Should I Lease My Land?
Many of the below sections are summarized from Land for Good’s Landowners Guide to Leasing Land for Farming. We advise that you read through it. It is one of the best guides to assist landowners in making their land available for farming.
If this is an arrangement you are seriously considering, please contact Phoebe through the contact form at the bottom of the page. We will schedule a more personalized conversation about understanding your land, finding a farmer, and the elements of a lease agreement.
Introduction
Leasing your land can be a win-win for both you and a land seeker. High land prices and start-up costs are the biggest obstacles for a beginning farmer. Leasing land allows a farmer to avoid those high costs all at once and purchase land when their farm business is more established. As a landowner, benefits include a steady revenue stream, increased local food production, keeping your property open and in production, and land management that meets your stewardship goals. Furthermore, a landowner who leases their land to an active farm operation will still receive a farm tax deferral through the state. Finally, leasing land encourages and supports a new generation of farmers and ranchers in your community.
Making Your Land Accessible
If you are interested in leasing your land to a beginning farmer, consider ways that you can make your land more accessible to beginning farmers with a lack of capital.
Here are some examples:
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- Charge graduated rent. Rent is initially low but increases a certain percentage each year. For example, rent increases 5% each year with a goal that it is paid in full by year 5. This is a way to help a new farmer who lacks capital.
- Sharing production expenses or sharing your equipment with a tenant. Any specifics should be defined in a share-lease arrangement. Please seek legal advice to create a legally binding document.
- Lease only a small portion of your property. Many beginning farmers, especially ones looking to grow annuals, only need a few acres to get their operation off the ground. Then, you can lease property to additional farmers or keep additional land for your tenant to expand onto in the future.
Understanding what you want out of a Lease
An essential step is to understand what your goals and priorities as a landowner interested in leasing land. We recommend you work through Land For Good’s Where Do I Start? worksheet. There are questions and prompts that offer great guidance into understanding what exactly your interests are in making you land available for farming. Also, examine what you are looking for in a landlord-tenant relationship. Healthy communication is the most important aspect to a successful relationship.
Here are some additional questions to ask yourself. Make sure your answers are somehow reflected in the lease language.
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- Do you want to be an active or passive landlord? What level of participation will you have in a farm operation or the management of your leased property? Do you want to have a mentorship role with your lessee?
- What non-agricultural uses of the property will you allow? Will you allow your tenant to recreate on the land as well?
- What is your long-term vision for the property? Are you interested in eventually selling the property?
Once you have read through this page, as well as Land for Good’s supplemental materials, and believe that leasing your land is the best option, please visit our “What to Consider in a Lease” page for more lease specific information.
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The Alaska Farmland Trust envisions a future with thriving local food markets that will give Alaskans access to fresh, healthy food, and keep our farmers farming.