Contract Negotiation - what’s best??

[Superbar365]

Hi, I’m about to approach a local farmer regarding setting up a Glamping Business on his land. However, I’m unsure of how the contract should be negotiated to get the best secure deal for everyone. My plan was to offer to rent the land on a 5 year lease that can be renewable based on a rent review at the end of it. My fear here is how does this work out when re-negotiating, can he just up the price to whatever he wants? Would love some advice on how best to work out a contract like this? Open to any suggestions.

 

[Brendan Burgess]

In a commercial lease, the rent is usually reviewed every 5 years. If the landlord and tenant can't agree on the market rent, it goes to arbitration.

How much will you be investing up front? Will you be building paths and some sort of central shower and services area?

Doesn't seem appropriate to be renting it if you invest a lot up front.

Brendan

 

[Superbar365]

Hi, thanks for responding. The area is beautiful and perfect for this kind of business. As such, there would be no chance the owner would sell it, therefore leasing it is the only option.
It will require paths etc and a septic tank. Total initial investment would be in the region of €100k

 

[Persia]

As such, there would be no chance the owner would sell it,

Have you asked the Farmer?

 

[Superbar365]

I haven’t asked him but I know he refused to sell it a couple years back to someone else. It’s not an option I’m afraid.

 

[galway]

The first thing you need to do is approach him and see is he interested any farmers I know of need lots of time to think things trough Land is in their DNA if they are still active farming the land in Question and refused to sell you are not pushing on an open door,
The last thing they might want Is having a Glamping Business around where they live,

The first thing you need to do is find out are they interested
If they say the are interested expect a very long drawn out negotiations,

 

[MrEarl]

Hello,

I'm also of the view that you need to have a chat with the landowner, and see if they are open to the idea.

If they are, then do they want to rent or sell ?

If they want to rent, then as Mr. Burgess correctly points out, commercial leases typically include a provision for a rent review, every 5 years, to include how the new rent will be agreed (and where it's not agreed, that it goes to mediation and who might meditate).

If you are considering putting in €100k, how long will it take you to get that money back, and thereafter, a profit ? That's the minimum term of lease that you should be looking for, though preferably a longer term than that.

You may need to pay vat on the rent, depending on term of the lease.

You will also need to deal with such things as who is liable, in the event of an accident, while someone is on the farmer's land - so insurance, to the property owners satisfaction, is a must.

Will you need planning permission for the project, either for general use, or any specific construction that's needed ?

I would suggest having a chat with an accountant, preparing a business plan, to include some financial projections, before speaking with the property owner. If the landowner has an interest, then you may need to share part of this plan with them, albeit I wouldn't share the financial forcasts, as the better they look, the higher the likely rent that the farmer will request.

 

[Leo]

Will you need planning permission for the project, either for general use, or any specific construction that's needed ?

Yes, glamping sites require planning. A change of use from agriculture and planning for any structures or supporting infrastructure will be required, with the septic tank likely getting a lot of scrutiny. Remember the glamping / motorhome Aire that was shut down in Limerick a couple of years back? He didn't even have waste facilities.

It might be worth a conversation with the local planners to see if they would be open to such a development/

 

[galway]

It might be worth a conversation with the local planners to see if they would be open to such a development

First he needs to talk to farmer to see is he/she open to such a development on their land,
I know and understand about having a conversation with local planners I just think this is a little different,
Poster was asking Contract Negotiations what is best,
Contract Negotiations could turn sour very quickly if OP was going behind farmers back and appeared to be making plans on land they owned I would say approach farmer first in fact it could help with the Negotiations later if he/she is interested,
Just my opinion,

 

[Leo]

First he needs to talk to farmer to see is he/she open to such a development on their land,

Yeah, really they need to establish if both the farmer and the planners are open to this idea before getting in the the structure of the contract or the negotiations themselves. Once you start talking contracts, you quickly get into the realm of solicitors and associated fees.

Many authorities simply won't allow this type of development in much of their areas. A conversation with a planner will clarify that pretty quickly for this particular plot of land and others in the area. If there is no hope of getting planning, time spent working the farmer is wasted.

Perhaps the fact the OP has narrowed down to a particular plot suggests they have already confirmed the planers are open to it though.

 

[galway]

Perhaps the fact the OP has narrowed down to a particular plot suggests they have already confirmed the planers are open to it though

Yes it is possible I was just pointing out not to put the cart before the horse,
I know in the past when I had a conversation with planners about a house I was interested in buying that was not up for sale officially and had not been lived in for a good few years
when she looked at the map she was concerned about an old well showing up in a field not part of the house and plot I was interested in and wanted to make a site visit which the owner had no problem with,
the next time I met the owner he was a little put out that word got out this was linked to the site visit,

I

 

[Leo]

I know in the past when I had a conversation with planners about a house I was interested in buying that was not up for sale officially and had not been lived in for a good few years
when she looked at the map she was concerned about an old well showing up in a field not part of the house and plot I was interested in and wanted to make a site visit which the owner had no problem with,
the next time I met the owner he was a little put out that word got out this was linked to the site visit,

Are you saying the local authority went to visit the site based on your conversation? That strikes me as very unusual, it's not uncommon for old wells or treatment systems to be on separate folios.

Simple solution there is for the OP to speak in general terms and not to mention the specific plot to the planner. If this is something the OP wants to pursue, surely limiting themselves to one plot of land as make or break is unlikely.