While most of your thoughts will be turning to Harvest, now is also the right time to be getting ‘farm ready’ to purchase agriculture land. More agri-properties come on the market in January and February once harvest has been completed.
Getting ‘farm ready’
It’s a very competitive market for buyers as there’s a shortage of quality listings in the local area. You need to be pro-active now, so you’re ready to grasp those opportunities which arise in the new year. Demand continues to outstrip supply, so would-be buyers should be sorting out their finances and investigating a legal team to help with the process and settlement. I cannot over-emphasise the importance of being ‘farm ready’.
Why buy a farm now?
You may have been considering a farm or agri-land purchase for a while, but in my opinion, there is no better time than now to make that move. Here’s why:
There are currently excellent commodity prices, and great demand both in WA and internationally. That’s across all agricultural sectors including wheat, grain, barley, wool and livestock.
Australia is earning a worldwide reputation for growing excellent crops and deemed a safe place to invest in agriculture.
Our farming systems here in Australia are more advanced than any other countries.
The WA farming industry is going through a period of growth offering strong returns.
Impressive long-term prospects
While it may be the right time to buy a farm now, you will still want peace of mind knowing that you have made the right decision for the future. All the indications are that the outlook for the farming industry in WA looks healthy.
Research shows that on a global scale, WA is best placed for offering a high return per hectare over a ten-year period.
Advancements in technology indicates the agricultural industry is forecast to double by 2030. A report from the Financial Review reveals that the future for farming will be a blend of old and new, with cutting edge innovation improving production and output.
WA has impressive road and transport networks. The port at Esperance is a major grain exportation hub and handles more than two hundred ships per annum and 11 million tonnes of trade.
Both the State and Federal Government are fully committed to helping the agricultural industry.
Farming across WA is stable and reliable, with farms expanding their current holdings to cope with demand.
Universities can see the potential of the industry with agricultural degree programs in Australia on the rise.
Agriculture land is still considered to be a sound long-term investment. It’s a good choice for investment purpose as part of a company portfolio or family farm wealth creation model.
There’s an increase with international farm investment here in WA as people realise its potential. China is soon set to overtake the United Kingdom as the biggest foreign owner of Australian farmland.
Who is the Buyer – Persons, Trust or Company?
It seems a simple question. But far too regularly, when people enter into a contract for sale, the wrong Buyer has been documented and this simple and avoidable error can be very costly to rectify. To give an indication to the additional costs; we mean extra, sometimes double, Transfer Duty.
So how do you avoid documenting the wrong Buyer and incurring those additional costs? The most important thing to do is to not rush into a contract for sale without giving careful thought to the transaction.
The three most likely forms a Buyer will take are:
An individual or individuals;
A Company in its own right; or
A Trustee (either person/s or a Company) as Trustee on behalf of a Trust.
BEFORE you put any pen to paper consider which entity or person the Buyer should be.
For example, if it is your intention for a Trustee to purchase a property on behalf of a Trust, ensure that this relationship is documented in the contract and that the Trust is actually formed. A classic error is where an individual is a Trustee of a Trust and they enter into a contract for sale in their own name, thinking this is sufficient for what they are trying to achieve. This is not the case. If an individual is a Trustee of a Trust the contract must acknowledge the Trustee relationship. Many peoples misconception around this area is because WA is one of the few states which does not recognise when land is held on Trust on a Certificate of Title. This does not mean however, that this relationship can be overlooked in the contract.
If you do not possess sufficient evidence, i.e. a contract for sale acknowledging the land was purchased on behalf of a Trust, you may find it difficult to vest that land out of the Trust at a later date and capitalise on the nominal Transfer Duty applicable when vesting to a beneficiary of a Trust. If you cannot prove that the Trust held the land in the first place you may be subject to Transfer Duty on this transaction.
The take home advice is
If you are considering entering into a contract for sale we recommend that you seek legal advice if you are unsure of “who is the Buyer”.
WA Property Lawyers are well placed to answer any queries you have in regard to contracts for sale and we also have a very experienced settlements department who can assist you with the settlement of any property, be it large or small.
Let’s Talk
Over the last eleven years I have been fortunate to transact on a number of farming properties. Whether you’re investigating options regarding future expansion, or would just like a chat regarding the current market, get in touch via 0429 110 700 or paul@ptrealty.com.au.