Based in Tauranga and specialising in quality business advice and income tax return preparation at an affordable price
Malcolm Webster Limited - Chartered Accountants

Orchard Leasing

Are you leasing out your orchard?   Are you getting a rental sum, and then sharing in the profits? 

Beware - you may also be sharing in the losses, and those losses may be clawed back from your rental or future fruit proceeds.  So you might end up with less than you expected. 

Make sure you really understand your lease arrangement!  The brochure phrase "minimises the owner's exposure to risk" does not mean it eliminates the risk.  Far from it.  In fact, it may lay the risk more at your feet than at the lessee's, particularly in times of poor yield.  And poor yield can't always be put down to climatic factors.  On-orchard practises and time of harvest are relevant too, and both these will likely be under the control of your lessee.  Is there sufficient incentive for them to get those right?

If all you want is to have the property maintained while you focus on other things, then your emphasis will likely lean towards an agreed rental structure with no risk, no share of loss.  It might be a different deal to your neighbour.  But that's ok.

Think about what's important to you, and then make sure that your lease arrangement is in sync!