Woodland in my experience tends to be a misunderstood and misused asset. Rural Estates tend to have inherited woodland that is either Ancient or as a result of the laying out of land for shooting. This has continued to be the main use. Therefore the mental management of these areas has focussed on management for that use, whether or not the wood is core to the drives or to holding birds.
As a specialist manager of rural estates I try and look at cash generation from a laterally thought out perspective. How can I benefit this rural estate or the management of this rural land while respecting the owners interests or the estates heritage?
The simple commercial management of woods is the first area which rural estate owners tend to neglect on the assumption that woods just don’t make money or that certainly the costs make positive management unjustifiable. This is often based on what has now become an outdated assumption on the commerciality of woodland ownership as a necessary evil or a labour of love.
I have just taken over the management of a rural estate where the cash generation was 60k over a 5 year period. We now generate 60k gross annually with a net income of c40k and all this is tax free!
Additionally over the past 6 years woodland values have increased, for Broadleaved lowland woodlands, from c2k/acre to c8k/acre and more for smaller areas. Other of my clients have taken advantage of these values to raise capital cash for re-investment in other projects again all but free of tax.
Even where there is a shoot and an actively managed wood on the rural estate my estate management policy is to look for a third income stream: people like occupying woods. My benchmark has been to achieve at least as much rent/acre as I would if the land was farmland. So, I have recently let an 18acre wood for £4,000pa, the equivalent of £220/acre and the wood still generates cash from timber.
The message is that woodland on the Rural estate or for many rural landowners has become an underused and undervalues asset.
For more see me at www.sherbornestatemanagement.co.uk