looking to purchase, need advice

[NWfellow]

hi all,
I am looking to diversify my portfolio, and considering buying farmland, to rent out, not to try and achieve 'the good life'
I am currently a residential landlord, who my tenants would consider a nice guy. (am sure we all do!!)
so, long story short, is it worth investing in land, be it arable or livestock grazing, not being involved with the day to day, interfering with someone's livelihood or being a pain in the posterior for someone who works hard for a living?
what are the pros/cons for both me and any potential tenant?
thank you

 

[betweenthelines]

Sniff, sniff

 

[NWfellow]

Sniff, sniff

sorry??

 

[Ffermer Bach]

https://bkcrm.agencypilot.com/crm/store/documents/other/17430_9yt4w727p23wrc2h.pdf

 

[HatsOff]

It doesn't make financial sense since it'll never pay for itself via rental income. Realistically you'd be buying for £12k/acre, renting out at £120/acre.

At best it'll achieve 1% return so won't outpace inflation and if you have cash there are a lot of other things you can do with it.

People buy farmland because they either:
- want to farm it/make it part of the family farm so ROI is irrelevant or less palpable
- hope for price rises in the land itself
- gamble on future development
- want to protect their view or immediate locality
- other business ideas

But if you're looking for ROI, it's not a good idea.

 

[GeorgeK]

The reason people like Dyson buy farm land is because there are inheritance tax benefits if you farm it yourself, but you won't qualify for this by letting it out. Remember once the BPS subsidy has gone in 2027 rents could reduce significantly. Finally it's not as simple as letting it out to whoever will pay the most because you run the risk of having the land damaged by farmers pushing it too hard and not looking after it.
As above your ROI in the form of rent will be very poor.

 

[betweenthelines]

sorry??

Seems a bit odd that you come on here to get info rather than speak to Land agents, Accountant and lenders about things like prices, rents, tenant security of tenure, landlord obligations, lending criteria and interest rates.

Presume you haven't got £2 or £3 million burning a hole in your pocket that you want to tie up for a minimum 10 years?

Also a house tenant wanting a new immersion, will seem a piece of cake when your farm tenant says he wants you to spend £200k on livestock buildings.

 

[chipchap]

It doesn't make financial sense since it'll never pay for itself via rental income. Realistically you'd be buying for £12k/acre, renting out at £120/acre.

At best it'll achieve 1% return so won't outpace inflation and if you have cash there are a lot of other things you can do with it.

People buy farmland because they either:
- want to farm it/make it part of the family farm so ROI is irrelevant or less palpable
- hope for price rises in the land itself
- gamble on future development
- want to protect their view or immediate locality
- other business ideas

But if you're looking for ROI, it's not a good idea.

That list is incomplete.
Inheritance Tax relief is the major consideration for many wealthy people buying land and farms.

The reason people like Dyson buy farm land is because there are inheritance tax benefits if you farm it yourself, but you won't qualify for this by letting it out. Remember once the BPS subsidy has gone in 2027 rents could reduce significantly. Finally it's not as simple as letting it out to whoever will pay the most because you run the risk of having the land damaged by farmers pushing it too hard and not looking after it.
As above your ROI in the form of rent will be very poor.

Wrong.
Land let out before I think 1995 attracts 50% relief after a qualifying period.
Land let out since attracts 100% relief after a qualifying period. This includes land let on an AHA tenancy where a succession has taken place since 1995, if that is indeed the correct date.

 

[Still Farming]

The reason people like Dyson buy farm land is because there are inheritance tax benefits if you farm it yourself, but you won't qualify for this by letting it out. Remember once the BPS subsidy has gone in 2027 rents could reduce significantly. Finally it's not as simple as letting it out to whoever will pay the most because you run the risk of having the land damaged by farmers pushing it too hard and not looking after it.
As above your ROI in the form of rent will be very poor.

Or off setting buying land instead of paying tax possibly?

 

[NWfellow]

It doesn't make financial sense since it'll never pay for itself via rental income. Realistically you'd be buying for £12k/acre, renting out at £120/acre.

At best it'll achieve 1% return so won't outpace inflation and if you have cash there are a lot of other things you can do with it.

People buy farmland because they either:
- want to farm it/make it part of the family farm so ROI is irrelevant or less palpable
- hope for price rises in the land itself
- gamble on future development
- want to protect their view or immediate locality
- other business ideas

But if you're looking for ROI, it's not a good idea.

was thinking more of a way to protect my money from inheritance tax to be honest. i don't want to work hard to have it stolen by the corrupt government!!

 

[NWfellow]

Seems a bit odd that you come on here to get info rather than speak to Land agents, Accountant and lenders about things like prices, rents, tenant security of tenure, landlord obligations, lending criteria and interest rates.

Presume you haven't got £2 or £3 million burning a hole in your pocket that you want to tie up for a minimum 10 years?

Also a house tenant wanting a new immersion, will seem a piece of cake when your farm tenant says he wants you to spend £200k on livestock buildings.

this was just my first stop for opinions and advise/experiences. i am presuming some people on here will be landlords, others tenants, so just looking for feedback.

 

[Formatted]

I mean if you want to buy a farm and rent it to me I'm all ears

 

[Ffermer Bach]

this was just my first stop for opinions and advise/experiences. i am presuming some people on here will be landlords, others tenants, so just looking for feedback.

did you look at the link I shared and contact the agents?

 

[NWfellow]

did you look at the link I shared and contact the agents?

i did see the link, thank you. and i have some calls set up with some agents. much appreciated

 

[Ffermer Bach]

I think in some respects, it depends on how much you are worth, but advice from a good inheritance tax accountant may be a good place to start (I am sure only worth it if you have at least £1 000000 to invest as a minimum).

 

[NWfellow]

I think in some respects, it depends on how much you are worth, but advice from a good inheritance tax accountant may be a good place to start (I am sure only worth it if you have at least £1 000000 to invest as a minimum).

thanks, i know there are ways and means of salting money away, but also want to do something with it too. i do have a bit that i need to save from the clutches of the tax man

 

[Highland Mule]

If all you want is to avoid IHT, stick it into a trust fund for the next generation and then get the trust to invest in stocks and shares. Farmland carries responsibilities and ongoing costs in both time and money - if you don't manage to look after it yourself you will likely get taken for a ride by either your tenant, your land agent or both.

What sort of sum are you looking to hide anyway? £1M, £2M, more?

 

[NWfellow]

If all you want is to avoid IHT, stick it into a trust fund for the next generation and then get the trust to invest in stocks and shares. Farmland carries responsibilities and ongoing costs in both time and money - if you don't manage to look after it yourself you will likely get taken for a ride by either your tenant, your land agent or both.

What sort of sum are you looking to hide anyway? £1M, £2M, more?

i would hope not to get taken for a ride, i kinda feel that people are above board, maybe i'm too naive? but treat folk well, and they should treat you well back??
i want to avoid responsibilities not by being gash, but by leasing the land out?

yeah, about that amount

 

[Highland Mule]

i would hope not to get taken for a ride, i kinda feel that people are above board, maybe i'm too naive? but treat folk well, and they should treat you well back??
i want to avoid responsibilities not by being gash, but by leasing the land out?

yeah, about that amount

I wouldn't advise it, as you will be sewn up somewhere. Stick to whatever industries you have an understanding of as farming is far more complex than you would otherwise realise.

 

[NWfellow]

I wouldn't advise it, as you will be sewn up somewhere. Stick to whatever industries you have an understanding of as farming is far more complex than you would otherwise realise.

thank you. and I'm not being sarcastic or rude. I don't think of farming as simplistic either, I couldn't do it, that's for sure. that's why I was thinking hands off approach
just looking for an honest way to stash money!!