Long-term agricultural leases: a win/win system!

T­here are many reasons for farmers and landowners to choose long-term agricultural lease rather than the ordinary 9-year lease.

As a commercial undertaking like any other, a farm may need expanding or upgrading. Operating costs come on top of the cost of land and land charges, and it is often difficult to buy land and acquire farm machinery while generating return on investment. Farmers have to prioritize.

  • Why establish an agricultural lease?

    • Com­pared with owner-operated farming, a long-term lease is an effective way of freeing farmers from the burden of buying land and paying land charges and taxes.

    • If jointly agreed, an ordinary 9-year lease can always be converted into a long-term lease. French law encourages long-term leases by giving both owner and farmer a variety of advantages and incentives.

  • Advantage from the tenant's angle:

    • Long-term leases are for a minimum of 18 years renewable by 9-year periods, or 25 years (long-notice lease) and can even be signed until the farmer retires (career-long lease), the long-term lease gives the farmer a stability comparable to that provided by land ownership .

  • Advantages for the landowner:

    • When compared to an ordinary lease, a long-term lease ensures a higher farming price and attractive tax exemptions for the landowner.

    • If the landowner wishes to make a gift of his/her property, he/she is granted partial exemption from taxes on gifts . There must be two years between the lease and the gift if the tenant, his/her spouse, his/her descendants or a company controlled by one of these people is the recipient of the gift.
      It is possible to use a notarised instrument to repeat this operation every ten years by claiming this advantage again.
      Transfer due to death is subject to the same rules but naturally no time-limit applies.

    • Lastly, agricultural property let on a long-term lease is considered business assets when deciding the basis for the solidarity tax on wealth.
      Under certain conditions, this may qualify for total or partial exemption from the tax on wealth for agricultural property rented out on a long-term lease.

  • Find a notaire

    • Whether you are a landowner or tenant, you should contact your notaire who will explain the advantages of a long-term lease.

    • All the legal, family and tax aspects of the situation will be covered; temporary advantages may even apply to you. Do not hesitate to ask for information.

Frequently asked questions