If you go down to the woods, you're sure of a big return

More and more investors are putting their cash into buying forests rather than bricks and mortar
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The Independent Online

While the property market might be stagnating, woodland prices have seen a 20 per cent rise over the past 18 months, encouraging more people to buy a copse and watch their investment grow.

Mistrust of banks and an increased interest in generating fuel have combined with the greater attention given to trees since the sell-off of 635,000 acres of Forestry Commission land was abandoned.

Mike Tustin, a chartered forester for John Clegg & Co, said: "This heightened awareness has increased demand for woodland, leading indirectly to higher prices. Increased interest in sustaina-bility is also pushing people in the direction of producing their own fuel, so woodlands are seen as a way of owning your own fuel reserve – especially as oil and gas prices can only rise."

Katherine Klinger, 53, a property manager with a nine-year-old son, bought her first piece of woodland on eBay 18 months ago: two acres in Hertfordshire for just under £30,000.

"I was very taken with the romance of the idea, and having a wonderful time: camping, lighting fires and whittling wood," she said. "As much as I might have wanted to own a cottage with land, woodland is a tenth of the price. I realised I could take the camper van and have all the space I could dream of. And then I realised the investment potential."

She has bought a second patch of woodland on the Surrey-Hampshire border, just under 20 acres for £120,000. "This is the investment buy," she said.

With timber prices expected to double again over the next five years, commercial woodland is having its greatest spurt in interest since the Thatcher government introduced incentives in the 1980s allowing investments to be written off against tax. This encouraged celebrity investors, such as Sir Cliff Richard, Phil Collins and Sir Terry Wogan, to create pine forests in Scotland.

Although that tax loophole no longer exists, commercially managed woodland is still exempt from income tax and inheritance tax, once it has been owned for more than two years.

Mr Tustin said: "In Scotland, we have seen very large woodlands changing hands for prices 10 to 30 per cent higher than the guide price. Smaller woodland prices range between £5,000 and £7,000 an acre in the south of England. A year ago, these woods would have been selling for around £3,000 to £4,500 an acre at the most."

Jason Sinden, a woodland investment manager at the forestry company UPM Tilhill, has seen prices rise by an average of 17 per cent a year over the past five years – but warns these may have peaked.

John Tunnicliffe, head of Woodland Bond, which sells segments of managed woodland, said prices have risen in the order of 50 per cent over the past three years. "The popularity has increased incredibly – I think because people are looking for secure places to put their money. There's insecurity in the financial sector and people are looking for safe havens."