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Advice needed on leasing of land

  • 23-04-2023 1:28pm
    #1
    Registered Users Posts: 3,949 ✭✭✭


    My parents are retired and have their land leased to the same person for the last five years. They have a good relationship with them and have had no problems. They could be getting a bit more for the lease but I'd say they don't want to rock the boat. I am the point of contact with the lessee because even though my parents are of sound enough mind they are a bit old to be dealing with issues like that now. So any issues that arise are dealt with by me. But there's never any no hassle, I just lodge the cheque every year and turn on or off the fencer and things like that. We used to have a contract but haven't bothered with that for the last couple of years because we don't see the point of paying an auctioneer for nothing.

    The lessee texted me this week saying that he would like to re-seed some of the fields and would be prepared to pay for it. However in return he wants to have a 7 or 10 year lease so he hasn't invested his money only to be turfed out after a year or two ( he didn't say that but that is obvious).

    I understand that completely because if he spends that kind of money he wants the peace of mind that he has the land for a certain period of time. I'd like my parents to have the peace of mind of having a guaranteed income for a number of years too. However the price of the lease is what I am thinking of. Do we agree to the same price for thelength of the lease? The price of land can fluctuate from year to year so my parents could miss out if I agree on a set amount for the length of the lease.

    I don't know too much about this side of things, it's not my decision to make anyway but as the land is in my parents name. I don't want to turn down the offer of the long-term lease because it's a a bit of a pain trying to get someone to rent land (and costs a bit too). Also they could get someone who will not look after the land. They had a guy before who was a right a#####e.

    If we say no he might not want to rent the land anymore. I was thinking a 5 year lease would be more suitable (if the money is good). Then he could re-seed a coupler of fields now and after five years re-seed a few more. My parents have a Teagasc adviser so I will ask him I think but I am just putting it on here to see what people think.



Comments

  • Registered Users Posts: 10,934 ✭✭✭✭wrangler


    Average rents are a god bit more than they were five years ago so you'd be entitled to look for a rise in this rent.

    Also if you go for a 7 - 10 year lease, look for a review of the lease at 4 - 5 years



  • Registered Users Posts: 962 ✭✭✭James 007


    Whats an average rent per acre nowdays for reasonably good land



  • Registered Users Posts: 10,934 ✭✭✭✭wrangler




  • Registered Users Posts: 20,973 ✭✭✭✭Water John


    Might be the opportunity to regularlise the arrangement again. He has opened the door for that discussion. The fact that he's a good tenant should not be overlooked.



  • Registered Users Posts: 3,949 ✭✭✭lukin



    Our guy is getting it cheap so; my parents are getting significantly less than that per acre. Most of it is good land.What he is claiming on the Basic Payment Scheme is paying for most pf the rent I'd say.



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  • Registered Users Posts: 8,610 ✭✭✭893bet


    How good is the land? What county? Is the fella renting it milking cows? Is there many lads locally milking cows?

    Rent price varies widely I think.



  • Registered Users Posts: 3,844 ✭✭✭Hard Knocks


    5 years ago good enough land was making €100-150 per acre around here, where exceptional was making up to €200



  • Registered Users Posts: 506 ✭✭✭1373


    What your parents are doing is typical of many arrangements, ie a good customer is better than a good price. But this needs to be fair to your parents also . It's easy be a good customer if your getting it well below market value. , that's where an auctioneer would be able to help you . If its worth 350 and your getting considerably less then you need to make it better. But don't forget a bad customer is as bad as it gets for any land owner.



  • Registered Users Posts: 1,416 ✭✭✭older by the day


    An auctioneer will try and catch the lessor and the the parents and end up messing up the relationship between the parents and the farmer to make money for themselves. ( I'd bring home the most scoury calf from the mart before I would draw that scum on my parents)

    Now all you have to do is talk to the owner. A tiny bit of bravery for two minutes. Say you would be delighted to lengthen the lease and you appreciate the care he is taken of the land but with the cost of living we need a bit more.

    The farmer knows well if he's getting it cheap so will be willing to bargain. You have the power as land for lease is getting very scarce . 300 for good/middling land from a good careful person would be good I think



  • Moderators, Society & Culture Moderators Posts: 3,496 Mod ✭✭✭✭Siamsa Sessions


    We have land leased out here with no auctioneer involved. And the last time we had an auctioneer involved, she was worse than useless and ended up costing us money (long story, don't ask!)

    But in the OP's scenario, a chat with two different local auctioneers might be safer in the long run. Decide after you speak to them which you are most comfortable with. This mightn't be the one who promises you the highest rent.

    If the tenant is as good as you say (and there's no reason to doubt that), then he won't mind the arrangement being "formalised" thru an auctioneer. It also gives him more security for his 5- or 7-year lease. Build in a rent review at the half-way point. Rents might be higher then or they might be the same - either way, it's fairer to everyone.

    The cost of the auctioneer can be written off against the rental income. And both parties can sleep easier at night.

    Trading as Sullivan’s Farm on YouTube



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  • Registered Users Posts: 79 ✭✭Downtown123


    Especially if they are claiming the BISS on it. As you said above they’re nearly posting nothing for it when you factor in the BISS. Maybe a quite controversial idea would be leave the rent as is and telll him to return the payments to you. I know it’s different this year with the “Greening” going to the farmer farming it but it’d be a nice top up and wouldn’t be abnormal in the current market



  • Registered Users Posts: 506 ✭✭✭1373


    I've dealings with 3 different auctioneers the past 12 months and never saw any of the issues you're mentioning , so if the op is here trying to educate themselves, then an auctioneer might be more useful



  • Registered Users Posts: 133 ✭✭massey 265


    I would also recommend going through an auctioneer because (1)they will give you a guide as to what the land in your area is worth in a lease (2)have a lease template that will have all the legal info contained that can be signed by both parties.(3)the lease should be for a period of more than 5 year duration to qualify for tax free status (4)leases usually have 2 payment times per year commonly march and september with the auctioneer receiving the payments for his client which can be more convient for both leasor and leasee.Example of lease drawn up last march for 30 acres of fair to good land for 6 years cost 300 eu to draw up lease and 100 eu annual charge through an auctioneer.Sound out an auctioneer anyway and then decide what way to go but remember a lease is a legal document and needs to be completed properly.Good luck with it.



  • Registered Users Posts: 506 ✭✭✭1373


    Most lease agreements go perfectly well , the only fear with an official lease agreement contract is that it's a legal contract signed by you and if the lessee starts acting the bo##icks and stops paying, its not simply a matter of kicking him out . And before anyone says to stop paying means breaking the contract, that's not the case . If you lock him out the you've renaged and your also liable ( as told to me by a solicitor who's dealing with such a case at present)



  • Registered Users Posts: 133 ✭✭massey 265


    I take ur point but i would still say a lease is a safer option .As u say most go ahead without any problems but u can run in to problems no matter what option one chooses.I Would imagine a legal lease would have a better standing than other agreement if a problem arises.



  • Registered Users Posts: 977 ✭✭✭morphy87


    The most important thing is to he someone that’s going to pay you, a friend of mine leased out his place a few years ago and he suffered trying to get the money, if you’re tenant is good and you have no issues with them, work with them and come to some agreement that suits everyone



  • Registered Users Posts: 3,949 ✭✭✭lukin


    I don't think I will ask an auctioneer because they have a vested interest in it; they might be hoping to be the one asked to draw up the lease agreement (and get a fee of course). We used an auctioneer the first few times we leased the land to the current tenant but then we didn't bother with him after that because me and the tenant didn't see the point of having one as we had to pay him money from the lease fee. He wasn't too pleased when we dispensed with his services and he let me know.

    I will ring my Teagasc advisor and ask him what I should do. I don't really want the responsibility of dealing with it but I have to.



  • Registered Users Posts: 20,973 ✭✭✭✭Water John


    Lease agreements come into their own when things don't run smoothly or the unexpected happens. Use a good solr, leasee has his own. It's a once off cost and they'll have a master lease to work off.



  • Registered Users Posts: 3,949 ✭✭✭lukin


    Well I spoke to him anyway and put forward my terms. I got advice from my Teagasc agent first and she advised me not to ask for too much more in rent. I asked for a bit more but not too much. I also have to factor in that the leasee is living 20 kms away from us so that costs him a bit more. He also moves the cattle off the land before the weather gets really bad in the fall of the year (our previous leasee did not). That counts for a lot with me.

    I won't say how much I asked per acre but it is a good bit below the current average rent per acre. I asked for a five year agreement instead of seven to ten and also that the fee by whoever draws up the rental agreement be split between the two of us. He didn't agree straight away, he said he would have to speak to his father first. There's no massive rush because the new lease won't start until next year. The re-seeding would have to be done before that though so we would maybe have to get that agreement drawn up and signed first.

    I don't really like dealing with issues like this because I don't want to make a mistake that would cost my father money (the land is still in his name). But I had to because he is not able to deal with things like this anymore sadly.



  • Moderators, Society & Culture Moderators Posts: 3,496 Mod ✭✭✭✭Siamsa Sessions


    You’ve opened the conversation. That’s a great step forward

    Trading as Sullivan’s Farm on YouTube



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  • Registered Users Posts: 1,043 ✭✭✭Tileman


    Exactly that’s the hard bit. Your being more than fair



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