Getting a woodland mortgage

Woodland mortgages or finance are provided for properties in the woodland.

Woodland mortgages or finance are provided by specialist lenders and you can expect to pay a management fee of up to and beyond £1000 a year as well as an initial fee of around 2% for your woodland mortgage or finance.

You may also be expected to pay for woodland insurance through the finance provider.

Most woodland properties may be purchased with cash but for those who choose to use a woodland mortgage or finance then the product could have the below requirements and features.

Woodland mortgages: eligibility requirements and features:

  • Woodland mortgages will usually come with variable rates of around 6%.
  • Most woodland mortgage lenders will lend to sole individuals or consider joint lending on both incomes.
  • Most woodland mortgage lenders will only lend up to 70% Loan to value
  • Most woodland mortgages will have an early repayment charge attached to them
  • Most woodland mortgages are only available on a repayment mortgage basis and not interest-only.
  • Most woodland mortgages will have a mortgage application fee attached to them.
  • Most woodland mortgages will have a valuation fee for the property.
  • Most woodland mortgages may have a minimum lending amount and a maximum lending term
  • Woodland mortgages are not regulated by the Financial conduct authority and so no compensation will be due from the financial services compensation scheme if bad advice is given.

Investing in a woodland property:

You can invest in a woodland property but you made need a minimum of £40,000 to invest (although you may be able to start investing with as little as £10,000) and these properties are usually targetted at that who already own commercial forestry.

A lot of people are investing in woodland properties due to their excellent returns over the past years of between 9 an 20%.

These returns are not guaranteed for the future and past returns should not be used as the sole basis for investments in woodland properties.

You may be able to find some woodland properties for sale on the following websites:

  • Woods4sale.co.uk
  • Woodlands.co.uk
  • Johnclegg.co.uk

You can also read more guidance on buying a woodland property from the small woods charity.

Woodland properties can be a good retreat for most families to enjoy camping out and gaming which may not be possible at their residential properties.

If the forest is commercially managed then the woodland property can be classified as a business property and qualify for full inheritance tax relief after two years. But even if the land is not commercially managed it still escapes inheritance tax on the timber value after five years.

Any increases in value from commercially growing timber is free of capital gains tax although capital gains tax will still be due on the land.

A mature commercial wood might expect three-quarters of its value to be in the trees and a quarter held in the plot of land. All income generated from commercially managed woodland such as the selling of timber is free from income and corporation tax.

Rules of owning a woodland property:

When owning a woodland property is must not be your permanent dwelling and you will only be allowed to camp in the woodlands for a maximum of 28 days a year. You can build your woodland property like a tool shed.

When you reside in a woodland property you will only be allowed to cut up to five cubic metres of timber every quarter. This should be more than enough to keep a house heated using wood burners.

If you want to cut more wood then you must apply for a felling licence from the Forestry Commission.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.

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John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.