Exiting farming

[e3120]

Does that then mean that the land sold by the farmer is no longer eligible for subsidy and is therefore potentially worth less?
Sounds a bit of a con all round to me?

I suppose you can't expect cake and to eat it. But what's the loss to a buyer - maybe 4 years at the end of the taper - £200/ac?

Most interested if the same applies in general. Is land sold after the delinking reference period, possibly behind us, effectively bare?

 

[heritagefarmer]

Does that then mean that the land sold by the farmer is no longer eligible for subsidy and is therefore potentially worth less?
Sounds a bit of a con all round to me?

No land will be eligible for BPS come 2028. But will be eligible for ELMS. I think I heard a minister say in an interview the land would not have to be sold, it could be rented out.

 

[Goweresque]

Off topic, but isn't ELMS going to make selling your farm a lot harder/more complicated? ELMS schemes are presumably going to be fixed length, possible up to a decade, so either the vendor is going to have to wait until his scheme ends before being able to offer it free of any encumbrances, or try and find a buyer who will take on the ELMS legal agreement from him. If one goes into a particularly complicated and onerous ELMS agreement, and then something happens that means the farm must be sold (a divorce, death or bankruptcy say) surely that will have devalued the farm? Buyers will demand a price cut in order to compensate for the work required under the ELMS scheme. This is especially going to apply if a landowner has entered one of these multi-party schemes - getting out of that won't be easy/possible, and the new owner may not be as keen on the terms as the old one.

 

[Dry Rot]

Give new entrants a start.
https://ecologicalland.coop/

Doesn't apply in Scotland.

 

[7610 super q]

Do you like living where you do ? Could you find somewhere equally as nice to live ? How much would the replacement place cost ?
I'd stay put and rent out the land. Bit of income, nice house, nice location ( unless you've got aerosol neighbours )

 

[Dry Rot]

Anyone have any experience of this? I am a staunch believer that there is no such thing as a free lunch and I am highly suspicious! Has anyone here even heard of it? Land agents looking for clients?

About Us | Scottish Land Matching Service

slms.scot

 

[Y Fan Wen]

Off topic, but isn't ELMS going to make selling your farm a lot harder/more complicated? ELMS schemes are presumably going to be fixed length, possible up to a decade, so either the vendor is going to have to wait until his scheme ends before being able to offer it free of any encumbrances, or try and find a buyer who will take on the ELMS legal agreement from him. If one goes into a particularly complicated and onerous ELMS agreement, and then something happens that means the farm must be sold (a divorce, death or bankruptcy say) surely that will have devalued the farm? Buyers will demand a price cut in order to compensate for the work required under the ELMS scheme. This is especially going to apply if a landowner has entered one of these multi-party schemes - getting out of that won't be easy/possible, and the new owner may not be as keen on the terms as the old one.

Depends whether the buyer sees the agreement as an asset or a liability. If it's a liability why would the vendor have entered it?

 

[Goweresque]

Depends whether the buyer sees the agreement as an asset or a liability. If it's a liability why would the vendor have entered it?

Because different people see things in different ways? What I might think was a reasonable amount of work/hassle in return for £X in ELMS payments you might not. Or indeed you might have entirely different plans for how you want to farm your new investment. But when you're selling a property you want as many interested parties as possible - by having restrictions on what the purchaser can do with the land after he shells out his cash surely thats going affect a) the number of interested parties and b) how much they are prepared to offer? There's also the fact that as purchaser you are going to have to enter legal negotiations with Defra to get them to swap the agreement over, knowing their usual speed level thats not going to be quick. And who pays for the extra costs of transferring the agreement, buyer or seller?

 

[BiomassMan]

@Dry Rot where abouts in the highlands are you.

 

[Dry Rot]

@Dry Rot where abouts in the highlands are you.

Somewhere to the south of where you intend to be!

 

[BiomassMan]

Somewhere to the south of where you intend to be!

I should update my profile, we have been up in sunny caithness for a while now.

 

[Clive]

Hows about a sideways view on the subject?
The biggest barrier to exit is mindset. Quitting farming isn't taking the easy option, it's actually the hardest. It's not giving up, it's choosing to live. It's not weakness, it's standing up and saying "I'm not afraid of what others think, I will never be trapped or bullied, I will never stop moving forwards and I will always do what's best for me and mine"

How much punishment do we accept, ever heard of Stockholm Syndrome? Psychiatrist Dr Frank Ochberg explains how hostages/the abused can fall in love with their captors:
"...they experience a type of infantilisation - where, like a child, they are unable to eat, speak or go to the toilet without permission. Small acts of kindness - such as being given food - prompts a primitive gratitude for the gift of life. They are in denial that this is the person who put them in that situation. In their mind, they think this is the person who is going to let them live."

good, thought provoking, post !

 

[Banana Bar]

Off topic, but isn't ELMS going to make selling your farm a lot harder/more complicated? ELMS schemes are presumably going to be fixed length, possible up to a decade, so either the vendor is going to have to wait until his scheme ends before being able to offer it free of any encumbrances, or try and find a buyer who will take on the ELMS legal agreement from him. If one goes into a particularly complicated and onerous ELMS agreement, and then something happens that means the farm must be sold (a divorce, death or bankruptcy say) surely that will have devalued the farm? Buyers will demand a price cut in order to compensate for the work required under the ELMS scheme. This is especially going to apply if a landowner has entered one of these multi-party schemes - getting out of that won't be easy/possible, and the new owner may not be as keen on the terms as the old one.

I may be wrong but I think HLS agreements need to be continued if land is sold?

 

[B'o'B]

On Mid tier, if the buyer didn’t want to carry on the scheme would be the seller who would have to pay back the scheme monies they had claimed.

 

[2tractors]

Hows about a sideways view on the subject?
The biggest barrier to exit is mindset. Quitting farming isn't taking the easy option, it's actually the hardest. It's not giving up, it's choosing to live. It's not weakness, it's standing up and saying "I'm not afraid of what others think, I will never be trapped or bullied, I will never stop moving forwards and I will always do what's best for me and mine"

How much punishment do we accept, ever heard of Stockholm Syndrome? Psychiatrist Dr Frank Ochberg explains how hostages/the abused can fall in love with their captors:
"...they experience a type of infantilisation - where, like a child, they are unable to eat, speak or go to the toilet without permission. Small acts of kindness - such as being given food - prompts a primitive gratitude for the gift of life. They are in denial that this is the person who put them in that situation. In their mind, they think this is the person who is going to let them live."

3 years ago we gave up our tenancy, 115 acres, intensive lowland sheep farm. Approaching state pension, children had taken their own paths not interested in farming. The reactions from some close neighbours were exactly this, one couldn't get his head around it (what are you going to do!!!) another said that's great because I can stop farming now without pressure from my peers.

It was the right decision we haven't missed it at all, I have another job which brings me in contact with farmers so I keep up with the industry. So to the OP do what ever works for you we are only on this earth for a short time.

As an aside the work I do at the moment is close to the development of ELMs and I am afraid a lot of farms will need to do some serious thinking about the future as direct payments are withdrawn.

 

[Will Wilson]

Another way to think of it 'what would I do if all I wanted was to maximise the financial return as I leave agriculture (being totally ruthless, ignoring any emotions)'.

I am not saying this is the only consideration but people forget money give you options and you can only sell 'it' once.

 

[Dry Rot]

I should update my profile, we have been up in sunny caithness for a while now.

I'm about 40 miles north of Inverness, so relatively snow and midge free.

 

[Goweresque]

I may be wrong but I think HLS agreements need to be continued if land is sold?

There's not so many of those around though is there? ELMS is going to be the major source of public funds to agriculture once BPS disappears, so a large % of land will end up covered by such agreements. And HLS is often on land that already has statutory protection anyway, SSSIs, ancient monuments, that sort of thing. So what you can do with the land is restricted anyway, regardless of there being a HLS agreement in place.

My guess is that if you took a 'normal' farm, entered it into a HLS agreement that significantly restricted the future usage of the land, plus ran a risk that when the agreement ended your responsibilities would continue due to the new 'high value' environmental features, then the open market value of that farm would be lowered as a result.

Put it this way - given the choice between Farm A with HLS in place and Farm B next door without, which would you bid on?

 

[puppet]

Doesn't apply in Scotland.

There is a Scottish Land Matching scheme. NFUS has been involved and one of the senior Scot Gov guys was coordinating it and I heard his presentation. They had helped around 40.
You provide the infrastructure and experience, the entrant the grunt. There is legal stuff but you can imagine there has to be a lot of trust as they may want to do something quite different but the place is maintained, your menagerie stays, you get some income and don't have to move. No capital gains selling up and buying a wee pensioners house in Dingwall.
If you are single then what are you going to do with it? Various charities, that nephew who phones you twice a year or could you set up something to get a keen young person on the ladder. That would be a nice legacy.

 

[heritagefarmer]

There's not so many of those around though is there? ELMS is going to be the major source of public funds to agriculture once BPS disappears, so a large % of land will end up covered by such agreements. And HLS is often on land that already has statutory protection anyway, SSSIs, ancient monuments, that sort of thing. So what you can do with the land is restricted anyway, regardless of there being a HLS agreement in place.

My guess is that if you took a 'normal' farm, entered it into a HLS agreement that significantly restricted the future usage of the land, plus ran a risk that when the agreement ended your responsibilities would continue due to the new 'high value' environmental features, then the open market value of that farm would be lowered as a result.

Put it this way - given the choice between Farm A with HLS in place and Farm B next door without, which would you bid on?

Using the suggestion that "a large percentage of land will end up covered by such agreements (ELMS)" Could we presume that it will only be the most productive land that survives a chance of surviving without the need for public funds to prop its business up. Then the less productive land could either be viewed as less valuable because of the ELMS 'restrictions' or could be seen as maintaining its value because of the income from the public funds received.

If public funds were not received on the least productive land, by its very nature it would then surely be less valuable to the owner.

This is all discussed without a mention of inheritance relief tax, whilst this still applies do you think it would trump any effects of ELMS on land value?