Forestry has grown into a £1 billion-a-year industry in Scotland, creating considerable opportunities for landowners and investors. If you are considering buying forestry or expanding an existing woodland portfolio, it is important to understand exactly what you are buying before you commit.

As with any land deal, every forestry purchase has its own circumstances. The legal, practical and financial details will vary from site to site, so each needs careful consideration.

Factoring these points into your plans from the outset can shape both the practical work required and the return on your investment. It can also reduce the risk of unforeseen challenges.

From our experience, working through a broad checklist can help you make a well-informed decision.

Consider the size of the forestry site

While there are many smaller forestry sites on the market, we have found that these do not generally bring strong returns on investment unless you are seeking an amenity plot. If you are looking to plant and harvest timber, the site may need to be more substantial – perhaps 50 hectares or more.

Check access rights and timber extraction routes

Understanding both your access rights and those of others is fundamental, particularly for planting and harvesting.

Are there others using the same access routes as you? Some areas of forestry - or wider countryside - can rely on one access route, which can cause issues if using heavy vehicles.

It is essential that those buying commercial woodland think about the process for timber extraction. Do the access arrangements allow for that?

Even if buying a woodland for amenity, at some point timber will need to leave the site as part of woodland management, so you need to understand how that would take place.

Also, it’s important to know whether any core paths or public rights of way run through the woodland and what that would mean for your management plan when it comes to on-site activity.

Review title conditions, grants and restrictions

During due diligence, it is wise to look closely at the title conditions, checking for any restrictions and whether they could affect your plans.

Is the area subject to a woodland grant and are there any obligations linked to that? Are there grants which may be available to assist with planting costs?

The consequences of being wrong-footed by rules which you did not realise are in place can be costly.

Arrange suitable woodland insurance

Woodland owners should ensure they have adequate public liability insurance. People can be injured by falling trees and debris.

Beyond public liability, recent events have highlighted the impact of wildfires on forestry.

Storms can also cause windblow, so both risks are worth factoring into your plans and potential financial exposure.

Understand the tax position

While accountants are best placed to advise, forestry can offer tax advantages. For example, neither income tax nor capital gains tax is payable on the sale of timber from commercial woodlands if certain conditions are met.

Woodland that does not qualify for Agricultural Property Relief or Business Property Relief on the death of the landowner may be eligible for Woodlands Relief. This can allow Inheritance Tax on the value of the timber or underwood to be deferred until the trees are felled and the timber is sold or otherwise disposed of.

Making an informed woodland investment

Bringing these factors together can help you make a well-informed decision about a woodland investment. The right professional advice is central to that process, giving you clarity on the detail and confidence in the moments that matter.