rented land - works undertaken

bouli73

Hi

quick question would be grateful for advise on.

Farm is rented to nearby farmer for past 2 years. In good condition, fencing etc.
He approached me recently and set out a list of works he wants to do - from hedging to creation of a new roadway. No problem in principle with what he wants to do.
My question, is he solely responsible for costs of this? To be fair he has not asked for part payment but just wanted to clarify what would be the norm

Thanks

blue5000

How long is the lease? Some places proper mains fencing in the whole thing is worth a year's rent.

ganmo

Different Landlords differ.
Some say if the renter wants to do it plough on but I'm paying nothing. In this case renter is entitled to take everything he installed out at the end of the lease.

freedominacup

ganmo wrote: »

Different Landlords differ.
Some say if the renter wants to do it plough on but I'm paying nothing. In this case renter is entitled to take everything he installed out at the end of the lease.

I don't think you're right. The landlord might be entitled to demand the roadway for example might ne removed but if you put in fixtures and fittings as a tenant it's up to the landlord whether you get them back.

Sam Kade

freedominacup wrote: »

I don't think you're right. The landlord might be entitled to demand the roadway for example might ne removed but if you put in fixtures and fittings as a tenant it's up to the landlord whether you get them back.

Correct, anything that can't be moved is the property of the landlord unless he says otherwise.

ganmo

Sam Kade wrote: »

Correct, anything that can't be moved is the property of the landlord unless he says otherwise.

what are you calling fixtures and fittings?

to me its gates, fencing + water troughs all moveable

Waffletraktor

freedominacup wrote: »

I don't think you're right. The landlord might be entitled to demand the roadway for example might ne removed but if you put in fixtures and fittings as a tenant it's up to the landlord whether you get them back.

Is the landlord required to refund the tenant for permanent fixtures that increase future earning potential/capital value at end of lease if it is left in place?

Sam Kade

ganmo wrote: »

what are you calling fixtures and fittings?

to me its gates, fencing + water troughs all moveable

I did say can't be moved

ganmo

freedominacup wrote: »

I don't think you're right. The landlord might be entitled to demand the roadway for example might ne removed but if you put in fixtures and fittings as a tenant it's up to the landlord whether you get them back.

Sam Kade wrote: »

Correct, anything that can't be moved is the property of the landlord unless he says otherwise.

so you're actually disagreeing with Free?

Sam Kade

ganmo wrote: »

so you're actually disagreeing with Free?

Unless you can pick up a roadway and take it under your arm, then no.

Mooooo

If he is a good tenant and what he plans improves the place come to an agreement yer selves. I know if I was looking for a place I would like a roadway or fencing already in place so his improvement may help in the future for you.

freedominacup

Waffletraktor wrote: »

Is the landlord required to refund the tenant for permanent fixtures that increase future earning potential/capital value at end of lease if it is left in place?

No, completely different to UK.

Loughfield

Is it a 5 year lease or 11 month rolling lease? Generally speaking it's up the to land owner to maintain hedges unless other wise stated in the lease contract. With regards to the roadway, this would have to be agreed with both parties. If the farmer who is renting the land puts down the roadways, well then he is responsible for the full cost. He cannot look for a deduction in rent, and he would be entitled to remove it when leaving.
It would be very important that any changes are recorded in the lease agreement, this will stop any disagreement that may occur on the ending or termination of the lease agreement.

bouli73 wrote: »

Hi

quick question would be grateful for advise on.

Farm is rented to nearby farmer for past 2 years. In good condition, fencing etc.
He approached me recently and set out a list of works he wants to do - from hedging to creation of a new roadway. No problem in principle with what he wants to do.
My question, is he solely responsible for costs of this? To be fair he has not asked for part payment but just wanted to clarify what would be the norm

Thanks

Bass Reeves

Loughfield wrote: »

Is it a 5 year lease or 11 month rolling lease? Generally speaking it's up the to land owner to maintain hedges unless other wise stated in the lease contract. With regards to the roadway, this would have to be agreed with both parties. If the farmer who is renting the land puts down the roadways, well then he is responsible for the full cost. He cannot look for a deduction in rent, and he would be entitled to remove it when leaving.
It would be very important that any changes are recorded in the lease agreement, this will stop any disagreement that may occur on the ending or termination of the lease agreement.

Fist off I do not know how you would remove a roadway. If you did remove it you would be responsible for reinstatement of land. It is hard to know what improves land/farm and what will not. Leases are different from conacre. I would imagine that most longterm leases include provisions to maintain fences and buildings during the lifetime of the lease. Lads that longterm lease need to understand this as well.

You have to look at it from the landlord view as well. If improvmenst were all loaded on him what is to stop a tenant carying our improvments costing ten's of thousands and expecting to be paid for them at the end of the tenancy. Remember that lease rental income is tax free so it is harder for landlord to write off such improvments against tax.

As well you have to look what rent is being recieved. It would be hard for a landlord that is leasing at lower rental values to accept such improvment costs rather than a landlord that is getting a higher rent and maybe SFP as well. It was interesting to read last week in the IFJ that in some cases now SFP and Land rent can be bungled into lease agreement and paid as part of the tax free lease.

When you realize that a 10 year lease can draw 20K tax free( with exception of PRSI and USC) and if land is in husband and wife name this tax exemption can apply to both spouses it would mean that in theory that 40K could be recieved in in income before tax is started to be calculated. Add in normal tax allowances and such a couple could recieve 72K before tax becomes an issue. Now I know that this would apply to very few but it boggles the mind at the same time.

Going back to improvments compensation if such costs are allowed, what portion is allowed as compensation. Is the general tax deprecation rate of 8 years acceptable. In this case a farm road way costing 16K carried out in year 1 of a ten year lease is fully depreciated during the life time of the lease however if it was put in in year 6 then 3/8 of the costs are recoverable or 6K. However you then have the issue of what is a removeable asset and waht is not.

Take a situtation where a farmer put in a Conc Slab abd removable cubicle in year 6 can he claim for the balance of the slab but insist on removing the cubicles. What if his cost value of the slab is inflated. He used a contractor to install both and as he knew he was allowed to remove cubicle but claim for slab. Then as a result of this he got the contractor to inflate the cost of the slab V the cubicles.

Loughfield

You are correct about the reinstatement, but there is roadways been removed from farmland fairly regularly. Look at roadway to wind farms, Co Councils, ESB etc. It all goes back to what is agreed with the landlord and the farm and what is in the lease agreement.

Bass Reeves wrote: »

Fist off I do not know how you would remove a roadway. If you did remove it you would be responsible for reinstatement of land. It is hard to know what improves land/farm and what will not. Leases are different from conacre. I would imagine that most longterm leases include provisions to maintain fences and buildings during the lifetime of the lease. Lads that longterm lease need to understand this as well.

You have to look at it from the landlord view as well. If improvmenst were all loaded on him what is to stop a tenant carying our improvments costing ten's of thousands and expecting to be paid for them at the end of the tenancy. Remember that lease rental income is tax free so it is harder for landlord to write off such improvments against tax.

As well you have to look what rent is being recieved. It would be hard for a landlord that is leasing at lower rental values to accept such improvment costs rather than a landlord that is getting a higher rent and maybe SFP as well. It was interesting to read last week in the IFJ that in some cases now SFP and Land rent can be bungled into lease agreement and paid as part of the tax free lease.

When you realize that a 10 year lease can draw 20K tax free( with exception of PRSI and USC) and if land is in husband and wife name this tax exemption can apply to both spouses it would mean that in theory that 40K could be recieved in in income before tax is started to be calculated. Add in normal tax allowances and such a couple could recieve 72K before tax becomes an issue. Now I know that this would apply to very few but it boggles the mind at the same time.

Going back to improvments compensation if such costs are allowed, what portion is allowed as compensation. Is the general tax deprecation rate of 8 years acceptable. In this case a farm road way costing 16K carried out in year 1 of a ten year lease is fully depreciated during the life time of the lease however if it was put in in year 6 then 3/8 of the costs are recoverable or 6K. However you then have the issue of what is a removeable asset and waht is not.

Take a situtation where a farmer put in a Conc Slab abd removable cubicle in year 6 can he claim for the balance of the slab but insist on removing the cubicles. What if his cost value of the slab is inflated. He used a contractor to install both and as he knew he was allowed to remove cubicle but claim for slab. Then as a result of this he got the contractor to inflate the cost of the slab V the cubicles.