Which field is good for selling

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Agricultural land: buy, lease, profit

Depending on the region, arable land is becoming increasingly scarce and therefore also more valuable - not just for farmers. In the meantime, more and more private individuals or business people want to buy agricultural land. Whether for your own use or as a capital investment: Investing in arable land and grassland can be worthwhile under certain conditions.

Growing your own fruit and vegetables, keeping a smaller herd of chickens and sheep for private enjoyment or simply as an investment - agricultural land is also becoming increasingly popular with non-farmers. Real estate agent Anke Delekat from Benjes Immobilien in the Lower Saxony district of Diepholz has also noticed this. She specializes in agricultural land and knows the motivations of many investors: “Land is stable in value and a safe way to invest your money. At the moment there are simply no alternatives. In most cases, the field is then leased to a farmer. It sometimes happens that a photovoltaic or wind power plant is built on arable land, but it is heavily dependent on the region. "

Only those who know exactly what they want to do with their land in the coming years will be successful in finding the right property.

Buying agricultural land - important preliminary considerations

Field, meadow or maybe a vineyard after all? Depending on the intended use, one type of landscape is not only more suitable than the other, they also differ greatly from one another in terms of price. For example, as the quality of the arable land increases, so does the probable crop yield and thus ultimately the value of the field itself. “A good field is valuable for farmers and much more expensive than grassland. With the rising land prices, the lease prices also increase. So leasing farmland is definitely worth it, ”advises Anke Delekat from Benjes Immobilien.

If, on the other hand, you are simply looking for a larger open space to set up a photovoltaic system, you naturally value other things such as as many hours of sunshine as possible. Then the purchase of a grassland area makes more sense than the acquisition of high-quality arable land.

Before the search for a suitable plot of land can start, the prospective buyer should weigh up which piece of land is best suited for the planned project in order to derive the best possible benefit from it at a reasonable purchase price.

Which floor for which project?

Agricultural areas in Germany are divided into a total of 14 categories, with each individual shape having its own code number. These categories include, for example, arable land and grassland, orchards, vineyards and fallow land.

  • Farmland includes all areas that are regularly plowed and used for growing crops. These can be crops for food production for humans and animals or energy crops for biogas plants. The term arable relates more to the ground, whereas field refers to the (field) plants.
  • Grassland consists mainly of grasses and herbs and is used either as pasture for animals, as a meadow for haymaking or as a location for a power station. Depending on the location, grassland can also become a landscape protection area and thus severely restrict the owner, even with regard to the color or texture of a paddock fence.
  • Orchards still belong to the traditional form of fruit growing. In contrast to modern orchards, there are fruit trees of various sizes scattered across a meadow that can also be used as pasture or for haymaking. Due to their diverse planting, these properties are considered to be particularly species-rich biotopes.
  • Vineyards are used for viticulture and place very special climatic requirements on their location. Contrary to their name, they can be located not only on a slope but also on a flat surface.
  • fallow describes an unused landscape area. A field or meadow can lie fallow for a certain or indefinite period of time for economic or regenerative reasons, for example due to poor yields or the usual crop rotation. Depending on the quality of the soil and the permission to use it, a fallow land can later be used again for arable farming or pasture, or it can provide a habitat for many animals as a biotope.

Anyone who does not want to commit to the use of their agricultural property and would like to use it once as pasture and another time as arable land could run into problems, by the way. Anke Delekat from Benjes Immobilien explains why: “Converting fields into grassland is usually not a problem, but the property loses value as a result. On the other hand, turning grassland into arable land is not that easy. Correspondingly large replacement areas for grassland may have to be created. You need a permit from the local authority in both cases anyway. ”Because: Grassland is an ecologically valuable component of a functioning agriculture, but has become less and less due to intensive tillage over the years. In order to protect soil, water and the climate, there are even grassland areas that are generally prohibited from plowing and cannot be converted into arable land.

Where can I find farmland for sale?

If it is clear what type of agricultural land is required for the planned project, the search for arable land can go into the first round. Agricultural sales areas can be found where there is also regular real estate: for example on real estate online portals. At immowelt.de you will always find a large selection of agricultural land - categorized by state and city or district. Anyone who would like to be looked after professionally in the search, has specific ideas or is looking for something extraordinary, can also turn to a real estate agent with special knowledge. In addition, a seller sometimes wants to resell very discreetly, which is why not all properties are advertised online - in these cases a broker is often the only option to find out about such offers at all. If a prospective buyer has contact with farmers himself, an inquiry there is always useful. Farmers often know about it when colleagues want to sell land and can thus establish contact between buyer and seller.

Anyone looking for arable land or grassland to buy in one of the new federal states can also contact Bodenverwertungs und -verwaltungs GmbH (BVVG). As a privatization agency, BVVG has been selling and leasing agricultural and forestry land on behalf of the state since 1996.

Buy or lease?

For some projects you don't necessarily have to buy a piece of land - a lease would also be an option, for example if you need pasture for a riding business or if you as a farmer want to expand the business as cheaply as possible and are looking for additional land to cultivate.

The decision to buy or lease an agricultural area is primarily an economic one. Both variants have their advantages and disadvantages and are more or less suitable depending on the project. If you buy arable land or grassland, you first have to dig deep into your pocket - the annual lease is much cheaper. A leaseholder is also much more flexible, as he can lease additional space if necessary or does not need to extend the lease after it has expired. However, he is also dependent on his lessor: Changes to the property must be discussed with the owner and a lease is always limited in time. After it has expired, it must first be extended again. There is also the risk that the owner no longer wants to extend the lease or resells the property. This can be particularly problematic if the tenant is planning a larger investment on the property, such as an irrigation system or a paddock fence. With such more extensive projects, the lease period should have a reasonable framework so that the investment is worthwhile for the lessee.

Interesting property found - what's next?

After an intensive search, the time has finally come: You have found an interesting piece of farmland, the seller has already been contacted and the purchase decision is getting closer. Before signing the sales contract, however, a few things should be checked. Special broker Anke Delekat from Benjes Immobilien advises: “Current lease agreements can be tied to agricultural land. Such leases should always be checked by the buyer in terms of duration and lease amount. In addition, it can happen, albeit rarely, that debts or easements, i.e. rights of third parties, weigh on the property - just as it is possible with real estate. Therefore, the land register should be checked beforehand. As a buyer, you can then immediately find out whether there are claims by other people. "

Both the right of way of the neighboring farmer and the transfer right of an electricity provider could get in the way of the planned project or even reduce the value of the property. For example, if an access road runs exactly where the new owner would like to draw a fence or set up a photovoltaic system, he must create an equivalent alternative for his neighbor with right of way. The previous use, for example by driving on with heavy or particularly wide vehicles, must continue to be guaranteed. In the specific case, this means: the new path must be just as wide and just as structured as the previous one. The transfer right of an electricity provider, on the other hand, can be linked to certain usage bans, such as the construction of a wind turbine, and thus reduce the value of the property.

In any case, prospective buyers should not only inspect the land register before purchasing, but also get in touch with the responsible authorities and clarify their intended use there, ”recommends Anke Delekat. Otherwise it can happen that the buyer only learns of usage bans or special restrictions from the authorities during the building permit process. When setting up a photovoltaic system, for example, it is not just a question of the building permit itself, but also of related requirements such as the height of the solar modules or the necessary greening.

If the buyer only wants to lease his arable land to a farmer, he should clarify beforehand whether there is even a willing tenant and whether the soil is suitable for successful planting. In order to determine the quality of a soil beyond doubt and to exclude pollution or even contamination, soil samples should be examined in an appropriate laboratory.

If all of these sticking points have been checked and the property is still suitable for the planned project, there is almost nothing standing in the way of buying an agricultural property.

Conclude the purchase contract in four steps

Arable and grassland is a farmer's livelihood and the state protects the survival of this shrinking occupational group. Since 1961, the Real Estate Traffic Act (GVG) has regulated that every sale of agricultural land must be approved in advance, regardless of whether the buyer comes from agriculture or not.

Step 1: Appointment with the notary

Since the purchase contract is later available to the authorities, it must be certified by a notary. This also means that the seller and buyer have an expert at their side who minimizes potential risks for both parties. Depending on the federal state, the notary fees amount to between one and four percent of the property price and are usually borne by the buyer, if agreed.

Step 2: Application for approval from the district

The notarized contract is submitted with the application for purchase approval to the district in whose district the property is located. The application can be made by the seller, the buyer or the notary.

Loophole for small areas

The sale of very small agricultural land does not require authorization. Depending on the federal state, the so-called exemption limit fluctuates between 0.15 and 2 hectares. The very high exemption limit in Bavaria was reduced from 2 to 1 hectare on January 1st, 2017.

Step 3: Waiting for the approval notice

The authorities now have three months to approve or reject the purchase agreement. However, they must report to the seller within the first month that the approval process has been initiated. Otherwise, the approval is deemed to have been granted and the sales contract to be legally concluded.

Step 4: Approval: OK or Veto

If the purchase of the agricultural land has been approved: Congratulations on the new property.
If the authority has rejected the permit application, in most cases this is due to the fact that the buyer is not a farmer and the land is being distributed unhealthily. However, the property is not completely lost for him. The right of first refusal for farmers, which is always queried in this case, does not necessarily come into force.

Purchase authorization refused: right of first refusal for farmers

If a non-farmer was refused the purchase of the property, the authority of the district forwards the purchase contract to the rural company of the respective federal state. There it is checked whether a local farmer needs the property for his business and wants to enter into the purchase contract. If so, the non-farmer was unlucky: The agricultural company then exercises its right of first refusal, buys the property and then sells it to the farmer - provided the farmer can pay the price stipulated in the purchase contract. However, if you as a farmer make use of the right of first refusal, you must be aware that the price of the property will increase by 10 to 15 percent: Since the property changes hands twice, the real estate transfer tax is due twice.

However, if no farmer turns up who wants or is able to buy the arable land at the contractually agreed price, the right of first refusal does not apply. The land company cannot buy land in advance to give it to a farmer at a later date. The non-farmer is then free to re-enter the sales contract and then usually also gets the property.

That is why the authority can refuse a purchase authorization:

  • Unhealthy distribution of land: Selling land to non-farmers means that the land is lost to agriculture.
  • Upper price limit exceeded: The purchase price may not exceed 150 percent of the local area prices.
  • Property is being reduced in size uneconomically: The division of a property into several small areas contradicts an intended, economic management.

What does agricultural land cost?

The demand determines the price - and arable land is in great demand as a commodity that cannot be reproduced. The purchase price per hectare has almost doubled since 2010, with buyers paying around 22,300 euros on a national average. However, this value is only suitable for a very rough orientation, as there is a large regional price difference, especially for agricultural land. According to the Federal Statistical Office, land prices for agricultural land in Thuringia and Saarland were the cheapest with an average of less than 10,000 euros per hectare. In contrast, buyers in North Rhine-Westphalia (44,500 euros per hectare) and Bavaria (52,000 euros per hectare) had to dig deepest into their pockets by far.

Reasons for price range: The German Farmers' Association only partially attributes this enormous price increase to the increasingly scarce agricultural land. The quality of the soil also plays an important role in the purchase price - and this varies greatly from region to region. A nutrient-rich arable land with an expected high harvest yield is much more valuable for agriculture and therefore more expensive than depleted, nutrient-poor land. In addition, a farmer can work a large contiguous area much more easily than several small, separated plots of land. An easily accessible property with an already existing road also increases the value.

Above all, however, investors are driving up prices for agricultural land. In many places, arable land is considered a safe investment and is increasingly being bought up on a large scale by non-farmers and corporations. This trend can now also be seen in other countries: where the land prices for arable land are currently still cheap, large arable land is being bought by investors, often from abroad.

Buying agricultural land: risk or profitable business?

Investing in agricultural land is currently seen as a safe investment even among brokers. The purchase prices for such properties have been rising for years, and the yield from leasing is not very high at one to two percent, but comparatively safe. An investment is definitely worthwhile - provided that the property is suitable for the planned use. If you look carefully before making a purchase and check important conditions such as soil quality, usage bans or claims by third parties, you can rule out all potential risks in advance. Special estate agent Anke Delekat from Benjes Immobilien currently sees only one reason for a later loss of value: “The only thing I can imagine would be a general collapse in land prices. That depends on the market development and cannot be foreseen. "

Anyone who buys a small-scale farm for purely personal use is in most cases not speculating on a high financial gain anyway, but simply wants to enjoy their peacefully grazing animals, their flowering fields or their own orchard.