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Leasing a farm with entitlements

  • 28-02-2019 7:16pm
    #1
    Registered Users, Registered Users 2 Posts: 409 ✭✭


    How a yas? Im in the bidding for a lease on a farm at the minute. The Auctineer told me today that the owner will be keeping 80% of the entitlements valued at 9000.
    I’d like to know will this affect me in claiming entitlements from the young farmers scheme if it opens? Could it hinder me from getting my own herd number? Thanks


Comments

  • Registered Users, Registered Users 2 Posts: 11,334 ✭✭✭✭wrangler


    390kid wrote: »
    How a yas? Im in the bidding for a lease on a farm at the minute. The Auctineer told me today that the owner will be keeping 80% of the entitlements valued at 9000.
    I’d like to know will this affect me in claiming entitlements from the young farmers scheme if it opens? Could it hinder me from getting my own herd number? Thanks

    The usual way is that you'll be claiming all the entitlements and then giving him 80% of the money, The entitlements will be transferred into your name for the length of the lease. You should be alright for a herd number too if you ahve a lease
    If that's the case the department will treat you the same as any young farmer.
    This could be a reference year for new CAP reform,


  • Registered Users, Registered Users 2 Posts: 409 ✭✭390kid


    wrangler wrote: »
    The usual way is that you'll be claiming all the entitlements and then giving him 80% of the money, The entitlements will be transferred into your name for the length of the lease. You should be alright for a herd number too if you ahve a lease
    If that's the case the department will treat you the same as any young farmer.
    This could be a reference year for new CAP reform,
    Thanks for that. It’s a area here none of us know too much about


  • Registered Users, Registered Users 2 Posts: 4,146 ✭✭✭Hard Knocks


    390kid wrote: »
    How a yas? Im in the bidding for a lease on a farm at the minute. The Auctineer told me today that the owner will be keeping 80% of the entitlements valued at 9000.
    I’d like to know will this affect me in claiming entitlements from the young farmers scheme if it opens? Could it hinder me from getting my own herd number? Thanks

    80% is very steep
    Give Joseph Naughton or HMG a call to see what entitlements of similar are making, I think it’s more like 60%

    There’s little to be made out of farming and allot of risks to be keeping someone else


  • Registered Users, Registered Users 2 Posts: 11,334 ✭✭✭✭wrangler


    80% is very steep
    Give Joseph Naughton or HMG a call to see what entitlements of similar are making, I think it’s more like 60%

    There’s little to be made out of farming and allot of risks to be keeping someone else

    My entitlements are rented out, 65% for some rented for last year and 70% on a ten year lease with the land, there's huge interest this year, the barstool experts are predicting this to be a reference year, I'd say you could get near 100% if you pushed it,


  • Registered Users, Registered Users 2 Posts: 409 ✭✭390kid


    80% is very steep
    Give Joseph Naughton or HMG a call to see what entitlements of similar are making, I think it’s more like 60%

    There’s little to be made out of farming and allot of risks to be keeping someone else

    I was thinking that meself.


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  • Registered Users, Registered Users 2 Posts: 4,146 ✭✭✭Hard Knocks


    wrangler wrote: »
    My entitlements are rented out, 65% for some rented for last year and 70% on a ten year lease with the land, there's huge interest this year, the barstool experts are predicting this to be a reference year, I'd say you could get near 100% if you pushed it,
    That’s crazy unless you could keep them

    390 make sure you find out what happens the entitlements when the lease is up
    Know of a case last time where leader had to buy entitlements which was not mentioned when taking out the lease


  • Registered Users, Registered Users 2 Posts: 11,334 ✭✭✭✭wrangler


    That’s crazy unless you could keep them

    390 make sure you find out what happens the entitlements when the lease is up
    Know of a case last time where leader had to buy entitlements which was not mentioned when taking out the lease


    A lot of tenants got cheap entitlements in the last CAP reform when the land lords had to get rid of their entitlements, I wouldn't be surprised if this time was the same, I've had a few calls already and it's only February


  • Registered Users, Registered Users 2 Posts: 409 ✭✭390kid


    That’s crazy unless you could keep them

    390 make sure you find out what happens the entitlements when the lease is up
    Know of a case last time where leader had to buy entitlements which was not mentioned when taking out the lease

    I’ll have to enquire into that. The boss reckons that could happen alright


  • Registered Users, Registered Users 2 Posts: 409 ✭✭390kid


    wrangler wrote: »
    A lot of tenants got cheap entitlements in the last CAP reform when the land lords had to get rid of their entitlements, I wouldn't be surprised if this time was the same, I've had a few calls already and it's only February

    How did that work wrangler? I was too young to gather too much on the last cap reform


  • Registered Users, Registered Users 2 Posts: 683 ✭✭✭foxirl


    wrangler wrote: »
    A lot of tenants got cheap entitlements in the last CAP reform when the land lords had to get rid of their entitlements, I wouldn't be surprised if this time was the same, I've had a few calls already and it's only February

    I wouldn't be 100% sure that's going to happen this time based on Hogans comments in this article.
    My take on that is there isn't going to be a reference year this time round. Obviously everything is open to change

    https://www.agriland.ie/farming-news/hogan-rules-out-entitlement-allocation-changes-under-cap-reform-post-2020/


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  • Registered Users, Registered Users 2 Posts: 5,345 ✭✭✭Grueller


    wrangler wrote: »
    The usual way is that you'll be claiming all the entitlements and then giving him 80% of the money, The entitlements will be transferred into your name for the length of the lease. You should be alright for a herd number too if you ahve a lease
    If that's the case the department will treat you the same as any young farmer.
    This could be a reference year for new CAP reform,

    Doubt it will be a reference year. Local FG TD leased his substantial dairy farm out. I doubt he would have if this were to be a reference year.


  • Registered Users, Registered Users 2 Posts: 7,084 ✭✭✭kevthegaff


    Will the new system only give entitlements to active farmers. When the system changes should the entitlements not go back to the lessee


  • Registered Users, Registered Users 2 Posts: 11,334 ✭✭✭✭wrangler


    390kid wrote: »
    How did that work wrangler? I was too young to gather too much on the last cap reform

    The last one was 2012, if your whole farm was rented out you had to get rid of your entitlements, selling on the open market you had to surrender 25% to the national Reserve and pay Capital Gains Tax of 33%on the rest, or sell them all to your tenant deductions and Tax free, so naturally if you thought anything of your tenant you gave him the opportunity, some got them for little over face value, I know one that got them for one and a half times face value divided over the last five years of the lease


  • Registered Users, Registered Users 2 Posts: 683 ✭✭✭foxirl


    wrangler wrote: »
    The last one was 2012, if your whole farm was rented out you had to get rid of your entitlements, selling on the open market you had to surrender 25% to the national Reserve and pay Capital Gains Tax of 33%on the rest, or sell them all to your tenant deductions and Tax free, so naturally if you thought anything of your tenant you gave him the opportunity, some got them for little over face value, I know one that got them for one and a half times face value divided over the last five years of the lease

    Out of curiosity Wrangler, if the tenant didn't buy the entitlements would they not have gotten them or new ones anyway as they would have been farming the land during the reference year based on the rules back then.

    Obviously what happened back then may not be the same as what happens in 2020


  • Registered Users, Registered Users 2 Posts: 11,334 ✭✭✭✭wrangler


    foxirl wrote: »
    Out of curiosity Wrangler, if the tenant didn't buy the entitlements would they not have gotten them or new ones anyway as they would have been farming the land during the reference year based on the rules back then.

    Obviously what happened back then may not be the same as what happens in 2020

    Don't think the same would've happened as now.
    If you weren't a young farmer, you'd get nothing.
    The entitlements were the landlords to do what he wished with, he could have just surrendered them to the National reserve if he wanted


  • Registered Users, Registered Users 2 Posts: 19,585 ✭✭✭✭Bass Reeves


    390kid wrote: »
    How a yas? Im in the bidding for a lease on a farm at the minute. The Auctineer told me today that the owner will be keeping 80% of the entitlements valued at 9000.
    I’d like to know will this affect me in claiming entitlements from the young farmers scheme if it opens? Could it hinder me from getting my own herd number? Thanks
    wrangler wrote: »
    The usual way is that you'll be claiming all the entitlements and then giving him 80% of the money, The entitlements will be transferred into your name for the length of the lease. You should be alright for a herd number too if you ahve a lease
    If that's the case the department will treat you the same as any young farmer.
    This could be a reference year for new CAP reform,

    Lads leasing land are getting away with daylight robbery. Some of the clauses in leases put all the risk on the lad renting the land. It may be grand for dairy lads but for any other system it is plain madness.

    390KID you need to assertain from the auctioneer what exactly he means by owner keeping 80%. Some owner's want this money included in the lease as it is tax free. If you put the owners entitlements into your name your treatment as a young farmers will be as if you have entitlements to that value so you will only get topped up. Some owners are looking for entitlements to be replaced after the end of the lease as well. I have even heard of cases where lads want the ANC money as well. It is only dairy farmers that afford these type of agreements. It will not hinder you from getting a herd number but it will means if I am right that the only department money you may get is ANC and GLAS.

    Slava Ukrainii



  • Registered Users, Registered Users 2 Posts: 4,146 ✭✭✭Hard Knocks


    Lads leasing land are getting away with daylight robbery. Some of the clauses in leases put all the risk on the lad renting the land. It may be grand for dairy lads but for any other system it is plain madness.

    390KID you need to assertain from the auctioneer what exactly he means by owner keeping 80%. Some owner's want this money included in the lease as it is tax free. If you put the owners entitlements into your name your treatment as a young farmers will be as if you have entitlements to that value so you will only get topped up. Some owners are looking for entitlements to be replaced after the end of the lease as well. I have even heard of cases where lads want the ANC money as well. It is only dairy farmers that afford these type of agreements. It will not hinder you from getting a herd number but it will means if I am right that the only department money you may get is ANC and GLAS.
    Can’t get GLAS as no new scheme until after 2020


  • Registered Users, Registered Users 2 Posts: 11,334 ✭✭✭✭wrangler


    Lads leasing land are getting away with daylight robbery. Some of the clauses in leases put all the risk on the lad renting the land. It may be grand for dairy lads but for any other system it is plain madness.

    390KID you need to assertain from the auctioneer what exactly he means by owner keeping 80%. Some owner's want this money included in the lease as it is tax free. If you put the owners entitlements into your name your treatment as a young farmers will be as if you have entitlements to that value so you will only get topped up. Some owners are looking for entitlements to be replaced after the end of the lease as well. I have even heard of cases where lads want the ANC money as well. It is only dairy farmers that afford these type of agreements. It will not hinder you from getting a herd number but it will means if I am right that the only department money you may get is ANC and GLAS.

    Write everything into the lease, and don't sign it until you get someone well qualified to check it


  • Registered Users, Registered Users 2 Posts: 6,933 ✭✭✭jaymla627


    Lads leasing land are getting away with daylight robbery. Some of the clauses in leases put all the risk on the lad renting the land. It may be grand for dairy lads but for any other system it is plain madness.

    390KID you need to assertain from the auctioneer what exactly he means by owner keeping 80%. Some owner's want this money included in the lease as it is tax free. If you put the owners entitlements into your name your treatment as a young farmers will be as if you have entitlements to that value so you will only get topped up. Some owners are looking for entitlements to be replaced after the end of the lease as well. I have even heard of cases where lads want the ANC money as well. It is only dairy farmers that afford these type of agreements. It will not hinder you from getting a herd number but it will means if I am right that the only department money you may get is ANC and GLAS.

    The biggest winners of the dairy boom are the above like your alluding too, the only fly in the ointment is with the tax free lease if the tenant breaks the lease before it ends the owner has to pay back the tax free income for all years the lease was running....


  • Registered Users, Registered Users 2 Posts: 21,808 ✭✭✭✭Water John


    It's important not to just let to the highest bidder. One must give equal weight to the reliability of leasee both in terms of financial soundness and how they will treat the land.


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  • Registered Users, Registered Users 2 Posts: 19,585 ✭✭✭✭Bass Reeves


    jaymla627 wrote: »
    The biggest winners of the dairy boom are the above like your alluding too, the only fly in the ointment is with the tax free lease if the tenant breaks the lease before it ends the owner has to pay back the tax free income for all years the lease was running....

    There seems to be two ways around it find another tenant or the owner has the option to pay revenue the USC and PRSI dure on the remaining years of the lease which is about 10% of lease rental
    Water John wrote: »
    It's important not to just let to the highest bidder. One must give equal weight to the reliability of leasee both in terms of financial soundness and how they will treat the land.

    In general excessive lease agreements are signed by dairy farmers so the financial soundness would generally be ok. Most dairy farmers will treat land ok

    Slava Ukrainii



  • Registered Users, Registered Users 2 Posts: 21,808 ✭✭✭✭Water John


    Well, one thrown up near here recently in the middle of the lease with money owed, by a dairy farmer.


  • Closed Accounts Posts: 2,471 ✭✭✭Panch18


    There seems to be two ways around it find another tenant or the owner has the option to pay revenue the USC and PRSI dure on the remaining years of the lease which is about 10% of lease rental



    In general excessive lease agreements are signed by dairy farmers so the financial soundness would generally be ok. Most dairy farmers will treat land ok

    Land on one year rent up the road from us made 430 an acre, with a sfp of 80 per acre. Yes those are per acre figures not per hectare

    And it was a plough man that got it and a plough man that was runner up

    Around here it’s the plough that dictates the price of rental land


  • Registered Users, Registered Users 2 Posts: 19,585 ✭✭✭✭Bass Reeves


    Water John wrote: »
    Well, one thrown up near here recently in the middle of the lease with money owed, by a dairy farmer.

    You just follow him through the court process. Too many unwilling to do that. If you start proceedings he be stupid not to sort it. If he goes all the it will cost him more

    Slava Ukrainii



  • Registered Users, Registered Users 2 Posts: 4,146 ✭✭✭Hard Knocks


    Water John wrote: »
    Well, one thrown up near here recently in the middle of the lease with money owed, by a dairy farmer.

    To me doesn’t matter the enterprise, saw it with friends renting pubs/restaurants too
    The tennent has to live as well as pay these huge overheads.
    Greed


  • Registered Users, Registered Users 2 Posts: 2,150 ✭✭✭Dinzee Conlee


    To me doesn’t matter the enterprise, saw it with friends renting pubs/restaurants too
    The tennent has to live as well as pay these huge overheads.
    Greed

    Greed on who’s behalf though? ;)


  • Registered Users, Registered Users 2 Posts: 409 ✭✭390kid


    Quick update on the situation lads. I pulled out yesterday morning at 210 a acre whether I was wise or not. I haven’t heard anything since but I know he wasn’t moving on the 80% of the entitlements and the water and fencing was still left unsolved. There was no word on keeping the ANC so I understood that would be mine to keep.


  • Registered Users, Registered Users 2 Posts: 19,585 ✭✭✭✭Bass Reeves


    390kid wrote: »
    Quick update on the situation lads. I pulled out yesterday morning at 210 a acre whether I was wise or not. I haven’t heard anything since but I know he wasn’t moving on the 80% of the entitlements and the water and fencing was still left unsolved. There was no word on keeping the ANC so I understood that would be mine to keep.

    I only understand the finishing business. on a store to finish system on good land reseeded in last 5-10 years depending on your ability to manage the system you will achieve a profit of 2-300/bullock. Stocking a one bullock /acre is about a fair level of management. If you hit the 300/bullock you would have 90/acre, the 35ish/acre ANC and 20% of the SFP. Assuming 300/HA payments you would have about 150/acre profit. Then again perhaps I am an idiot and there are way better lads than me out there.

    Slava Ukrainii



  • Registered Users, Registered Users 2 Posts: 4,242 ✭✭✭GrasstoMilk


    Panch18 wrote: »
    Land on one year rent up the road from us made 430 an acre, with a sfp of 80 per acre. Yes those are per acre figures not per hectare

    And it was a plough man that got it and a plough man that was runner up

    Around here it’s the plough that dictates the price of rental land
    Very sane around here. Yearly land over the road here made thr same money fir spring barley.
    Same lad took it last year for 320 and had the worst crop of corn I ever seen, he said no way was he taking it again for that much money...............


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  • Registered Users, Registered Users 2 Posts: 4,146 ✭✭✭Hard Knocks


    390kid wrote: »
    Quick update on the situation lads. I pulled out yesterday morning at 210 a acre whether I was wise or not. I haven’t heard anything since but I know he wasn’t moving on the 80% of the entitlements and the water and fencing was still left unsolved. There was no word on keeping the ANC so I understood that would be mine to keep.

    If I remember you’re in Leitrim
    I think you’re wise, same as buying at the ring you’ll have your doubts, no point losing the run of yourself & being a busy fool


  • Registered Users, Registered Users 2 Posts: 4,146 ✭✭✭Hard Knocks


    Very sane around here. Yearly land over the road here made thr same money fir spring barley.
    Same lad took it last year for 320 and had the worst crop of corn I ever seen, he said no way was he taking it again for that much money...............
    There must be an option that this is a reference year, same happened in 2014 some land was overpriced


  • Registered Users, Registered Users 2 Posts: 409 ✭✭390kid


    I only understand the finishing business. on a store to finish system on good land reseeded in last 5-10 years depending on your ability to manage the system you will achieve a profit of 2-300/bullock. Stocking a one bullock /acre is about a fair level of management. If you hit the 300/bullock you would have 90/acre, the 35ish/acre ANC and 20% of the SFP. Assuming 300/HA payments you would have about 150/acre profit. Then again perhaps I am an idiot and there are way better lads than me out there.

    I wouldn’t have a notion about finishing stock I’ve suckers and sheep here. No your no idiot any advice or figures from something I don’t know much or anything about is all gratefuly took on board here


  • Registered Users, Registered Users 2 Posts: 1,061 ✭✭✭Neddyusa


    390kid wrote: »
    Quick update on the situation lads. I pulled out yesterday morning at 210 a acre whether I was wise or not. I haven’t heard anything since but I know he wasn’t moving on the 80% of the entitlements and the water and fencing was still left unsolved. There was no word on keeping the ANC so I understood that would be mine to keep.

    Wise move.

    Number 1: 80% is way overpriced for entitlements.

    Number 2. Anything over e120/acre and you're losing money on sucklers and sheep. (Unless it's Golden Vale land, fenced and watered in paddocks..... Which i'd hazard a guess it's not!)


  • Registered Users, Registered Users 2 Posts: 154 ✭✭early_riser


    Quick question, land joining land i own going to be up for sale later in the year currently in probate being transferred to daughter of previous owner who died. I being given first option of buying the land and currently have an agreement to take the land until the end of june at least and until transfer goes through. No entitlements on this land at the min as was leased for years. Could i lease entitlements for this land for the year as i would have it in may and june?


  • Registered Users, Registered Users 2 Posts: 251 ✭✭In the wind


    To me doesn’t matter the enterprise, saw it with friends renting pubs/restaurants too
    The tennent has to live as well as pay these huge overheads.
    Greed

    Greed?

    Was a contract with terms laid out not entered into voluntarily?


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  • Registered Users, Registered Users 2 Posts: 19,585 ✭✭✭✭Bass Reeves


    To me doesn’t matter the enterprise, saw it with friends renting pubs/restaurants too
    The tennent has to live as well as pay these huge overheads.
    Greed

    Too many lads think self employed lads are creaming it. Yest if you rent the right place at the right price. But most lads renting cannot do there sumes and fail to account for smaller costs. It is really noticeable in pubs the amount that are only rented for a few years and are thrown up or tenant will not renew the least is becoming very common

    Slava Ukrainii



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