AHA Land value

[Overby]

If splitting a family business and one party takes more land (AHA) what value should go on this?

Obviously the land offers the chance of 'x' amount of income every year in perpetuity so needs to be compensated for correctly.

Any experience?

 

[Surgery]

If splitting a family business and one party takes more land (AHA) what value should go on this?

Obviously the land offers the chance of 'x' amount of income every year in perpetuity so needs to be compensated for correctly.

Any experience?

Sounds a minefield

 

[GB Kettering]

Good afternoon, whilst this looks like a simple question the background; details of the tenancy, age of the tenant, etc etc will add up to make it quite complicated. But making a lot of assumptions the market value of land with a young and healthy AHA tenant is reduced to 60% so it would stand to reason the the value of that tenancy is 40% of market value. I would start there. I would be happy to take a more detailed look at your issue, send me a message if you would like to get in touch.

 

[Overby]

Good afternoon, whilst this looks like a simple question the background; details of the tenancy, age of the tenant, etc etc will add up to make it quite complicated. But making a lot of assumptions the market value of land with a young and healthy AHA tenant is reduced to 60% so it would stand to reason the the value of that tenancy is 40% of market value. I would start there. I would be happy to take a more detailed look at your issue, send me a message if you would like to get in touch.

 

[Overby]

Thanks for that.

There's another generation after the current one still to go so a long lifespan.

The value of it is in essence 40% of the acreage x market value (if the land were to be sold)?

 

[Still Farming]

Thanks for that.

There's another generation after the current one still to go so a long lifespan.

The value of it is in essence 40% of the acreage x market value (if the land were to be sold)?

If they want to farm? Is it?

 

[Overby]

If they want to farm? Is it?

Splitting a family farm between 2 siblings, both continuing farming.

 

[GB Kettering]

Thanks for that.

There's another generation after the current one still to go so a long lifespan.

The value of it is in essence 40% of the acreage x market value (if the land were to be sold)?

That is where I would start any discussions yes.

 

[chipchap]

.....on the other hand you have to think about the potential sale value. The AHA tenancy has no sale value as such. For example if one son gets the tenancy, and then dies in a car accident, his wife will have no asset to sell, whereas the wife of the son getting freehold property will be better off if her husband died. Perhaps you should take into account the premiums of a good life insurance policy?

 

[Overby]

Market value. If not it might as well be split equal and sold by the one who doesn’t want as much. The one who sells their excess will be the tenant of the sold bit if everything else is equal and can relinquish their tenancy to sell what they want from their share.

It's all on an AHA now (which is being split into 2 new AHA's), nothing to 'sell' as such? Trying to work out the value of the extra acreage taken by one side.

 

[Overby]

I understand this. It has to be calculated at market value then.

You could take yours with your new AHA and the sibling theirs equally if you wished and then sell what they want at market value as it’s your land with your agreement to do as you wish with it. I’m not saying either of you wants to sell anything but it is worth what the market will pay so it needs to be divided up this way imo.

Ta, I wasn't being rude, it's just a tricky one to get the head around.

On similar terms, how would you value buildings given up by one party?

 

[Overby]

It's on an existing AHA....., outside owner.

Existing AHA now being split (very generously by LL) into 2 new AHAs.

 

[DRC]

It's on an existing AHA....., outside owner.

Existing AHA now being split (very generously by LL) into 2 new AHAs.

Will it be a proper AHA, or two new FBTs on AHA terms.
I am surprised any NEW AHAs can be started.I would take advice from TFA .

 

[4course]

It's on an existing AHA....., outside owner.

Existing AHA now being split (very generously by LL) into 2 new AHAs.

whatever happens in terms of trying to be fair will ultimately result in one party feeling ripped off ,that im afraid is just life because within a few years circumstances will change for one or both parties regardless of the best intentions

 

[Overby]

Will it be a proper AHA, or two new FBTs on AHA terms.
I am surprised any NEW AHAs can be started.I would take advice from TFA .

2 standard aha's, continuing where old one left off

 

[Overby]

whatever happens in terms of trying to be fair will ultimately result in one party feeling ripped off ,that im afraid is just life because within a few years circumstances will change for one or both parties regardless of the best intentions

1 party is already a nightmare

 

[DRC]

2 standard aha's, continuing where old one left off

Are you a member of the TFA ?

 

[Overby]

TBF, it's just some rough guidance Im after as most is nailed on. Just your standard family whining and head burying to deal with. A is worth roughly X and B is worth roughly Y, job done. Things change!

 

[chipchap]

Get someone to toss a coin.
whoever wins splits the assets in two.
then the other one chooses which half they want.

 

[Overby]

Get someone to toss a coin.
whoever wins splits the assets in two.
then the other one chooses which half they want.

One half wants everything......