Land rental decision

lukin

Apologies if I am asking something that can be found out by searching the forum; I did that but couldn't really find the answer. My parents land is due to be leased out again for this year. The total area to be leased is 50 acres.
Last year we got €195 per acre and the agent's fee was €500. I wasn't involved in the negotiations so I have no idea if that was fair or not. However the lease is now up for renewal and the letting agent has requested €30 more per acre for his fee. It was my father that spoke to him so maybe he took that up wrong (he is in his 80's). That means he wants four times more this year for his fee. The reason he gave for this is that "land is making more money this year".
I know very little about the value of land (I work in IT) and I have no vested interest in what the money paid ends up at because I won't be getting any of it.
However I don't want my parents to be ripped off. I find it hard to believe the price of land has increased considering the times we live in right now.
However maybe agriculture is not as badly affected by this crisis as other industries are.
Just looking for some advice.

minerleague

lukin wrote: »

Apologies if I am asking something that can be found out by searching the forum; I did that but couldn't really find the answer. My parents land is due to be leased out again for this year. The total area to be leased is 50 acres.
Last year we got €195 per acre and the agent's fee was €500. I wasn't involved in the negotiations so I have no idea if that was fair or not. However the lease is now up for renewal and the letting agent has requested €30 more per acre for his fee. It was my father that spoke to him so maybe he took that up wrong (he is in his 80's). That means he wants four times more this year for his fee. The reason he gave for this is that "land is making more money this year".
I know very little about the value of land (I work in IT) and I have no vested interest in what the money paid ends up at because I won't be getting any of it.
However I don't want my parents to be ripped off. I find it hard to believe the price of land has increased considering the times we live in right now.
However maybe agriculture is not as badly affected by this crisis as other industries are.
Just looking for some advice.

Sounds like solicitors charging % of estate value doing wills, even though work would be more or less the same. Try another agent, or go direct to current tenant?? Suppose you know long term leases are tax free to certain values?

einn32

lukin wrote: »

Apologies if I am asking something that can be found out by searching the forum; I did that but couldn't really find the answer. My parents land is due to be leased out again for this year. The total area to be leased is 50 acres.
Last year we got €195 per acre and the agent's fee was €500. I wasn't involved in the negotiations so I have no idea if that was fair or not. However the lease is now up for renewal and the letting agent has requested €30 more per acre for his fee. It was my father that spoke to him so maybe he took that up wrong (he is in his 80's). That means he wants four times more this year for his fee. The reason he gave for this is that "land is making more money this year".
I know very little about the value of land (I work in IT) and I have no vested interest in what the money paid ends up at because I won't be getting any of it.
However I don't want my parents to be ripped off. I find it hard to believe the price of land has increased considering the times we live in right now.
However maybe agriculture is not as badly affected by this crisis as other industries are.
Just looking for some advice.

Try shop around I would say. I'm not sure what the land rental market is doing but it has always been bullish especially in an intensively farmed area.

ismat

Is it possible that the agent is looking to get 225 per acre in rent and the extra is nothing to do with his fee ?

einn32

ismat wrote: »

Is it possible that the agent is looking to get 225 per acre in rent and the extra is nothing to do with his fee ?

My take is the agent wants 40e per acre this year up from 10e an acre last year?

ismat

That wouldn’t make sense. Agent fee for letting like this would be in the region of 500.

lukin

ismat wrote: »

That wouldn’t make sense. Agent fee for letting like this would be in the region of 500.

Yeah that is what it was last year. That's why I am thinking my dad got it wrong. Is there a separate fee apart from the letting agent's fee? I don't think there is.

ismat

lukin wrote: »

Yeah that is what it was last year. That's why I am thinking my dad got it wrong. Is there a separate fee apart from the letting agent's fee? I don't think there is.

I don’t think there would be any other fees. I’d say your dad misheard the agent

lukin

ismat wrote: »

I don’t think there would be any other fees. I’d say your dad misheard the agent

He must have. I am going to ring tomorrow and find out for sure.

tanko

lukin wrote: »

He must have. I am going to ring tomorrow and find out for sure.

Is this "agent" an auctioneer?

SuperTortoise

Ring the agent and clarify.

lukin

OK I have got to the bottom of this. The auctioneer said to my father that land was making more money this year and that he should ask for more money per acre than last year. So my father said "OK, ask for more money". It's not the auctioneer that asked for more money, he said to my father he should ask for more.
I don't think we should though, I doubt very much if the value of land has gone up this year.
Edit; I don't know why the auctioneer would say this unless there is something in it for him.

Aravo

If you got on well with the renter and no issues arose then happy days. Leave well enough I would think. Try and give first refusal to the renter already there no matter which way things go.

Dinzee Conlee

lukin wrote: »

OK I have got to the bottom of this. The auctioneer said to my father that land was making more money this year and that he should ask for more money per acre than last year. So my father said "OK, ask for more money". It's not the auctioneer that asked for more money, he said to my father he should ask for more.
I don't think we should though, I doubt very much if the value of land has gone up this year.
Edit; I don't know why the auctioneer would say this unless there is something in it for him.

Its very location & land type dependant...

But land at 200/acre would be below average in a lot of places
Land at 300/acre would be strong, but it wouldn't be unheard of, not around here anyways...

I know someone renting out very average ground at 200/acre
Land around here in dairy/tillage area would be 250 and up

Its up to you if you ask, but 225/acre wouldn't be mad money I would have said...

lukin

I don't think we should ask for more, I don't want to risk the renter saying "no thanks". The land is not below standard but it's not exactly great either.
As regards the auctioneer, I don't think we will use him at all, I don't see what we need him for.

White Clover

lukin wrote: »

I don't think we should ask for more, I don't want to risk the renter saying "no thanks". The land is not below standard but it's not exactly great either.
As regards the auctioneer, I don't think we will use him at all, I don't see what we need him for.

You were probably glad of the auctioneer last year!
If he hasn't rode you, And in fairness he made the effort to keep your father in the loop as regards local rental prices, maybe give him a break. Ask for €20/acre extra from the lessee and everyone is a winner.

Castlekeeper

lukin wrote: »

I don't think we should ask for more, I don't want to risk the renter saying "no thanks". The land is not below standard but it's not exactly great either.
As regards the auctioneer, I don't think we will use him at all, I don't see what we need him for.

The auctioneer seems to be doing his job properly and advising your father as to what price the current local market is at. Your father appears to have taken that advice on board. The process is one of negotiation, hence the word "ask". An auctioneer can be very useful to formalise payments, conditions, and act as a middle man in the case of any disagreements or disputes. He may also put you in the way of a good tenant, which he may already have done, and help you avoid a poor one, or an unwanted neighbour.

machu

minerleague wrote: »

Sounds like solicitors charging % of estate value doing wills, even though work would be more or less the same. Try another agent, or go direct to current tenant?? Suppose you know long term leases are tax free to certain values?

In a long term lease is the agreed price/acre the same whether it is in grass or say potatoes or is there a different yearly fee depending on what the land is used for in each particular year ?

Donald Trump

machu wrote: »

In a long term lease is the agreed price/acre the same whether it is in grass or say potatoes or is there a different yearly fee depending on what the land is used for in each particular year ?

It would be up to yourselves to specify that in advance. You might want to specify no de-stoning or something. Although sometimes those things would be done verbally so you'd need to be careful with who you are letting in.





You'd be unlikely to get a fella who wants to grow spuds in it the first year and wants grass in it for the next 4.

minerleague

machu wrote: »

In a long term lease is the agreed price/acre the same whether it is in grass or say potatoes or is there a different yearly fee depending on what the land is used for in each particular year ?

Only ever heard of one price per acre per year. As donald trump says up to negotiation then between owner and tenant what is allowed over the term.

machu

Maybe grass and spuds was not the best example. In tillage land would a set fee/year be the norm for the length of the lease or is it depending on the crop sown each year what the yearly fee would be ? Thinking of going down a 7 year lease route just wondering what the standard practice is.

machu

minerleague wrote: »

Only ever heard of one price per acre per year. As donald trump says up to negotiation then between owner and tenant what is allowed over the term.

Thanks only saw you’re reply now

minerleague

machu wrote: »

Maybe grass and spuds was not the best example. In tillage land would a set fee/year be the norm for the length of the lease or is it depending on the crop sown each year what the yearly fee would be ? Thinking of going down a 7 year lease route just wondering what the standard practice is.

very hard to say as every lease will be different, eg for tillage land on a long term lease tenant might want soil samples taken and price taken into account, or who is responsible for ditches , watercourses etc, Owner might not potatoes or maize grown on heavy land. A good reliable tenant is nearly as important as anything

paddyte20

Giving the agent 500 means you are getting 185/acre.that would be cheap. Grassland is making 250 easily in the south east. What part of the country are you in.

20silkcut

White Clover wrote: »

You were probably glad of the auctioneer last year!
If he hasn't rode you, And in fairness he made the effort to keep your father in the loop as regards local rental prices, maybe give him a break. Ask for €20/acre extra from the lessee and everyone is a winner.

Not very hard to be in the loop it’s all over the journal and farming independent and agriland etc.

machu

If a person leases out there land on say a 7 year lease to qualify for the tax relief are they confined to leasing the whole farm to one person or can the farm be divided and leased to two or three eligible farmers and still qualify for the tax relief ?

893bet

It can be split.

Water John

One lease only.
Well, one of us is wrong.

Dinzee Conlee

Water John wrote: »

One lease only.
Well, one of us is wrong.

You’re right I think Water...

“You will only qualify for one reduction regardless of the number of qualifying leases you may have”

From here - https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/leasing-farm-land/index.aspx

Water John

Dinzee Conlee wrote: »

You’re right I think Water...

“You will only qualify for one reduction regardless of the number of qualifying leases you may have”

From here - https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/leasing-farm-land/index.aspx

There was I, hoping I was wrong, but had read up on it recently. So was getting worried as to my memory.

893bet

Whoops. I was sure you could have multiple as long as all meet the terms.

Water John

893bet wrote: »

Whoops. I was sure you could have multiple as long as all meet the terms.

Fair enough, next pint is on me.

machu

Believe me I wish you were wrong too but it looks to be the case alright.

It was something I wasnt aware of until it was said to me today that I might not be able to proceed with the plans I had in place and avail of the tax relief. It certainly makes things very awkward on what way I proceed from here.

Thanks.

Water John

machu wrote: »

Believe me I wish you were wrong too but it looks to be the case alright.

It was something I wasnt aware of until it was said to me today that I might not be able to proceed with the plans I had in place and avail of the tax relief. It certainly makes things very awkward on what way I proceed from here.

Thanks.

All I can think of is, putting some of the farm in the OH's name. Each of you lease out.

wrangler

Water John wrote: »

There was I, hoping I was wrong, but had read up on it recently. So was getting worried as to my memory.

IFAs interpretation of it

With effect from 1 January 2015 the age restriction and the requirement to be permanently incapacitated were removed, the amount of income that may be exempted under a qualifying long term lease was increased and a fourth threshold introduced for lease periods of 15 or more years with income of up to €40,000 being exempted.

€40,000 where all the qualifying leases are for 15 years or more,
€30,000 where all the qualifying leases are for 10 but less than 15 years,
€22,500 where all the qualifying leases are for 7 but less than 10 years, and
€18,000 where all the qualifying leases are for 5 or 6 years.

I've three 10yr leases here all exempted, we're joint ownership so the exemption is doubled

Water John

Wrangler was hoping you'd be around to clarify. The Revenue doc does say only one lease though. Will be delighted if its more.
I'll have to apologise to 893bet.

wrangler

Water John wrote: »

Wrangler was hoping you'd be around to clarify. The Revenue doc does say only one lease though. Will be delighted if its more.
I'll have to apologise to 893bet.

I see that sentence alright, it's very ambigious........ actually it's not ambigious, it reads as you said.

Water John

SSSSHHHH, say nothing, delete this discussion.

893bet

Or does it mean if you have 3 farms leased out and were getting the max at 22.5k each for 7 years that you only get one reduction ie 22.5k tax free?

Good loser

Dinzee Conlee wrote: »

You’re right I think Water...

“You will only qualify for one reduction regardless of the number of qualifying leases you may have”

From here - https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/leasing-farm-land/index.aspx

The owner gets tax relief up to a given amount - say €15,000.
The sentence you quote states one 'reduction' not one 'lease'.
Could that mean you could aggregate the rents from several leases to make up the 15K maximum? But could not have a series of 15K leases, claiming on each.

It would be strange if one lease of 15K qualified but two leases aggregating to 15K didn't.

wrangler

893bet wrote: »

Or does it mean if you have 3 farms leased out and were getting the max at 22.5k each for 7 years that you only get one reduction ie 22.5k tax free?

No, a 22.5k reduction every year

893bet

wrangler wrote: »

No, a 22.5k reduction every year

That’s what I meant. You may have three leases that meet the requirements but the most you can get is 22.5k per year.

If the three leases were for 7 k you can claim a 21 k reduction.

893bet

A call to revenue should clarify. They are very helpful usually.

wrangler

893bet wrote: »

A call to revenue should clarify. They are very helpful usually.

Or helpful to them either........ alerting them to a reason to enforce that condition, even though they didn't mean it that way either when it was written

893bet

wrangler wrote: »

Or helpful to them either........ alerting them to a reason to enforce that condition, even though they didn't mean it that way either when it was written

I think that’s unlikely. And I am pretty sure we ain’t the first to wonder or discuss this and seek clarification.

Donald Trump

I had the same interpretation previously - that you could only have one lease.

But then I realised that others on here were doing multiple leases, and that it could be interpreted that you only get one reduction, but on your total income from rental.