Conacre and entitlements.

iron man

Just looking for advice here. I have approached by my neighbours, whom live in England, to take our there late uncles farm They have about 9k in entitlements on 150 acres of hill ground and grazing fields only, with a slatted house and a 6 bay lambing shed. They have suggested that I hand them over half the value of the entitlements, with a lease on top of that about 4k... per year.. So whatever money I get from Cap is gone before I start. This will not come into effect till 2021 at the will of uncle is at probate stage. On top of that they want to share the esb bill for the shed as well as the water. They are using me as part of a business relief for reducing tax. Im a bit bothered about the fact that I'm saving them money but will have nothing to show for it myself. The hill ground is grand for 40% of the year but useless in the winter. Has anyone any suggestions on how to figure this out. Am I mad getting involved?

J.O. Farmer

Do you not have use of the land for effectively nothing. Try leasing land elsewhere for the value of the entitlements and see how you get on.

richie123

iron man wrote: »

Just looking for advice here. I have approached by my neighbours, whom live in England, to take our there late uncles farm They have about 9k in entitlements on 150 acres of hill ground and grazing fields only, with a slatted house and a 6 bay lambing shed. They have suggested that I hand them over half the value of the entitlements, with a lease on top of that about 4k... per year.. So whatever money I get from Cap is gone before I start. This will not come into effect till 2021 at the will of uncle is at probate stage. On top of that they want to share the esb bill for the shed as well as the water. They are using me as part of a business relief for reducing tax. Im a bit bothered about the fact that I'm saving them money but will have nothing to show for it myself. The hill ground is grand for 40% of the year but useless in the winter. Has anyone any suggestions on how to figure this out. Am I mad getting involved?

Am I correct in saying you'll be up 500 a year and the land leased at that...or am I reading that wrong ?

iron man

Yes, I'll have 500 out of it, per year, but that will be swallowed up by Esb bills etc.. You see the thing is, I'm not used to this type of stuff if I ask around locally then others could step in ahead of me. Is this the norm that you hand over that type of money for poor quality hill ground?? I don't expect it to rent it for nothing, but at the same time I'm saving them about 50k on inheritance tax from business relief. I know they will have inputs with fencing and stuff from conacre but I'm worried that I'm letting them have all the cake as well as the cherry on top....

This is relatively simple, do you have use for the land, yes or no.

The potential for their tax savings is irrelevant to you. As you say, if not you then someone else.

IF you have use of the land then you're looking a gift horse in the mouth.

Danzy

Sounds like you are getting a fantastic deal, that they would only give a neighbour.

They won't pay you to take it. Though they aren't far off it. You are getting the place with 500 in your hand.

Not sure how they could make it even better for you.

Grueller

I hope this doesn't come across wrong but it's not your neighbour looking for the cake and the cherry.

Mooooo

They wont get the relief unless it's a longterm lease afaik?. What you have to figure out is what you can make of the land farming it if you want to do it. You are essentially getting the land for nothing so land cost will be zero. Do up a plan and see what you can do with it.

emaherx

iron man wrote: »

Is this the norm that you hand over that type of money for poor quality hill ground?? I don't expect it to rent it for nothing

You are renting the poor quality land and the entitlement. If you had to rent them separately there's not a hope you'd break even.

Grueller

On top of the €9k in entitlements if that is hill ground there should be a more severely disadvantaged payment attached to the land. That is roughly another €6k to be claimed.
There could also be the possibility of an environmental scheme to be had. That could be another €5k based on Glas and will probably be more when a new reps comes in.
That's €11,500 before any beast on it. I would be snapping their hands off for a 10 year lease.

Bass Reeves

What you have to decide is if there is a decent margin for you in it. On one hand you have decent faculties on the farm but no silage ground and I presume that lambing shed is straw bedded.

While in theory it may sound ok to get land for nothing to make a profit you need the capital's investment of stock. Have you the extra silage ground to compensate for the extra stock. Buying silage for a 5-6 month winter for stock is an expensive capital hard business. There are certain advantages. First as BPS is 150/ HA it can only go up. There is a good chance that these entitlements will reach 200/HA over the next 4-5years. That another 3K. As at any CAP reorganisation the removing of control of entitlements from LL's is always on the agenda. However you need land to draw these down so it's catch 22.

As most farms in poorer land type areas are larger holding there is no advantage in extra ANC. However if there is any new environment schemes may be more on a reps basis you may be able to draw extra income there if there is an area based element to the payments. However this entails putting a long lease in place as these new schemes are 2-3 years away. That means first lease needs to be 10 years to facilitate any such reps contract. This is especially important if any of the land is SAC.

As the farm seems to be near you it will not have entail extra time traveling to it or machinery specific for it. The biggest issue is stocking and that another reason for a 10 year preliminary contract.

Really at the end of the day you need to put a business plan in place to see the feasibility of it

Bass Reeves

Grueller wrote: »

On top of the €9k in entitlements if that is hill ground there should be a more severely disadvantaged payment attached to the land. That is roughly another €6k to be claimed.
There could also be the possibility of an environmental scheme to be had. That could be another €5k based on Glas and will probably be more when a new reps comes in.
That's €11,500 before any beast on it. I would be snapping their hands off for a 10 year lease.

ANC is capped at 34 HA so giving land holdings types in hill land area it usually never comes into play in hill farms when renting. However you might manage it if the farm was put into a spouses name but being a qualifying farmer comes into play

orchard farm

I know if it was around here people would bite there handsoff to get it and would pay closer to 11000 for the privilage.seems your gettin a great deal there