Is there anything to be said for...forestry investment

A friend of a friend bought a bit of Mayo a few years ago for forestry - dirt cheap, poor-quality land, suitable only for forestry. Lots of incentives, it seems, to do this. You get premiums for 15 years, support for building access roads, and when you chop it and sell it after the premium payments stop, your earnings/gains are tax free. The friend-of-friend did it through a pension via a company like this(but not necessarily that one - I didn’t get the name of the crowd he used)

There’s a grant scheme and Teagasc are on the road this month encouraging people (mostly farmers?) to avail of the scheme.

I don’t know anything about forests. But I don’t know anything about anything(!) that my (still v. small) pension is invested in.

  • What are the pros/cons of investing in forestry? Do the incentives make this worthwhile? How risky is it?
  • How difficult is it to put some of your pension into this? (NB I’m self-employed so might have some freedom to manage own pension)

Perhaps it’s all too good to be true but it feels more tangible than a fund suggested by a broker but less of a headache than buy-to-let landording. Any advice/experience welcome

Search on boards.ie There are a few threads on it. I always thought this should be attractive but it seems to be one level above French sale/leaseback schemes for some reason.

Be interested to suss out what the actual snags are. In this market/world, with bubbles everywhere, a decent plot of land looks an attractive albeit highly conservative proposition to me.

The Irish forestry shares thing was a complete bust. It failed to beat any other standard investment over the timeframe including leaving the money on deposit.

So I would take this with a pinch. Small forestry clearance is likely more expensive that the value of the wood.
You could grow something for firewood, I guess, but you’d need to get at it. Perhaps there’ll be a generation of hipsters ready to pay to cut (ala Norwegian Wood?). Make sure you plant the right trees if so. Mrs. YMs uncle planted firs many years ago on a small patch of useless ground and the firs are being reclaimed by ivy, the weather and rot. I occasionally cut some, but it’s more effort than it’s worth!

Hsving said that, the site looks a bit more interesting than the usual and the grants are better than they were! At the very least, it’d give you somewhere to go and walk :0)

poster Caoimhin is a forester who has previously written about it

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Wasn’t there raids on a forestry fund a year or two back - how did that end?

I looked into this a little while back.

It’s a great vehicle if you want a tax-efficient wealth transfer to the kids as it attracts the farmer’s relief but as an investment, its massive downside is how illiquid it is.

If you want to go for the farm relief just buy a few fields and lease it to a farmer for more than 5 years and all the income is tax-free.

When you want to give it to the kids they can inherit 90% of it tax-free. In the interim, it’s very liquid but the yield on land is low 1.5-2.5% but it is tax-free on a long lease (>5yrs) much less than the 15 yrs on the forestry

Thanks for all the replies - sounds like I might have too much to learn and that there’d still be a lot of uncertainty involved. Looking at detailed discussions on boards, it seems there are plenty of things to figure out in terms of species of tree etc. and things can still go very wrong. Not exactly the simple-if-boring option I was looking for.

Owning farmland sounds quite attractive but would be more expensive and involve a bigger initial outlay. The guy who suggested it to me was talking in fairly small numbers <50k and you could then add to it later if you had another few tens of thousands. His pitch was that shares are unpredictable (yes!), property can be a hassle (yes!) and managed funds are expensive (yes!). But when he said that - in contrast - trees can only go up, I became a bit sceptical… They don’t grow to the sky y’know :slight_smile:

Although buying agricultural land anywhere in the world with a good water supply probably makes sense on a long term view basis farmland in Ireland has always looked too expensive from a commercial farming point of view. But if people are looking to buy land as a possible tax avoidance vehicle then that’s a different matter and perhaps thats one of the reasons that the price of even poorish land remains so high here (there are other reasons - see The Field!).

If you are looking at buying land to lease out you need to factor in several factors though, such as location/land type/drainage/neighbours etc so some advice from someone who can look over a potential purchase in an independent and critical way is important. Otherwise you could end up with poor stuff.

Access!!! Don’t buy land-locked land!

Is that the same as road frontage?

No, its the ability to access land through your own access point such as a lane or from a road. “Land-locked” means that you have to use a point of access or a right of way across another farmers land, which can be problematic. Road frontage is a positive, since it allows for easy access and it may also allow for some development potential in certain locations.