Surrender value of AHA tenancy

glasshouse · Jan 9, 2018

chickens and wheat said:
looking at the rent we paid vs the value of the land I doubt our landlord was making stratospheric returns. we were long term aha tenants

Ten yrs ago your land was worth about £1500 per acre with a sitting tenant, today its worth £5000 with a sitting tenant
Thats a 30% return on capital per yr for ten yrs
And i didnt even count the rent

glasshouse · Jan 9, 2018

bankrupt said:
Does that mean that they're more likely to give half of it to their tenants, or less?

Dunno
They have made a packet since 07, maybe they will happily share the spoils?

Brisel · Jan 9, 2018

A sitting tenant can buy at 50% vacant possession value, therefore could ask for half the uplift in value. FBTs are more tax efficient for the landlords than AHA. Join the TFA - this is a common question.

multi power · Jan 9, 2018

glasshouse said:
Landlords return on capital these past ten years has been stratospheric

How can you say that? How much is the rent, £150 an acre? Not much of a return on a 10k assett

chipchap · Jan 9, 2018

multi power said:
How can you say that? How much is the rent, £150 an acre? Not much of a return on a 10k assett

It is a fair return on an asset, the value of which rises in line with inflation in the long term.

multi power · Jan 9, 2018

chipchap said:
It is a fair return on an asset, the value of which rises in line with inflation in the long term.

It's a joke in terms of return, would it even pay the interest if the land was mortgaged ?

chipchap · Jan 9, 2018

multi power said:
It's a joke in terms of return, would it even pay the interest if the land was mortgaged ?

Should it pay the interest?
The interest is the cost of the money borrowed to buy the land, not the cost of owning the land. There is a subtle difference in that the value of money stays the same in £ terms, whereas the value of land rises perhaps in line with inflation.

glasshouse · Jan 9, 2018

multi power said:
How can you say that? How much is the rent, £150 an acre? Not much of a return on a 10k assett

what about the capital growth?

glasshouse · Jan 9, 2018

multi power said:
It's a joke in terms of return, would it even pay the interest if the land was mortgaged ?

if the said tenanted land was bought in 2007 for £1500/ac, the interest @ 5 % would be £75

glasshouse · Jan 9, 2018

Brisel said:
A sitting tenant can buy at 50% vacant possession value, therefore could ask for half the uplift in value. FBTs are more tax efficient for the landlords than AHA. Join the TFA - this is a common question.

Fbt is not more tax efficient for landlords.
A new AHA tenancy created after 1995 enjoys the same tax reliefs.

multi power · Jan 9, 2018

glasshouse said:
if the said tenanted land was bought in 2007 for £1500/ac, the interest @ 5 % would be £75

Was there any land for 1500 an acre in 07 ?

glasshouse · Jan 9, 2018

multi power said:
Was there any land for 1500 an acre in 07 ?

with a sitting tenant remember
there was land nearby at £2,300 with vacant possession in 07

Brisel · Jan 9, 2018

glasshouse said:
Fbt is not more tax efficient for landlords.
A new AHA tenancy created after 1995 enjoys the same tax reliefs.

Are there many of those?

multi power · Jan 9, 2018

glasshouse said:
with a sitting tenant remember
there was land nearby at £2,300 with vacant possession in 07

And what rent would the sitting tenant been paying ?

glasshouse · Jan 9, 2018

Brisel said:
Are there many of those?

thats not the point.
i know where tenants have been asked to surrender and regrant an aha to get the tax relief (me)
and quite a few others

glasshouse · Jan 9, 2018

multi power said:
And what rent would the sitting tenant been paying ?

your guess

DRC · Jan 9, 2018

multi power said:
How can you say that? How much is the rent, £150 an acre? Not much of a return on a 10k assett

Most estates weren’t bought for 10k, they were bought for much less , often generations ago. So not the tenants fault that land values have increased so much.
If they want to sell, which most don’t, then offer the sitting tenant a decent payout.
After all the tenant and his family have bought the farm many times over in rent.

d williams · Jan 9, 2018

glasshouse said:
Ten yrs ago your land was worth about £1500 per acre with a sitting tenant, today its worth £5000 with a sitting tenant
Thats a 30% return on capital per yr for ten yrs
And i didnt even count the rent

You sure those figures are right ?

DRC · Jan 9, 2018

Brisel said:
A sitting tenant can buy at 50% vacant possession value, therefore could ask for half the uplift in value. FBTs are more tax efficient for the landlords than AHA. Join the TFA - this is a common question.

I believe it’s not the case if your landlords are trustees.

Brisel · Jan 9, 2018

silverfox said:
I believe it’s not the case if your landlords are trustees.

My landlords are trusts. No 10 year charges on FBTs, unlike AHAs.

Surrender value of AHA tenancy

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0 %

Up to 25%

25-50%

50-75%

75-100%

100% I’ve had enough of farming!

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