A farm lease agreement sets out which land is being leased and for how long. It covers how rent is paid, whether in cash, as a share of the crop or as a share of the livestock. It also says who looks after the fences, water and improvements, and what happens when the lease ends.
Plenty of farm leases in Australia still run on a handshake. That works until a dry season, a sale of the property or a disagreement over who paid for the new fence. That's when most disputes start, and a written lease is what settles them.
Australian farm lease agreement for all states, in Word and PDF, $49. Get the farm land lease agreement →
01 What is a farm lease agreement?
It's different from share farming and agistment. In share farming, the owner and the share farmer work the land together and split the costs and the income. In agistment, the landowner takes in someone else's livestock to graze for a fee, usually per head per week, without handing over control of the land.
02 What is the format for a land lease agreement?
A farm lease usually follows this order:
- Parties. The owner and the tenant, with contact details.
- Land description. Title details, area in hectares, and a map.
- Term. The start date, the end date and any renewal option.
- Rent. The amount or formula, and when and how it's paid.
- Use of the land. What the tenant may and may not do.
- Maintenance and improvements. Who looks after what, and who pays.
- Insurance. What each party insures.
- Ending the lease. Notice, early termination and the end-of-lease handover.
- Signatures. Both parties, dated, with witnesses if your state or the length of the lease calls for it.
03 What to include in a farm lease agreement
The land
Give the title details (lot and plan or volume and folio), the total area in hectares, and a map marking the leased area. Say exactly which paddocks, sheds, yards, silos and houses are included, and which aren't. Most boundary arguments come from a lease that just says "the farm".
Permitted use and stocking limits
State what the tenant can use the land for: cropping, grazing, horticulture or a mix. If grazing is allowed, set a stocking limit, for example a maximum number of dry sheep equivalents (DSE) per hectare. That protects the land from being overgrazed in a dry year.
Term, renewal options and notice periods
Set the start and end dates and any option to renew, with the deadline for exercising it. Line the term up with the farming calendar, so a cropping lease doesn't end halfway between sowing and harvest.
Rent and how it's paid
State the rent method (cash, crop share, livestock share or flexible), the amount or formula, when it's due, and how it's reviewed. For a cash lease over several years, an annual CPI adjustment is common.
Fencing, water rights and bores
Say who maintains boundary and internal fences, and who pays to replace them. Set out which water rights, bores, dams and troughs come with the lease, whether any water allocation is included, and who maintains pumps and pipes.
Rent and how it's paid
State which improvements the tenant can make, whether they need the owner's consent, and whether the tenant is compensated at the end. In NSW, the law gives tenants certain rights here whatever the lease says, as covered below.
Weeds, pests and soil care
Make the tenant responsible for controlling weeds and pests under your state's biosecurity rules. Set expectations for good farming practice, such as crop rotation, fertiliser use and avoiding erosion, so the land is handed back in the condition it was received.
Insurance and liability
The tenant should hold public liability insurance and insure their own stock, crops and equipment. The owner insures the buildings. Say who carries the risk of fire, flood and drought.
Bond
A bond, often one quarter's rent, gives the owner security for unpaid rent or damage. State how it's held and when it's returned.
Landlord access
Set out when the owner can enter, how much notice they must give, and for what purposes. The farmhouse, if the tenant lives there, needs separate treatment.
Ending the lease early and resolving disputes
Cover what happens if rent isn't paid or the land is mismanaged, including how much time the tenant has to fix it before the lease can be ended. Add a dispute process, such as negotiation first and then mediation, before either side goes to a tribunal or court.
04 How to calculate rent for a farm lease in Australia
Fixed cash rent per hectare
The simplest method: a set amount per hectare per year, for example (figures for illustration only) $150 per hectare across 300 hectares, which comes to $45,000 a year, paid quarterly or half-yearly. The tenant carries all the seasonal risk and the owner gets a predictable income.
Rent as a percentage of the land's value
The rent is set as a percentage of the land's market value. Older guides suggested around 5% for dryland farming. As land prices have climbed, many owners now accept lower yields, because rent still has to make sense against what the land can actually produce.
Crop share
Instead of cash, the owner receives an agreed share of the harvest, or of the proceeds from it. The share usually reflects how the costs are split. If the owner pays for part of the seed or fertiliser, they expect a bigger share. Both sides share the seasonal risk.
Livestock share
The owner receives a share of the livestock income, such as a percentage of the calves or lambs, or of the wool clip or sale proceeds. This suits grazing country where the owner contributes some of the stock or infrastructure.
Flexible rent
A base cash rent, plus a bonus in good seasons, tied to yield or prices above an agreed level. The tenant has a lower fixed cost in a bad year, and the owner shares in the upside in a good one.
Local rates vary widely by region, rainfall and season. Check recent sales and leases nearby, or work through the budgeting steps in the GRDC leasing and share farming fact sheet.
05 The four main types of farm lease
- Cash lease. The tenant pays a fixed amount of money. It's the most common type and the simplest to run.
- Crop share lease. The owner takes an agreed share of the crop or its proceeds instead of, or as well as, cash rent.
- Livestock share lease. The owner takes a share of the livestock income, and often contributes stock or infrastructure.
- Share farming. This isn't strictly a lease. In a lease, the tenant has control of the land and carries the business risk. In share farming, the owner and the share farmer run the enterprise together. Each contributes land, labour, machinery or inputs, and they split the income in agreed shares. Because both sides carry the risk, share farming needs its own agreement, covering decision-making and how costs are divided.
Our farm land lease agreement supports the first three: cash, crop share and livestock share.
06 Farm lease agreements in NSW: the Agricultural Tenancies Act
NSW has its own law for farm leases, the Agricultural Tenancies Act 1990. It writes certain terms into every agricultural tenancy, whatever the lease says, and a lease can't contract out of them.
When the Act applies
The Act applies to a "farm", meaning land of at least 1 hectare that is wholly or mostly used for agricultural purposes. Those purposes include grazing, dairying, pig and poultry farming, viticulture, orcharding, beekeeping, horticulture, vegetable growing, cropping and forestry. It covers leases, licences and share farming arrangements, written or not. Either party can ask for the arrangement to be put in writing. If they can't agree on the terms, the Tribunal can decide them.
Improvements a tenant can make without the owner's consent
Under Schedule 1 of the Act, a tenant can carry out these improvements without asking, and the owner must pay fair compensation for them:
- drainage
- making or improving necessary roads or bridges
- clearing and removing stumps and logs
- pest control authorised or required under the Biosecurity Act 2015
- control of weeds, including prickly pear
- permanent subdivision fences
- sowing pasture
- applying fertiliser, lime and trace elements
- repairs to necessary farm buildings, but only after giving the owner notice and the owner failing to do them within a reasonable time
- repairs or re-erection of buildings to meet the Food Act 2003 or other legal requirements
- repairing and de-silting wells, bores, dams, reservoirs and ground tanks
Any other improvement needs the owner's consent, or a Tribunal finding that it's suitable and desirable.
07 Compensation when the lease ends
Compensation for a tenant's improvement is based on its value to an incoming tenant. The tenant can also claim for grain, hay, silage, fertiliser or other useful products they stored and left on the farm. And if better farm management by the tenant has improved the farm generally, the tenant can claim for that too. It works the other way as well. If the farm deteriorated because the tenant didn't manage it properly, the tenant must pay the owner compensation for the loss in value.
08 Record of condition
Either party can require a joint record of the farm's condition at the start of the tenancy and at reasonable intervals after that. That includes the land and cultivation, buildings, fences, gates, roads and drains. Do it every time. It's the evidence that decides most compensation claims.
Disputes go to the NSW Civil and Administrative Tribunal (NCAT). An application must be made within 3 months of the dispute arising or the tenancy ending, whichever is later. Read the NSW Government's guide to improvements or the Agricultural Tenancies Act itself.
Our template reflects the rules of each state, including NSW.
09 How to draft a farm lease agreement
- Walk the property together. Agree on the boundaries, paddocks, buildings, water points and fences that are included, and mark them on a map.
- Agree the rent method. Choose cash, crop share, livestock share or flexible rent, and agree how the rent will be reviewed.
- Record the farm's condition. Take dated photos and notes of the land, fences, buildings and water infrastructure, and both sign the record.
- Fill in a template. Use a farm-specific lease, not a generic property lease, so improvements, water and stocking limits are covered.
- Sign it and keep copies. Both parties sign and keep a copy, with the condition record attached. Register it on the title if your state and the term call for it.
Can ChatGPT write a farm lease?
It can produce a draft that looks complete. But it doesn't reliably know state-specific rules, such as the NSW compensation scheme for tenants' improvements, and it won't tell you what it has left out. Generic AI drafts also tend to use American terms like acres and bushels, or US-style crop shares. A lawyer-drafted template written for Australian law is a safer starting point.
Disadvantages of leasing farmland
For the owner, the risks are wear on the land, such as overgrazing, weeds and soil decline, and in NSW, compensation claims for the tenant's improvements at the end of the lease. For the tenant, the risk is having no security beyond the term, which makes it hard to justify investing in the land. The fix for both is the same: a written lease with clear terms on condition, improvements, renewal and compensation.