Net income and expenditure in 2012

Rural estates in Scotland continue to perform well from an investment perspective.

16 January 2013, Words by Ian Bailey

Net income

Our 2012 survey results show that the average net income (before depreciation, finance, drawings and tax) increased by 8.3% to £41 per acre (£99 per ha), while overall costs, mainly from property repairs and professional fees, increased, which dampened the benefit of the increase in income (see Graph 1).

Net income was derived from an average gross income of £99 per acre (£245 per ha), and an average expenditure of £58 per acre (£143 per ha). Net income represented 42% of gross income.


Our research shows that expenditure on the average Scottish estate in 2012 increased by 3.2%, to £58 per acre (£143 per ha), although, at 58.6% it represents a slightly smaller proportion of gross income than in 2011. Graph 7 shows that property repairs and management costs amounted to 43% of gross income. However, other costs including insurance, legal, accountancy and rates should not be ignored, as they represent a further 16%.

Property Repairs

Property repairs remain the largest spend, and in 2012 amounted to £24 per acre (£59 per ha), down 10% on 2011 average spend, representing 24% of gross estate income (see Graph 7). An additional £5 per acre (£12 per ha) was spent on capital improvements to property – again lower (-33%) on the figure recorded in 2011.

Total average expenditure (including repairs) on SAT properties in 2012 was just over £4,000 per dwelling (up 22% on 2011), reflecting a lower net surplus per property of £1,658, compared with just over £2,000 in 2011.

We believe that this increased expenditure is directly related to houses resumed from agricultural tenancies, bringing the properties up to the Repairing Standard.

These figures would suggest that, although overall property repairs were down, the majority were spent on the residential portfolio.

Management Costs

Our survey shows that average management costs across ‘All Estates’ in Scotland, in 2012, were just under £19 per acre (£47 per ha), 21% higher than in 2011, and represented 19% of gross income. The trend has been similar for other professional fees, including legal and accountancy, which both increased in 2012, by 10% and 50% respectively.

Investment performance

Rural assets in Scotland continue to return a reasonable investment performance on ‘All Estates’. In 2012, the average total return for ’All Estates’ on all let property was 3.4%, the sum of a net income return of 0.8%, and capital growth of 3.4%.

However, it is the farmland that contributes the lion’s share of this performance. It recorded capital growth of 12.7% (in excess of the 6% recorded in Savills Farmland Value Survey), and a net income return of 1%, giving a total return of 13.7%.

The let residential sector is currently the weakest performer on rural estates, giving an average total return for let residential property on ’All Estates’ was 1.1% being the sum of a net income return of 1% and no capital growth.


Key Contacts

Ian Bailey

Ian Bailey

Rural Research

Head Office London

+44 (0) 20 7299 3099


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