The Stamp Duty Hike and Other Matters

The Stamp Duty Hike and Other Matters Training Yards and Stud Farms Avoid the Worst Now that the National Hunt season is drawing to a close and the Lincoln has ushered in spring, the property market should be starting to move. The country market usually comes to life as soon as the paddocks green up, the fields dry out and the leaves are on the trees. Whilst there is activity already, most agents are reporting that it has been noticeably quieter than last year. This is almost certainly due to the rise in stamp duty and lower agricultural profits. Commercial property, and that normally includes stud farms and training yards, is subject to a top rate of stamp duty at 5%, so there are advantages when compared to the country house in five acres. A buyer of a training yard selling for say £3m will have to pay substantial £139,500 of stamp duty, however this pales into insignificance when compared to a buyer of a country house who retains a flat in London paying £3million , the stamp duty is £363,750. This is over 12% of the purchase price in addition. When a buyer factors in this tax, it results in a reduction in the amount offered, particularly as it can't be clawed back in a later sale. It isn't therefore surprising that the general country house market is moribund, with many valuations coming in at lower prices than in 2012. Agricultural land is treated by many as a store of wealth, however it is suffering from a short term blip. With feed wheat at £110/ton, farmers aren't rushing to pay the £10,000 to £12,000 an acre being offered a year ago - it is now more likely to be in the region of £8,000 to £10,000 an acre. Of course sales at higher prices do happen, particularly if there are long term opportunities, but it does mean that some sellers will sit and wait. By contrast the training yard market has been busy. Windsor Clive, the specialists in that sector of the market have sold a dozen yards in the last year, from the most prominent 150 box yard in Newmarket to a 30 box start up in Lambourn, and there is demand for more. Normally training yards don't come to the open market as trainers like to give their owners and staff a definite announcement of their coming move. This means that much of the time searching for a training yard is not easy. In the open market at the moment are Eve Lodge in Newmarket with 5 cottages, 95 boxes and 5 acres all for £1.2m. This was on the market in 2015, but now that it is being rented and is in better condition, there is a resurgence of interest. A rural alternative is a training yard at Scamblesby in the Lincolnshire Wolds with 39 boxes, a good farmhouse, paddocks and access to a beautiful gallop for £895,000. As to the new entries this year, coming to the market are a couple of 80 acre stud farms, and some training yards in Newmarket and Lambourn - unless they sell quietly beforehand. The prices are likely to be stable unless the influx of new trainers is greater than we expect. 15 April 2016 George Windsor Clive