Land prices

[jackrussell101]

Just out of interest what percentage of purchased land is made up by debt?, and what by cash?

 

[Doing it for the kids]

Just out of interest what percentage of purchased land is made up by debt?, and what by cash?

Surely depends on buyer?

For developers it would be debt, for most farmers it’s roll over, for a few it’s hard earned cash.

For ‘others’ I’d say cash from London sales from sell up / other sector business profit.

For those bank holiday caravan parks it’s def untaxed cash!

 

[midlandslad]

Most farmers would be borrowing in my experience plus rollover.

 

[icanshootwell]

There must be a large proportion of farmers that have bought land on interest only in the last 20/30 years, to not be able to repay the capital as well is something I would not do. I can't make enough per acre to make buying land at today's price an attractive option. You need cash in the bank IMO or do less work and don't worry about your neighbors. Debt is good when you can pay the bank and make a profit. The % from building rollover etc must be very small in the UK.

 

[midlandslad]

There must be a large proportion of farmers that have bought land on interest only in the last 20/30 years, to not be able to repay the capital as well is something I would not do. I can't make enough per acre to make buying land at today's price an attractive option. You need cash in the bank IMO or do less work and don't worry about your neighbors. Debt is good when you can pay the bank and make a profit. The % from building rollover etc must be very small in the UK.

Yea, I would think that a large proportion of larger loans will be on the interest only option. These loans are great as it gives you the option to repay when there is surplus cash, but unless there is a windfall most businesses just don’t bother.

there will be a lot of the next generation that will be given the farm and the interest only loans, therefore all they can hope for in their farming career is to get it repaid, whereas dad was the successful one that bought the farm!

A lot of people forget that the loan capital has to be repaid after tax. So to repay £600k capital you need to earn £1m.

 

[teslacoils]

Interest only allows you to invest better. If I make £40k, do I want to a) invest all that in the farm business in something that may be 100 percent tax deductable, and pay a ten percent return, or do I want to pay 30 percent of it as tax to repay some capital that really pays maybe three percent? At least interest only gives you the option...if you're making profit. Which you should be as terms of your loan.

 

[fudge]

Yea, I would think that a large proportion of larger loans will be on the interest only option. These loans are great as it gives you the option to repay when there is surplus cash, but unless there is a windfall most businesses just don’t bother.

there will be a lot of the next generation that will be given the farm and the interest only loans, therefore all they can hope for in their farming career is to get it repaid, whereas dad was the successful one that bought the farm!

A lot of people forget that the loan capital has to be repaid after tax. So to repay £600k capital you need to earn £1m.

The capital could be repaid with a future capital disposal. In that case the cost wouldn’t necessarily be £1m for a £600k repayment. Due consideration should also be given to where the assets are held. The chap in charge of HMRC is quite helpful in these matters…….

 

[Oilseed]

The great thing with an interest only loan is that inflation is paying the capital back tax free.

 

[goodevans]

The capital could be repaid with a future capital disposal. In that case the cost wouldn’t necessarily be £1m for a £600k repayment. Due consideration should also be given to where the assets are held. The chap in charge of HMRC is quite helpful in these matters…….

A capital disposal may incur tax though if outside the rollover threshold period, I get what your saying about Rishi though

 

[midlandslad]

How long is Rishi and the conservatives going to be in power though?

 

[Bossfarmer]

if your paying an interest loan am i right in saying you can offset the monthly interest payments against tax meaning it might cost you very little?

 

[midlandslad]

if your paying an interest loan am i right in saying you can offset the monthly interest payments against tax meaning it might cost you very little?

Similar to paying a rent in terms of tax treatment. 5% interest on £10k is a £500/ac rent though.

 

[fudge]

A capital disposal may incur tax though if outside the rollover threshold period, I get what your saying about Rishi though

In the context of doing it for the next generation there can be a capital uplift on death which doesn’t attract CGT, likewise is exempt from IHT.

 

[Yale]

How long is Rishi and the conservatives going to be in power though?

Indeed, it won't be long the man on the street will be muttering ‘off with their heads’.

As long as inflation is running at high levels and money is being printed the value of land in £’s can only go one way.

 

[Bossfarmer]

In the context of doing it for the next generation there can be a capital uplift on death which doesn’t attract CGT, likewise is exempt from IHT.

doesnt sound like the worst idea then?

 

[fudge]

doesnt sound like the worst idea then?

Matter of opinion I guess. We hear land prices are increasing so the demand is there.

 

[jackrussell101]

What sort of interest rates on long term loans are available atm for say 25 year loan on variable, 5%?

 

[midlandslad]

What sort of interest rates on long term loans are available atm for say 25 year loan on variable, 5%?

Over 4% I would think. All good on interest only until values slide

 

[Weasel]

It’s all about location!

Blocks of 100 acres go for 15-20k / ac here.

Some 3 acre pony padddock potentials are £100k

I don’t think Some of you Northen monkey’s who wear those skirts realise Just how variable land prices are.

Granted as a % of total uk sales this area wont be high but averages are just that

Ah, so is that why you English idiots come up here and buy it, then make a tit of it??

 

[Doing it for the kids]

Ah, so is that why you English idiots come up here and buy it, then make a tit of it??

Quite possibly but I can’t talk from experience. Im led to believe my ancestors Flogged the castle a long time back!