Tips for buying and selling land with natural capital potential

Landholdings with natural capital potential have increased significantly in value in recent years, with several high-profile, high-value transactions taking place, particularly in Scotland. Buyers have ranged from investors and corporate businesses to families interested in entering the UK carbon markets, offsetting emissions, as well as delivering biodiversity improvements and adding social value to local communities.

A number of key themes and considerations have emerged for properties with natural capital potential. We take a closer look at what this means for both buyers and sellers in today’s market:

Helping buyers quantify natural capital opportunities

For buyers, information is key. Looking beyond the sales particulars and drilling down to the quantifiable natural capital data is vital to understand if a landholding’s natural capital potential aligns with their own ambitions.

Many of our clients have looked to our Natural Capital team to advise them on the opportunities, risks, existing obligations, as well as potential of the estate and how this all fits into their short- and long-term objectives.

We have carried out a number of natural capital appraisals on behalf of buyers to understand (but certainly not limited to) the following:

• Estate overview – landscape, climate & environmental designations 
• Existing natural capital initiatives and existing obligations
• Peatland, woodland & biodiversity potential, including grant funding and information on voluntary carbon markets
• Constraints, risks and overarching considerations

Our team is also often retained by the purchaser to realise the potential of the natural capital on the landholding after they take possession.

Showcasing natural capital potential for sellers

As we have already highlighted, a buyer who is serious about purchasing a landholding to realise the natural capital potential will often commission their own independent appraisals of the land to understand if it is the right fit for them.

It is therefore in the seller’s interests to work with a selling agent, such as Strutt & Parker, to market all of a property’s potential, from sporting and location to natural capital and beyond, to offer a 360^o service.

Often nobody knows your landholding better than you or your factor/land manager and so the importance of utilising this knowledge to showcase your property to its full potential cannot be underestimated.

Buyers are demanding more information than ever before, so the savvy seller should have all the information a buyer could expect to want ready at hand – and a selling agent at the end of the phone to answer their questions as they arise.  

A seller should be aware that potential purchasers will want to understand not only the natural capital potential still to be unlocked, but also details of existing initiatives and obligations.

This may include:

• Details of existing peatland restoration projects including mapping, submitted reports, grant claims and outstanding works.
• Woodland creation scheme reports and associated maps as well as a summary of ongoing maintenance obligations.
• The status of carbon credits under the relevant carbon codes, information on registration, validation, verification progress and details of any units sold.

The information requested may differ according to the type of buyer and their ambitions in relation to natural capital, whether they are institutional investors, charities, corporate bodies or individuals. 

A seller should therefore ensure their landholding is being marketed strategically to illicit interest from a range of potential purchasers. In this fast-paced evolving market, selling agents cannot rest on their laurels of what ‘was’ and must pivot to obtain the best price for their clients.  

Strutt & Parker’s Natural Capital team can work hand in hand with Estates and Farm Agency Department to ensure a property is marketed to its fullest potential. To find out more contact rebecca.burton@struttandparker.com (Natural Capital consultant) or robert.mcculloch@struttandparker.com (Head of Estates and Farm Agency in Scotland).