THE GOLDEN cream lapped up by successful City fat cats keeps them sleek, but it is not always enough to make them frisky. Increasing numbers of them are seeking satisfaction in more traditional fields of enterprise — a country farming estate. There will be a rich financial harvest to be gathered, of course, particularly with the help of generous tax advantages, but the money-making can be done amid the charm of the countryside, and far from the madding crowd. And some of this new breed of the landed classes would consider a £22 million farming estate in Hampshire a very tasty titbit.

Rising farmland values and preferential taxes are tempting more and more big spenders with an eye for yields both financial and agricultural. Demand for agricultural land is up by about 15 per cent year on year, the agent Knight Frank says. And Savills reports that farmland values rose by 12 per cent in 2005 (see chart below). Just over half of Knight Frank’s farm customers are “lifestyle buyers”; they want pleasure as well as profit. Successful City workers and entrepreneurs now make up a big slice of the new landed class. Rupert Bradstock, of the buying agent Property Vision, says that farmland often tempts buyers who have sold their businesses and want a new challenge: “They are desperate to get stuck into something else and farming gets them excited. They’ll put their heart and soul into breeding rare cattle or sheep or organic farming.” The returns are a big attraction. “They say to themselves, ‘there is no more land in England — I can’t go wrong buying land, and I can have fun as well’ — they regard it like buying a painting.”

So the 3,824-acre Hursley Estate, which came on the market last week, is likely to stir buyers’ excitement. It is just 75 miles from London and 4 miles from Winchester. It is the privacy and rural charm as well as the mix of income streams that will appeal to investors, says Jessica Simpson, of Savills’ country department. The estate, which can be bought whole or in seven lots, includes 3,182 acres of farmland and 566 acres of woodland. Turnover is put at about £ 2 million, with profits near £300,000. The returns come from a varied portfolio, including the main farmhouse; 19 rental properties in Hursley village and the hamlets of Standon and Bunstead; dairy, arable and sheep enterprises; pheasant and partridge shoots; and farm subsidies.

The tax perks of owning agricultural land are also a big draw and could save Hursley’s new owner up to £8.8 million. Mike Warburton, of the accounting firm Grant Thornton, says that owners of “in hand farms” (land in vacant possession) can benefit from agricultural property relief, which can mean lower capital gains tax and exemption from inheritance tax (though this exemption would not apply to parts of the estate not used for farming). He says: “If you enter into a farming contract where a farmer does all the work, and you both share the profits, after two years you would be exempt from inheritance tax, saving you 40 per cent in taxes. However, you have to show that you are farming the land on a commercial basis with the intention of making a profit.” If the land is let out, inheritance tax would be levied at half the rate (20 per cent), but only after seven years.

Capital gains tax advantages are there to be had. As farmland is considered a business, capital gains tax would be applied at 10 per cent instead of 40 per cent, as long as the land was owned for two years before selling. Mr Warburton says these factors have helped to drive farmland costs above true economic value — buyers will pay more now to benefit from lower tax bills in the future. But if the Government cuts these allowances, farmland values might suffer.

Hursley lacks a grand old trophy house: the estate’s former manor house was sold to IBM in 1961, and the main house is now a Grade II listed, six-bedroom property. But this is reflected in the value, says Rupert Bradstock: if the estate did have a grand manor, he says, the asking price could have been £30 to £40 million.

• The Hursley Estate is for sale through Savills, 020-7499 8644, www.savills.co.uk, and BCM, 01962 763 900, www.bcm.co.uk
• Grant Thornton: 020-7383 5100, www.grant-thornton.co.uk

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