Scarcity of leasing land being caused by long-term leases as nitrates pressure and fertiliser prices drive demand for more land
Land leasing prices are set to reach record heights this year as the amount of land coming on the market tightens.
This scarcity is due, in the main, to the prevalence of long-term leasing.
Many five-year leases due to expire are being rolled over with modest increases as former tenants remain in place.
According to Mallow auctioneer Liam Mullins, renewed land leases are making €250 to €280 or €300/ac, while new grazing land on the open leasing market is starting at €300 or €320/ac.
“Landlords want to keep good tenants and while they might get more for their land on the open market, they are happy to take a modest increase and keep the good tenant,” he said. “Fresh land for lease is like gold-dust.”
In a rare foray into the Banner County, Mr Mullins is handling the lease of a 43.8ac farm at Gurtaderra, Scarriff in east Clare.
The holding, made up of good south-facing grazing ground as well as more marginal land, is available for €150 to €160/ac.
Kilkenny auctioneer Joseph Coogan is experiencing a distinct shortage of letting land. There is little tillage land coming up for lease, but he expects the phones to be hopping in a few weeks’ time.
“I had one letting auction before Christmas and that netted €400/ac,” he said.
This week Mr Coogan will handle the letting of a 56ac farm at Rahennahown House, Stradbally, Co Laois. Described as “top-quality agricultural land”, the holding is available for lease until November 15, 2022.
The prime grazing land in two lots of 8ac and 47ac comes with a water supply and no entitlements. The 47ac parcel is divided into three individual paddocks suitable for grazing, hay and silage.
With a guide of €300/ac the farm will be let by public auction this Friday, February 4, at 3pm at Ballycomey House, Castlecomer, Co Kilkenny.
A week later Mr Coogan is dealing with the public letting of a 71ac farm at Rathoran, Leighlinbridge, Co Carlow. Located just over 1km from the Arboretum Garden Centre, the farm is currently in grass.
“A portion of about 52ac is suitable for tillage, grazing or silage while c19ac could be described as summer grazing,” he said.
With no entitlements and coming with a guide price of around €300/ac, the property will be leased at a public auction to be held on the land at 5pm on Friday, February 11.
Mr Coogan expects leasing land to increase by up to €100/ac, with land that made €300 last year making €350, €370/ac and more this year.
He also believes roll-over lease rents will increase marginally.
“When a landowner has a good tenant they won’t want to let them go,” he said.
In the midlands Dillon Murtagh of Murtagh Bros is witnessing serious competition and serious money paid for letting land.
“Grazing ground is making anything from €300/ac — even rough grazing is making around €250/ac,” he said.
Just as the price of land increased dramatically in the auction rooms of Longford and Westmeath over the last year, the price of letting land in these counties is also showing a marked rise.
“I recently let a 49ac farm in Longford for €16,000 per annum, which works out at €325/ac,” Mr Murtagh said. “Generally, good letting land in these counties is making between €225 and €250/ac.”
Like other agents Mr Murtagh says the majority of prospective tenants are looking for naked land, or land without entitlements.
One of the larger parcels of letting land on the books of Murtagh Bros is a 111ac holding at Kilwarden, Hill of Down, Kinnegad in Co Westmeath.
Located on the Trim road the place is 4km from Kinnegad and is described as “excellent-quality grazing land”.
Laid out in neat tidy divisions, the farm, includes farm buildings, is available on a five-year lease with a guide of €30,000 per annum or about €270/ac.
In Cork Eamonn O’Brien of CCM describes the letting market as very strong, with evidence of business people buying land to capitalise on the letting opportunities.
Prior to Christmas he sold a 22.5ac parcel of top-class roadside ground at Ballybrack, Carrignavar about 12m north of Cork city.
The holding was much contested by local farmers and business people and was bought for €423,000 or €18,800/ac by someone in the latter category.
The holding is now for rent and an opening offer of €300/ac is on the table. Mr O’Brien expects it to reach in the region of €400/ac
He said tenants are anxious to stay in current arrangements and are agreeing pay more, rather than face the open market in search of land.
“I recently had a five-year lease rolled over where the original price was €300/ac. The tenant is paying €350/ac for the next five years,” he said.
“In another case I had a tenant who paid €250/ac for the last five years now agreeing to a €300/ac rent for the coming term.”
Mr O’Brien identified the nitrates issue, exacerbated by the rising price of fertiliser, as a key driver in the rental market. Farmers are taking more land as a way of cutting back nitrate concentration and fertiliser purchase.
He said some tillage farmers are paying strong money for land as part of a delicate balancing act.
“Larger tillage farmers need to reach a critical mass of land to make their operation work. To do that, they use cheaper land to subsidise the more expensive ground.