For those, who do not wish to enter into such a detailed lease agreement, the Revenue Commissioners require only the following to be contained in a written agreement (for the purposes of tax benefits):
the names and addresses of the lessor(s) and lessee(s),
details of the acreage, address, location etc. of the land which is the subject of the agreement
the terms of the lease including that the duration be for a definite term of five years or more
the signatures of the lessor(s) and lessee(s).
Registration with PRSA
Commercial leases must be registered with the PRSA (land registry) and this includes leases of agricultural land. Leases entered into after April 2012 must be registered with the land registry.
The lease should be registered within 30 days of its commencement.
The obligation to register the lease with the land registry lies with the lessee or tenant.
However, a lease can be registered with the land registry by a third party/agent for the lessee.
Another cost factor is the liability for stamp duty on leases.
Stamp duty is normally payable on these type of leases at a rate of 1pc of the annual rent.
Although Budget 2015 brought in an exemption to the payment of stamp duty on leases which exceed six years in duration, it is a factor for consideration nonetheless from the prospect of future budgetary measures.
To fulfill you stamp duty requirements with revenue you should fill out form SDR3 which will require the details of your lease agreement.
The key to any successful agreement is a suitable and user friendly dispute resolution mechanism.
This will help both parties to deal with the inevitable disagreements that may arise during the term of a lease.
The IFA Master lease agreement does provide a sample term of this type and parties to a lease agreement would be well advised to give this particular term detailed consideration.
By agreeing to the appointment of a third party who can assist in the resolution of difficulties and disagreements at an early stage you could well avoid recourse to the lengthy and costly process of the courts system.
Theresa Murphy is a barrister based in Ardrahan, Co Galway
Leasing considerations for landowners
For the landowner there are a number of obvious considerations on which you should seek advice from your accountant and/or agricultural consultant in relation to entitlements on land and the receipt of tax free rental income.
In brief, Budget 2016 brought with it further advantages to long term leasing of land by broadening the net of those who are eligible for tax free income from agricultural land leasing.
It further incentivised the longer term leases and as a result practitioners are seeing an increase in the numbers of farmers willing to lease their lands for longer terms.
With this comes obvious reservations for the person leasing the land.
By adopting a detailed and all-encompassing lease agreement, the lessor will undoubtedly have more protection from the lessee's lack of care for the leased lands.
However, potential lessee's should be aware of overly restrictive lease agreements and exactly what they are agreeing to do, particularly in terms of upkeep of the lands.
They should also examine issues such as 'alienation'. That is, where the lessor decides to sell/transfer the land during the term of the lease. Provision should be made for this to protect both parties.
Rent reviews are also essential when it comes to longer term leases as you will want to protect yourself from a rent which does not rise in line with the market rate.