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Forest for sale: buying guide

Published at October 29, 2024 by Bernard Charlotin
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Forest for sale: buying guide

Looking for a forest to sell is a project that attracts many people, but it can be frightening because of a lack of knowledge of the regulations and obligations weighing on forest owners. 
This article will guide you through the main points you need to know to make a successful purchase of a woodland or forest. You will also find a link to additional articles providing an in-depth look at a number of points.

Summary
1. The French forest
2. Why buy a forest?
3. Buying a forest is a long-term investment
4. The price of forests
     4.1. A very active forestry market
     4.2 Forest prices by region
     4.3 Forest prices by area
     4.2. Analysis of private forest transactions
5. Forest acquisition costs
6. The Forestry Group
7. The sustainable forest management plan
8. The DEFI acquisition
9. The Madelin SME scheme
10. Building in a forest
11. Insuring your forest
12. Conclusion
13. En savoir plus

The French forest 

French forests cover more than 17 million hectares and are owned by two categories of owners: private owners for 13 million hectares (3.1 million owners) and public owners for 4.3 million hectares. The forest also covers 8.25 million ha in the French overseas departments, including 8 million ha in French Guiana alone. 

The surface of the French forest has increased significantly during the 20th century: In 1908, the surface of the French forest was close to 10 million ha and covered 19% of the territory compared to 31% nowadays.  

It should be noted that 380,000 forest owners own 76% of the private surface area (surface area greater than 4 ha). 3 million hectares are therefore held by more than 3 million owners with an average surface area of less than 1ha. 

This important fragmentation of the French private forest strongly affects its management. The main objective of the specific measures, both fiscal and linked to preferential right or pre-emption right, is to reduce this fragmentation. 

Why buy a forest? 

Buying a forest is a project that meets a variety of expectations:  

  • Pleasure 
  • Ecological investment 
  • Sale of wood
  • Desire to produce firewood 
  • Practice of hunting 
  • Diversification of patrimony 
  • Professional investment 
  • Search for tax advantages 
  • ... 

Whatever the project, a careful examination of the market and the tax systems is necessary before making the purchase. 

Buying a forest is a long investmentsilver alarm clock

If the tax regimes are attractive, which we will see later, this can be explained by the relatively low profitability of the forest in the long term. 

On average, experts consider that the profitability of a forest is in the order of 1 to 2% per year with however strong variations according to whether you will carry out cuts or plantations. The income from the cutting of trees must, for an important part, be reinvested in new plantations and the maintenance of existing plantations. 

Some productions can achieve much higher yields due to shorter rotations. Well managed, forestry investment can be a good investment over time. 

Considering the duration of the exploitation cycles and the different tax measures, the forestry investment must be made on a long term horizon of at least 15 to 30 years. 

The price of forests

As with agricultural land or residential property, the prices of forests for sale vary widely depending on the region and the size of the forest. It is important to know the average prices charged, but above all you need to consider the condition of the forest on the day of sale: 

  • What species are present?
  • Have there been any recent cuttings?
  • Do any plots need to be replanted?
  • Is the forest suffering from disease, drought, etc.?
  • What maintenance work needs to be carried out in the next few years?
  • ...

If you are not familiar with these questions, we recommend that you contact a forestry expert who will be able to assess the woodland for sale according to these and many other criteria.

A very active forestry market

Every year, SAFER publishes a study on forest prices. You can also find a more succinct presentation on the land prices website. 

The average sale price of forests was €4,750/ha in 2023, up 5.2% on 2021. This price has been rising steadily since 1997 (€2,180/ha). 

Forest purchase is a market in which there are few properties available and where there is strong demand from buyers. 

The area sold is down (-8.5%), with 141,900 hectares transferred compared with 155,100 hectares in 2022. This drop in volume is mainly due to a reduction in sales of large forests.

However, there are considerable disparities between regions and sales types (size and type of plot). The average sale price is lower for small properties than for large ones. Maximum sale prices are now approaching €15,000/ha, with records of up to €40,000/ha.

Forest prices by region

Forest regions Price 2023 per hectare Change over 1 year
Nord-Bassin parisien         7 440 € +7,4%
Ouest 6 630 € +1,5%
Est 4 860 € + 2,9%
Alpes-Méditerranée-Pyrénées 3 900 € +1,1%
Sud-Ouest 3 320 € +5,2%
Massif Central 2 900 € +6,3%

Annual prices in current euros. Source: Safer-SSP Group.

Forest prices by area

Surface vendue Price 2023 per hectare Change over 1 year
De 1 à 10 hectares 3 530 € +0,4%
De 10 à 25 hectares 3 640 € - 12,0%
Plus de 25 hectares 5 800 € +10,3%

Annual prices in current euros. Source: Safer-SSP Group.

Analysis of private woodland transactions

Forêt Patrimoine and the Comité des Forêts also publish an annual analysis of the forestry transaction market.

According to their latest analysis, the average transaction price for undeveloped forests of 1 hectare or more is €5,809 per hectare in 2023, up 2.7% on 2022.

However, the study points out that values vary widely depending on the areas sold and the regions concerned. The price per hectare increases with the surface area sold, which can be explained by the scarcity of these assets on the market and the higher quality management of these large properties.

The average price for forests of more than 50 hectares is €8,981 per hectare in 2023, compared with €7,895 per hectare in 2022, an increase of 13.7% despite a 29% reduction in the area sold.

Forest acquisition costs

The purchase of a forest, whether it is done personally or through a Forestry Group, is done under the normal registration rights regime, i.e. at a cost of 5.89% of registration rights (with some departmental particularities). 

Since January 1, 1999, there is no longer a preferential regime for registration fees to be paid when purchasing a forest.  

In addition to these registration fees, you will have to add the emoluments and disbursements of the notarized deed of acquisition as well as the possible guarantee fees related to your financing.  

Consequently, the amount of the "notary fees" is generally between 7.5 and 8% of the purchase price. 

However, the purchase of shares in Groupements Forestiers is subject to a fixed registration fee of 125 € as opposed to 5% for classic real estate companies. 

The Forestry Group 

A Groupement Forestier is a special type of real estate company whose purpose is to exclusively hold forestry properties. 
There are 2 types of Groupements Forestiers :  

  • Groupements Forestiers d'Investissement (GFI) which have been approved by the French financial markets authority (AMF) 
  • Groupements Fonciers Forestiers (GFF) 

A third type, the Groupement Foncier Rural, is a Groupement Foncier holding both agricultural and forestry assets. It benefits from the tax system specific to Groupements Fonciers Agricoles (GFA) for its agricultural assets and from the tax system specific to Groupements Fonciers Forestiers (GFF) for its forestry assets. 

The constitution of a Groupement Forestier is done without paying registration fees. The contribution of forest plots after the constitution of the company can also benefit from an exemption from registration fees if the land is less than 5ha and has a value of less than 7 623 €. 

Buying shares in a Groupement Forestier that already owns a forest allows you to save a lot of registration fees because, as mentioned above, this sale will be subject to a fixed fee of 125 €. It will be necessary to add the fees of the drafter of the deed and some additional costs, but the saving can be very important (up to 5% of the value of the forest). 

This structure is also an investment tool allowing small investors to pool a forestry purchase and also presents advantages compared to the undivided ownership system which is by nature more fragile. 

The sustainable forest management plan

The sustainable management of forests guarantees their biological diversity, their productivity, their regeneration capacity, their vitality and their ability to satisfy their economic, ecological and social functions. 

The documents of sustainable management of private forests, which attest to its consideration, were created by the law of forestry orientation of 2001, and allow to justify a guarantee of sustainable management necessary to obtain any aid or tax reduction. 

What are these documents? 

  • The Schéma Régional de Gestion Sylvicole (SRGS) is a regional framework document for private forests.  
  • The Simple Management Plan (PSG) is a document specific to its forest. The PSG is essential for forests of more than 25 ha. 
  • The Code of Good Forestry Practices (CBPS) is a simple way to manage small areas. 
  • The Standard Management Regulation (SMR) is a tool defining the management methods for each major stand type. The RTG is intended for owners who do not fall within the framework of a PSG obligation and who have their wood managed by a management organization (cooperative...) or an expert. 

The Simple Management Plan can be realized by a forestry cooperative, by a forestry expert or by the owner himself and will be the object of an approval by the Regional Center of the Forest Property. 

The management plan is mandatory to benefit from tax advantages. 

The DEFI acquisition 

DEFI acquisition, which stands for Dispositif d'Encouragement Fiscal à l'Investissement dans l'Acquisition d'une Forêt (tax incentive scheme for forest acquisition), is a tax credit scheme. It is available to purchasers of a property larger than 4ha (or enabling a surface area of 4ha to be reached) or of shares in a landholding group.

In return for the tax credit, the owner undertakes to conserve the forest for 15 years and to apply a sustainable management plan.

The tax credit is 25% of the purchase price, with a ceiling of €6,250 for a single person and €12,500 for a couple.

The Madelin PME scheme

When you subscribe to shares in a groupement forestier d'investissement (GFI), you can take advantage of an income tax reduction. This corresponds to the Madelin PME scheme (article 199 terdecies-0 A of the French General Tax Code).

  • The tax reduction applies in the year in which the investment is made;
  • It is 18% of the amount you have invested;
  • There is a ceiling on the amount you can invest: €50,000 for a single person or €100,000 for a couple;
  • The reduction is included in the overall ceiling on tax benefits granted in respect of income tax (€10,000 per year), but any excess can be carried forward to the following 4 years.
  •  

In our next article, we'll look at the key points to bear in mind when managing a forest (income, income tax, property wealth tax). 

Building in a forest

Building in a forest is subject to town planning regulations. 

Forest plots have a specific classification (N for Natural) and it is forbidden to build a dwelling there (Art. R151-25 of the town planning code). Any buildings that may be permitted are those required for farming and forestry. Light leisure dwellings may be authorised by your local council. 

If you want to live in the middle of your own forest, you'll have no choice but to buy a house built in the heart of a forest plot. 

Insuring your forest

It is not compulsory to insure your forest. However, given the risk of natural disasters, it may be wise to take out insurance to cover your civil liability.

Conclusion

You now know the main rules for buying a forest, as well as the average selling prices and tax benefits available to you.
Now it's up to you to define the specific details of your project: region, surface area, budget, etc., and to search for forests for sale using our property advertisements portal.

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