Investing in arable farming offers investors access to a trading opportunity, underpinned by freehold and assets that offer stable and predictable returns. Arable farming is uncorrelated to other asset classes and has low volatility, but offers an opportunity to benefit from capital growth and Agricultural Property Relief. Investors can also access a sector which typically requires more significant capital outlay.
The UK farms in which we invest are located in Bedfordshire and Norfolk, and our preferred assets have fertile land and some opportunity for redevelopment. The long-term annual returns from these farms are around 11% over 10 years, illustrating the steady returns of this asset class.
Strategy
We aim to acquire a portfolio of UK farm assets that include freehold agricultural land and associated buildings, which may be used for either dairy or arable farming. Every farmer has responsibility for all day-to-day activities, and the investment is long-term – with an expected life of around eight to ten years.
We aspire for our farms to outperform the Rural Property Held Only Properties Index over their lifetime, which is part of the Investment Property Databank UK Rural Property Investment Index.
Security
A farming partnership acquires the freehold or long leasehold interest in each farm – with full title at the Land Registry. It then enters into a contract for services with our specialist manager, and the farmer is directly employed by the partnership.
Example Investment: Buryfields Farm, Keysoe, Bedfordshire. Acquired April 2017.
Download our Investment Sector overviewMeet Our Investment Manager
Jonathan Naughton
Jonathan Naughton, MRICS and Principal of Manor House Farms, started investing in sustaining farm businesses in 2009, following his family’s experiences across Gloucestershire as both owners and tenant farmers. His career as a Chartered Surveyor since 1985, and experience in land and property, allows development potential to be understood and pursued where viable. He is a specialist in land value policy and works on this through the RICS and through liaison with civil servants and Government ministers.
Manor House Farms started managing farm land and buildings for tax planning funds in 2009. Arable and dairy farm assets have been bought, managed and sold continuously since then for various funds. Assets are usually bought where incumbent farm businesses have ‘3D’ issues: death, divorce or most usually, debt. This creates a parallel with IHT managed funds, with the farmer needing to pass a business down through the generations, whilst releasing capital.
Manor House Farms source these specialist situations at below market value, as there is a ‘marriage value’ in the retention of the farm contract work by the vendor. We are particularly proud of the robust performance of the assets, especially in a land price market which has been falling since 2014. The aim is to generate very secure, well run farm assets, with income generated only from core food needs in combinable crops, peas and beans – as well as high welfare, UK market only, dairy and livestock. Investments in farm land can be made available across a wide range of rural assets and investment sizes.
UK Agricultural policy is in a time of change, as is the anticipated farm land grant system. The acquisition strategy is therefore prioritising investments alongside proven specialist farm businesses and their investment requirements within new policy led opportunities – organic dairy being one such focus.
Arable Farming is accessible through the following services:
Stellar Business IHT Service
A discretionary managed service which provides numerous succession planning and tax efficiency options for business owners – either following the sale of a company, or to invest excess company capital to maintain tax efficiency.
Stellar Growth IHT Service
This discretionary managed service involves the creation of a privately owned limited company for each investor, to access a portfolio of asset-backed Investment Sectors – targeting 5% growth per annum.