Shaping the future of animal health

Leasing Legends

Could leasing land be a good option for you?

More and more producers are choosing to lease land instead of buying.

Leasing offers flexibility for producers, and can bring land owners an additional source of income – but it’s worth being careful about a leasing arrangement.

Often, the land owner and lessee casually negotiate the terms of their lease, but this type of casual agreement isn’t recognised by laws, and when facing a dispute, can leave those involved short-changed.

If you’re sure you want to go ahead with a lease, there are three main factors to consider:

  • Length of lease
  • Cost of the lease
  • Responsibilities

Length of lease

The length of lease can vary from anywhere between a few months and many years. When dealing with long leasing contracts, both the lessor and the lessee should be mindful of risks including land price increases or decreases and consider how to address shifts in seasonal productivity. It may be of benefit to address the handling of these situations in the lease.

Cost of the lease

Before setting a rental price, or before signing a lease agreement, it is important to research past prices for that parcel of land, as well as pricing trends in the area. The price depends on a variety of factors, including available water, soil type, seasons and yields, and carrying capacity. A land owner may choose to have an economic valuation done in order to set a price for the pre-determined return and productivity of the land. This could help decide their asking lease price.

Provisional Responsibilities

Generally, land owners are responsible for providing land, infrastructure and payment of council rates and insurance on fixed assets; while tenants are responsible for labour, machinery and livestock. More questionable responsibilities include: power and other utility payments, general maintenance of assets, and livestock monitoring.

It is critical to ensure that these responsibilities are clearly laid out in your rental contract and that all parties agree on the terms of the lease and the responsibilities of each party.

Where to find help?

Whatever you do, don’t leave anything to chance. A legal contract that addresses these factors is an upfront cost that could save you thousands of dollars whether you’re the landowner or the lessee.

Most state governments have legislation surrounding leasing agricultural land, and you may be able to seek counsel from stock station agents, who can help you navigate the tricky world of land leasing.

There are also many reputable sources available to reference when investigating leasing possibilities: