FOR RETIRING FARMERS AND THEIR FAMILIES
Can someone take over your farm if they have no money?
By Sam Marwood
Not by buying it outright. But someone with the skill and little capital can get onto your farm and earn their way in. Share farming and a flexible lease put them to work while you keep the land. Lease to buy and vendor finance are ways they come to own it.
Share farming
You keep the land, they do the work, and you share the seasons. You hand over day to day control to someone running their own business on your place, and in the typical arrangement they fund a share of the inputs before any income arrives. See how share farming works.
A flexible lease
The land stays yours and the rent comes without the physical work, a lower base plus a share of the farm's operating profit. You carry part of the season, and the lease puts off the succession question rather than answering it. See how a flexible lease works.
Lease to buy
They lease for a set period, then can choose to buy at the price you agreed up front, and you keep the title and the rent until then. The choice is theirs, and any rise in land value beyond the agreed rate goes to the buyer. See lease to buy for the owner.
Vendor finance
This is a sale. They pay a deposit and you lend them the rest, so the farm becomes theirs and you become the lender. How the title moves depends on how it's set up, so ask your solicitor which way yours works. It can work for a buyer a bank won't lend to, but your money stays in the farm until the loan is paid off. See vendor finance.
Judging the person
Of everything you decide about stepping back, who farms your land next matters most. Look for skills, attitude and values, and a genuine commitment to the land and the community. Some savings still show they're good with money.
You can find their referee's number yourself, ring, and ask for one other person who knows their work, then ask for a farm plan and the figures to take to your accountant.
Start with a paid trial season, before any lease, share farm or path to buy in, with an end date and a way for either of you to stop, drafted by your lawyer before anyone starts. Until the full arrangement is signed, don't lend money or guarantee a loan.
Take it to your advisers
An agricultural accountant, and a solicitor who has done farm transitions, are the people to take it to. A suburban conveyancer and a general tax accountant are the wrong tools.
In one case a lease to buy fell apart once the tax on the sale was clear. That's a reason to take advice in the first month. See what kills a lease to buy and the questions to ask before vendor finance.
Read more: Who could run your farm when you step back? and How do you know the next farmer will look after your farm?.
This is general information, not legal or tax advice.
The full guide, Ageing on Farm, is free at cultivatefarms.com/resources.
You can build your own plan at cultivatefarms.com/plan.