JUBILANT lottery winners looking for ways to invest their spare millions are seldom advised to buy a handsome farmhouse with a 300 acres.
The reasons are that lottery winners generally hope to give up work. They want their jackpot invested where it will produce the highest possible return, whereas agricultural land currently produces a return of only 3 or 4%.
So why is it many people now buying farms are city entrepreneurs who own their own companies?
A farm can be an excellent purchase for someone in business, who can use the farm to help his tax planning, to offset capital gains tax problems or to ease the effects of inheritance tax, say estate agents Strutt and Parker .
Jasper Feilding, from Strutt and Parker's Moreton-in-Marsh office, said: "Other business will often produce bigger returns than farming or owning an estate, but buying a farm gives more than a business. If the project is set up properly, the new owner gets a country house in rolling acres. They are surrounded by their own land and can walk out of their front door and enjoy what they own.
"Even so, while new farm buyers may not be looking for a full commercial return, the figures must still stack-up."
Farming gives low returns at present, yet buying a farm does not mean throwing money away. Agricultural land has fallen 25% from its peak of four years ago, yet there have been impressive increases in the past and the long term trend is for stability.
An attractive farmhouse will generally maintain its value and prices have soared between 15% to 25% year on year.
Mr Feilding added: "Farmhouses make first-class homes. They were usually very well built and in the centre of their own land. So long as you own that land, it serves as a buffer between you and any future development - preventing any new development built up to your kitchen window."
Farms are not cheap though. Mr Feilding said: "Even a modest house in 100 acres in Cotswolds and South Midlands would cost £500,000, while a period farmhouse with 1,000 acres might cost £3 million. On the other hand buyers get a lot for their money. Usually not just a good-looking farmhouse, but cottages, traditional and modern farm buildings, woodland and sometimes even a shoot or fishing."
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