Breakdown of long-term leasing arrangements as rents soar

Long Term Leasing has proven to be the most popular arrangement type, mainly driven by the tax benefits to landowners
Long Term Leasing has proven to be the most popular arrangement type, mainly driven by the tax benefits to landowners

Martin Ryan

Soaring rental prices have become “an issue” for long-term land leasing, with a number of the farm arrangements now under pressure for survival.

Austin Finn of the Land Mobility Service, which has assisted over 500 plans covering 47,000 acres of farm land, described the situation as “becoming very challenging” for some participants as rental prices for land have increased in recent years.

He confirmed that breakdown in arrangements are now occurring “because the rent is not being paid” where rental costs are too high and leasors run into difficulty on long-term leases.

“Going forward I can see it becoming an issue where the rent is too high,” he warned, adding that many leasors are experiencing difficulty with the greater volatility in incomes from farming.

Following a three-year pilot programme, where 282 arrangements for 25,000 acres of farm land were completed, the Land Mobility Service was extended nationwide two years ago.

During the pilot, the service was used by landowners in 22 counties. Co Cork dominated with almost a quarter of the completed transactions at 61.

Second highest was Kilkenny with 49, with Mayo third on 22 Laois on 19.

The lowest was Cavan with just one, followed by Westmeath and Kerry on two.

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The average farm size involved was 91 acres, and there were 128 long-term leases, 57 partnerships, 51 shared farming arrangements, and 38 contract rearing arrangements put in place.

In 2018 about 40pc of the arrangements were lease agreements, Mr Finn said.

“The five-year lease has become the new conacre but it is becoming too short for many situations,” he said.

Costs

“If there is a need for reseeding and fencing, there is a need for seven years to get return from the costs involved.

“And where there is a significant investment involved, you are looking at 15-20 year arrangements.”

Mr Finn feels that partnerships tend to be more successful within family arrangements.

“Sometimes it can work between neighbours but they have to be prepared to put everything into the pot and that does not always work out,” he said.

The  Land Mobility Service was initiated by Macra na Feirme and has been supported by the major dairy co-ops and agri-business.

Online Editors