News Farmland
New Flemish leasing law supports young farmers
Just like in our country, the lease law in Flanders is a hot topic. We worked for almost ten years to update the 35-year-old lease law. This new law focuses on the young farmer at the expense of long-serving tenants. This cannot count on the support of all interest groups in Flanders.
After Wallonia, Flanders now also has a new lease law. In their own words, this must be transparent, balanced and contemporary. In concrete terms, this means that young farmers enjoy a preferential position and that the rights of landowners are better defended in law. Yet not all agricultural advocates are happy. The organization for young farmers (Groene Kring) is satisfied with the end result, but the General Farmers Syndicate, among others, is not, nor is the organic Farmers Forum. The Boerenbond, the largest interest group, has supported the new law.
Verbal agreements
The old law, dating from 1988, was very outdated. For example, this law had a provision whereby lease agreements did not have to be drawn up in writing, but that an oral agreement was also legally valid. That led to uncomfortable situations. The new lease law changes that. As in the Netherlands, all parties agreed that reform was necessary, but how exactly is a hot topic.
Of the 619.800 hectares of agricultural land in Flanders, more than 60% is issued in short or long-term leases. The new law therefore has a major impact on the sector. It is therefore not surprising that the federal government has been reforming that law since 2014. Wallonia already did this in 2019. A goal within the lease law is to promote land mobility. That is why the part of the country is trying to relax the requirements for both tenant and lessor. Young farmers can more easily obtain leased land and lessors receive a shorter notice period.
Pre-emptive right
In addition to the mandatory written lease agreement, there will be a digital counter stating who actually exploits the land. If a landowner wants to sell his leased land, he can now do so after eighteen years instead of 27 years previously. The tenant's right of pre-emption (right of first purchase) remains intact. A young farmer is given a preferential position in this right over a retired farmer. If they continue to farm actively, they must be able to appoint a successor. If this is not possible, the lease may be terminated.
Under Flemish law, tenants have the right to sublet the land. This will continue to exist, but transferring the right of pre-emption to a third party is no longer possible. If the owner wants to sell his land, he must do so to a so-called safe buyer. He is then obliged to lease the land for a minimum of eighteen years. Plots up to 1,5 hectares have a term of at least nine years. An exception to that rule is when forest is planted on the plot. Then the term expires.
Expansion of offer
It is precisely this exception for afforestation that concerns the interest groups (among others). The new law also offers no tax incentive for lessors to lease land. Nevertheless, the Boerenbond believes that the new law will remove many old problems and expand the land supply for companies.
Tightness on the Flemish land market is clearly noticeable. The average rental price increased by almost half in ten years, to an average of €424 per hectare for arable land and €354 per hectare for grassland. Rental prices in our southern neighbors do not have annual indexation but a local coefficient. This means that a lease price committee per province and per region annually determines the lease standard based on the financial capacity of farmers in that region and the evolution of land prices. This means that in areas with high-yielding crops, rents can rise sharply every year. That is precisely a bottleneck in the lease file.
Niels van der Boom
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
