NEW CONSIDERATIONS of the 'natural capital' tied to land have had a seismic effect on Scotland's rural property market – and some would argue not for the better.

The perception is that serious money from outwith the traditional rural industries is now competing for every acre, as companies and corporations with massive carbon footprints invest in land for offsetting activities such as tree planting and peatland restoration. While this trend may have an overall positive impact on the amount of carbon being released into the atmosphere, there is a big question mark over the effect it is having on the communities and businesses historically dependent on that land.

To better understand what exactly is going on, a major new report has been commissioned about the nature and value of rural land sales in Scotland. Leading land agents are to be contacted to collate data on recent land transactions in rural Scotland, including off-market sales, as well as being asked to help inform the picture of market trends and drivers.

The aim of the report – commissioned by the Scottish Land Commission, and to be delivered by Scotland’s Rural College in partnership with land agents Savills and Strutt and Parker, with support from the Royal Institution of Chartered Surveyors – is to understand the role ‘natural capital’ is playing in the land market, and look at how its emerging value can be harnessed in a way that encourages responsible investment and creates public value.

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SLC chief executive, Hamish Trench, said: “Scotland is well positioned to make the most of private investment in delivering land use change that meets the climate targets. Doing this in a way that drives a just transition, where the opportunities, costs and benefits are shared fairly means shaping these markets to work in the public interest.

"Part of this is having improved transparency and shared understanding of how the land market is operating. As it stands, there is uncertainty around the volume and value of off-market, or private, land transactions – and the motivations of both buyers and sellers." said Mr Trench.

“Global efforts to tackle climate change are driving demand for carbon and natural capital investment and there is growing concern about the impacts of this in the land market. Improved market transparency will help inform evidence-based policy and help address the risks and opportunities.”

The new research has two main aims – firstly to analyse and report on the current pattern of activity within Scotland’s rural land market to provide an accurate picture of landowner, buyer, and seller motivations, with a specific focus on understanding of how increased demand for natural capital investment is driving activity in the land market. In the process of achieving this, it will also develop a replicable methodology for gathering robust quantitative and qualitative data about land market activity in the future.

Mr Trench added: “Land agents will play a crucial role in this research, helping to develop a more comprehensive baseline for rural land transactions than is currently available. We anticipate this will also provide a repeatable approach to providing useful market information on an ongoing basis.”

RICS public affairs lead for Scotland, Euan Ryan, said: “A clear understanding of the market, and the role of natural capital, will be crucial in creating an effective land policy in Scotland which balances the drive towards net zero, as well as the needs of market participants and local communities. For this reason, we strongly encourage land agents and other relevant parties to participate in this important research, and look forward to supporting the project as it progresses.”

Rob McMorran, the researcher from SRUC who is leading the study, commented: “This research represents an important opportunity to develop a comprehensive assessment of rural land market activity in Scotland, as well as providing useful evidence to inform our understanding of how natural capital investment may be affecting rural land markets and land values.

The final report will be published in Spring 2022.