News Land prices
Value of leased land less low than expected
Landowners who sell regularly leased land receive less than the land that has not been leased. The tax authorities report that leased land is worth 50% less than lease-free land. However, a study by Wageningen University & Research shows that the price-depressing effect is less pronounced.
At the moment, a standard valuation of 50% of the free value applies to the tax authorities. However, the question is whether this value corresponds to current market developments. Is leased land not valued too low compared to the free land price? And does the land price in a leased state increase enough with the free land price?
Value of the leased land
Uit the research It appears that in the period from 2012 to 2016 the sitting tenants (those who use the land) purchased the regular leased land at a value of 71% of the price of unleased land. However, various experts estimate the value on average to be much lower, namely 60%.
Those who continued to lease the land to the existing tenants after purchase paid regular leased land in the period from 2012 to 2014 at a value of 60% to 66% of the price of unleased land. The price for land with short-term use agreements differs little from that for unleased land.
Free land price rises faster
It also appears that in practice leased land is valued higher than the standard value of 50%. The lease value has increased along with the value of the free land price. The average price for regular leased land has increased by 2012% between 2016 and 18 to €39.200 to €46.200 per hectare. This while the price increase for free land remained at 22%.
The fact that the lease value has increased along with the free land price is on the one hand favorable for the land owners. On the other hand, it does mean that, if the standard value is raised, the land owners will eventually pay more tax for 'Box 3' of the income tax.
Larger share of free land traded
In the period between 2012 and 2016, 33.000 hectares of unleased land was traded (this is free land). When we add the land in leased state (about 19.657 hectares), we arrive at a total of 52.657 hectares. That is the land that has been traded.
The majority (63%) of the transactions are therefore about free land. Of the land that is not lease-free, about half is sold to incumbent farmers and the other half to landowners who continue to lease the land.
Why is leased land less valued?
The fact that land in a leased state is valued less is mainly due to the legal protection of the tenant (such as the pre-emptive right to purchase, continuation right, substitution and the lease standards). The (family) relationship between the tenant and the lessor also plays a major role.
Anne-Jan Doorn
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