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. 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.
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. Each farm is run by a farmer with responsibility for all the day-to-day activities. This is a long term investment and has an expected life of around eight to ten years.
Our farms have the aim of outperforming the Rural Property Held Only Properties Index over their lifetime, which is part of the Investment Property Databank UK Rural Property Investment Index.
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.
Meet our Investment Manager
Jonathan Naughton, MRICS, Principal of Manor House Farms, started working on investing in sustaining farm businesses needing capital 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 sources 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 in a falling land price market 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 and high welfare, UK market only, dairy and livestock. Investments in farm land can be made available across a wide range of rural assets and across a wide range of investment size.
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 is one such focus.