Rural tenancies   

5 steps to calculate the rental amount

Published at June 1, 2021 by Bernard Charlotin
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5 steps to calculate the rental amount

The tenancy statute is regulated and most of the important provisions are of public order which means that it is not possible to derogate from them even if the lessor and the farmer are in agreement. This is particularly the case for the amount of rent, the regulation of which is complex.
Fortunately, ma-propriete.fr will give you the key information for setting a rental amount in accordance with the rules.

How to calculate the rental amount?5 steps - picture by Shahid Abdullah - Pixabay

To define the rental amount of a rural lease, just follow these 5 steps:

  1. Consult the departmental rental decree
  2. Define the category of plots and rented buildings
  3. Define the rent in euros
  4. Define the distribution share of property taxes
  5. Apply the national rental index each year

1. Consult the departmental rental decree

The fixing of the rent is framed by a prefectural decree which fixes a price range (between a minimum and a maximum) by category of land and buildings which it defines. Each department defines several categories of plots (according to agronomic quality, ease of work or access, etc.) and sets a rental value per hectare including a minimum and a maximum. The same procedure is carried out for agricultural buildings and for residential houses included in the rural lease.

This departmental decree can be consulted on the site of the DDTM (Direction Départementale des Territoires et de la Mer) of your department or with the chamber of agriculture.

2. Define the category of plots

With regard to the criteria decreed by the prefectural decree, you must therefore categorise each plot or building. If the task is too difficult or is a source of dispute between the farmer and the lessor, you can call on a land expert to define the category of each rented plot.

3. Set the rent in euros

the rental price must be fixed in currency - Picture by Nattanan Kanchanaprat - Pixabay

Since a law of 2nd January 1995, except for perennial crops such as, notably, vines, the rental price (i.e. the rent) must be fixed in currency. Fixing the rent in food is no longer possible even if certain prefectural decrees continue to indicate the equivalence of this rent in food, because custom has not banned quintals of wheat from our countryside.

For vines, the amount of the rent must be determined between a minimum and a maximum which is defined either in euros or in hectolitres per hectare. There are different scales for AOP, IGP and vins de France.

If the rent which is defined in a lease exceeds the departmental scale by more than 10%, then the lessee or the lessor can apply to the Parity Court of Rural Leases during the 3rd year of the lease to request a judicial review of the lease.

It should be noted, however, that in many regions, the actual rents are frequently higher than the maximums and that the number of judicial review proceedings before the Joint Rural Lease Court remains relatively low.

4. Define the distribution share of property taxes

The owner can ask his tenant to reimburse him a share of the property taxes of the rented goods.

In the absence of a differing agreement between the parties, the rural code provides, however, for a reimbursement of 20% of the municipal and inter-municipal tax, 50% of the Chamber of Agriculture costs and 8% of the management costs.

Note that it is forbidden to provide for a full refund of property taxes by the farmer, and that property tax reductions for the benefit of young farmers must be fully deducted from the amount of the farmer's rent.

5. Apply the national rental index each year

The rent is revalued each year according to a national index, which is generally published in August. Since 2010, this index has been made up of 60% of the change in the Gross Agricultural Enterprise Income (Revenu Brut d’Entreprise Agricole, RBEA) per hectare recorded nationally over the five previous years and 40% of the change in the general price level of the previous year.

FIND OUT MORE : 

  1. The universal character of the rural lease
  2. Farming
  3. Duration and end of the rural lease
  4. Other types of agricultural leases
  5. Transfer, exchange and subletting of the rural lease
  6. The farmer's right of pre-emption
  7. Rural lease and succession
  8. Termination of the lease
  9. Recovering rented farmland for sale
  10. Can rented vines be sold?
  11. How to recover land leased to a farmer?
  12. The hire purchase agreement on agricultural land
  13. How to calculate the amount of rent for vineyards?