Interview Paul Kindt
What exactly is wrong with the lease policy?
The Private Land Ownership Federation (FPG) has informed Minister Carola Schouten (Agriculture, Nature and Food Quality) that there is dissatisfaction with the lowered lease standards. According to them, these standards, in combination with fiscal pressure, lead to the bankruptcy of the current lease policy. Time for an explanation from Paul Kindt, board member at the FPG.
Kindt believes that a change in policy is necessary. The basic principle of the policy should be that lessees and lessees are enabled to make agreements themselves, in such a way that both parties are satisfied.
The FPG has clearly expressed its dissatisfaction with the new lease standards, why?
"Our criticism must be placed in the general displeasure of landlords. Due to the string of restrictive legal conditions, regular leases have been under pressure for years. The right of continuation (also called extension right), pre-emptive right, substitution right and the lease price test mean that lessors regard the current regular lease form as unattractive. Landlords also lack freedom of movement to set conditions with regard to biodiversity and soil fertility."
"The immediate cause of the discontent is the sharp drop of the lease standards (the second year in a row) and the combination with an increase in the tax burden. These lowered lease standards make it extra clear that (also for financial reasons) the current lease system is completely obsolete. Just like last year, the declines are again significant this year (to a minus of as much as 44%). A reasonable return for the lessor becomes increasingly out of sight with regular leases. To that end, we have calculations and they make it painfully clear that there is now a negative return."
Farmers are generally happy with the low rent, and in some cases the reduction was much needed. What does the FPG think about that?
"The lessee and lessor need each other badly, but what we are now seeing is that a reasonable return for the lessor is out of sight. That is not a tenable situation, not even for the lessee. It is not for nothing that Minister Schouten emphasized that a lessor ( when entering into a long-term lease) will want to achieve a corresponding return."
One of the problems is the high tax burden. The capital yield tax is going up to more than 5%, what exactly is that?
"Since 2017, the tax authorities have based the capital yield tax on a fictitious return. From tax year 2017, the tax authorities assume a return of 5,39% for all assets. This fixed return is not related to the actual return, which is achieved by law. lease standards. This is an untenable situation. This has rightly led to questions in Parliament."
Another problem is that the valuation of leased land with a non-finite lease is increased from 50% to 60% of the standard value of unleased land. What does the FPG think about this?
"The value of the leased land is lower than that of free land. When entering into a regular lease, a decrease in value takes place. This has been translated by the tax authorities into the so-called standard value. The Tax Authorities want to adjust this from 50% to 60% of the free value. Last year we managed to turn this around, but the expectation is that the Tax and Customs Administration will propose this again. We strongly disagree and point to underlying figures that do not justify such a proposal."
The capital yield tax, the standard value and the lower rent standards can lead to a negative return. How negative is this return for the lessor?
"In our opinion, no lessor should take a negative return for granted. We have calculated that the loss (with the current lease standards) in the Southern livestock area can rise from a minus of €5 per hectare in the second bracket of box 3, to a loss of €101 per hectare in the third bracket."
After the summer recess, Schouten wants to inform the House about a revision of the lease system. What do you want to include in this new lease system?
"For us, the ideal lease form, the lease form where the tenant and lessor make their own arrangements, is such that both parties are satisfied. The new lease forms that Spelderholt is proposing are certainly suitable for this and have the approval of various parties. We also hope for support from NAJK and the Association of Land Tenants and Own Land Users (BLHB)."
Under this new system, the regular lease will disappear. You are positive about this, because with this form the influence on the ground is lost. Traditionally, long-term leases were also used, why should that change now?
“Landlords also need long-term agreements. In order to maintain long-term leases, we think it is time that Spelderholt's proposals (for alternative long-term lease forms) were converted into legislation. new shape, the career lease. This is an alternative to the current regular lease, which is no longer up-to-date and for which little or no regular lease contracts are entered into."
"In contrast to the decreasing acreage of regular leases, the acreage of liberalized leases and long leases is growing. The lessors wish to make agreements for a long period of time. This also ties in with the needs of the lessee, who wants certainty about his land use rights. Then he can do business and invest in the future of the company. For example, in a long-term lease relationship there is a shared interest and a shared future."
"The decrease in long-term contracts is in stark contrast to the expected increasing financing needs of the agricultural sector. In addition, this decrease counteracts the desired strengthening of land-based agriculture and possibilities for healthy business transfer. A change in policy is therefore absolutely necessary."
What does the FPG think of the rising land prices, in relation to the lease price?
"The rising land prices lead to higher tax payments for the lessor. By itself, rising land prices for the lessors, including estate owners, are irrelevant, because as a rule sale is not the goal. There is a long-term commitment, with the ambition to keep the leased property pass it on to the next generation."
Could it be that in the long run you will get a situation with unaffordable prices, and that the farmer will then be employed by landowners?
"We see leasing as a form of financing, just like a loan from the bank. We must all cherish this alternative, especially now that the banks are making it increasingly difficult to finance land. A farmer would of course prefer to work with his own land, but there may also be a need to include more land in the company's production, without needing equity capital."
An investigation is underway by the LEI about Spelderholt. What is the progress?
"A number of partial aspects of the agreement are currently being investigated on behalf of the minister. The FPG has urged that this be speeded up. As soon as these results are available, the FPG will be happy to, together with the other signatories of the agreement, start a conversation with the minister."
Anne-Jan Doorn
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