Rural property - there are still surprises to be found.

From one day to the next, you never know what property you might discover. Some are encountered whilst carrying out professional work and the remainder through word of mouth on the information super highway. Four I visited recently spring to mind that I will tell you about.

The first is a block of mature woodland in open countryside at the end of a no through road. Nothing to interesting there but what made it special was this - a river running through it, a cider press, an apple orchard and an established dwelling formerly a single garage. The garage had consent for a cottage. How many people dream of finding such privacy and seclusion and the chance to build your own home or a retreat? Plus you can make your own cider too.

The second was a very special country house, a mixture of Jacobean and Victorian architecture with ancillary accommodation, walled garden, stone stable block and land. I have not seen such a perfect package and country house for some time. For me, what made it extra special was that many of the Victorian fittings were still in use and the stables unmodernised. Properties like this can still be found.

The third was a modest country house close to the south coast with stunning views built in the 1930's. It was extremely well furnished. This had a touch of "Miss Faversham" about it. One of the owners had predeceased the other some fifteen years before and since that date the dining room had been left as was with the curtains drawn and the dining room table still laid with the food, wine, coffee all crystallised and the room unused since their death.

The final property was a pretty country cottage of local stone and thatch which had been bought in the late 1950's in a poor state of repair but rather than modernise and repair the purchasers lived in it as it was never disposing of anything. The ashes from the solid fuel Aga had only reached the garden and created a mountain. All ten cars they had bought over the years having reached the end of their useful life were parked in the garden lost amongst brambles and nettles. The house comprised various passage ways through piles of newspapers, books and other possessions accumulated over the years following purchase. It represented a true social history of the preceding decades and was like a treasure house. 

I always find it refershing that such opportunities still exist in this part of England. The other point of interest is that all will be coming to the market in the New Year.