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Notably... This business owns a lot of forest in the UK. The UK doesn't have much forest. So, they can make themselves appear more valuable by pushing up t
by londons_explore 2y ago
Notably... This business owns a lot of forest in the UK.
The UK doesn't have much forest.
So, they can make themselves appear more valuable by pushing up the price of forest land.
Forest land used to be priced based on the lumber value - which is almost nil. There was also the pricing element of the possible agricultural value if it were to be cut down (which is also almost nul, because the land is usually unsuitable for agriculture). There is also the very high value if you were somehow able to build houses on it, but the very low probability of being able to secure permits to do so.
However, I have noticed odd real estate transactions in the last ~decade for forest land. Specifically, a few companies have been buying up lots of forest land, dividing it into tiny parcels, often just a few hundred yards in each direction, and selling it for 10x the price.
Most don't sell, but a few do - and thats all you need to make the basis of a new market price.
Now when you value all of center parcs land, it looks way better!!!
And there is a 2nd factor... Center parcs usually get permission to build lodges on their land as temporary forest huts, and since they aren't made for anyone to be resident in, this is normally seen as an okay use of otherwise protected forest. Gradually over many years they can slowly turn it into a brownfield site by trimming out trees. 20 yrs down the line they might get permission to build actual houses on the land. Suddenly it's worth 100x as much.
I would 100% not be surprised if center parcs end up making more money by this conversion of forest land to residential (skirting laws designed to protect forests) than they make from decades of running the parks.
- ajb 2y agoOh that's why forest land has gone up so much! Thanks, I'd seen the same rise, and couldn't figure out why.
- londons_explore 2y agoI've been mulling over buying up farmland and planting trees and then just sitting on it for 20 yrs to capitalize on it.
- dwighttk 2y agoIn the us sometimes people do that because of an agricultural exemption to property taxes.
- PyWoody 2y agoSome states call it different things but most call it in "Current Use." [0] If you want to take the land out of Current Use, you'll usually have to pay the back taxes first. Around my parts, it's seen as a very good program as it promotes natural growth. It's also great for protecting wetlands that wouldn't be buildable anyways but can now be protected at a lower cost. [0] https://www.forestsociety.org/advocacy-issue/current-use https://www.forestsociety.org/advocacy-issue/current-use
- Stevvo 2y agoIf you buy a forest of trees planted 20 years ago it will be cheaper than farmland, and you may be able to take income from thinning from day one.
- rwmj 2y agoIt's also because an exception to inheritance tax that covers farm land and forests. Rich people have been buying up both (Dyson owns several counties now). https://www.gov.uk/guidance/woodland-owners-tax-guidance https://www.gov.uk/guidance/woodland-owners-tax-guidance https://whoownsengland.org/2017/09/19/why-is-james-dyson-hoovering-up-land/ https://whoownsengland.org/2017/09/19/why-is-james-dyson-hoo...
- pydry 2y agoI wonder if Starmer included this loophole in his list of "painful tax rises" he promised for next year's budget.
- b800h 2y agoLiterally yes - generational farms are expected to go out of business when the head of the family dies as a result, and have to sell up to massive farm businesses.
- Retric 2y agoThat’s great news! Small family farms are a significant economic drain. I’m only half serious, but protecting multigenerational business does come with serious drawbacks.
- b800h 2y agoThis isn't "protecting" multigenerational businesses. Inheritance tax shouldn't be a thing in the first place.
- Reason077 2y ago> "Inheritance tax shouldn't be a thing in the first place." The problem with entrenched intergenerational wealth is you eventually end up with a feudalistic society, with a small population of extremely wealthy families controlling all the capital but essentially just becoming rent-seekers, with no incentive or need to innovate in order to maintain their wealth (on the contrary, they will seek to suppress innovation and disruption in order to maintain the status quo). In the long run this leads to violent revolution or other forms of societal collapse.
- Stevvo 2y agoIncome from the sale of timber is exempt from income tax & corporation tax. Forrest ownership in the UK is quite literally growing money on trees.
- HeatrayEnjoyer 2y agoWhy is it exempt?
- londons_explore 2y agoSome rich people own forests and have friends in government. And it can be passed as a way to encourage forestry as being eco friendly.
- lotsofpulp 2y ago> Most don't sell, but a few do - and thats all you need to make the basis of a new market price. That seems like an elementary mistake for a buyer/lender (who would be appraising the property for use as collateral). Unless the lender has a too big to fail guarantee where everyone but the taxpayer wins as long as a plausibly deniable deal is made. As an aside, the linked article has no substance to support its theory.
- throwup238 2y agoThe banks don’t care because they package the loans up as securities and sell them to investors. The investors don’t care as long as they’re packaged up with a bunch of other healthy mortgages. This was one of the causes of the ‘08 financial crisis.
- Drunkfoowl 2y ago[dead]