The rental market at present is very active, with a large increase in rent agreements before Christmas, compared with previous years, according to Martin Lonergan of CCM property network, a subsidiary of Cork Marts. It has coverage throughout Munster, with offices in Bandon; Cahir; Mitchelstown; Midleton; and Macroom.
“The increase in activity in the rental land market is due to a number of factors. CAP reform is on everyone’s mind; the change in the climate has resulted in fodder shortages; and high stocking rates on farms have not been viable in 2018,” he said.
This has meant farmers are reducing stocking rates and increasing their land base to achieve growth in a more sustainable way.
The preferred lease term from vendors is definitely long-term lease agreements, to avail of the substantial tax benefits, Martin said.
“We are building in rent reviews every three to five years into nearly all the long-term leases to ensure that a fair price is achieved and the passing rent is kept in line with the economic climate and market conditions,” he said.
Farmers with larger land blocks are signing into longer-term agreements of up to 15 years and are, therefore, availing of €40,000 in tax relief per annum.
“For a farmers’ lease to qualify for tax relief, your lease must be in writing and for a definite term of five years or more. The lessee cannot be connected to the lessor. If the lessee is a company, it cannot be under the control of you or any person connected to you,” said Martin.
“The lessee must use the leased land for the purpose of carrying on a farming trade. It is important to remember that the vendor can only qualify for one reduction, regardless of the number of qualifying leases you may have,” he said.
A lease term of five years or more but less than seven years, will attract tax relief value of €18,000, Martin said.
“A term of seven years or more but less than ten years, will have tax relief value of €22,500. A term of ten years or more but less than 15 years, will have tax relief of €30,000. A term of 15 years or more will result in tax relief of €40,000.”
A number of farms in excess of 100ac have been leased from €200/ac for marginal land types to €300 for tillage-type grassland. Naked land and smaller parcels of ground are achieving similar interest and prices.
“We in CCM property network are expecting a very active land rental market for the spring of 2019 and are actively looking for land to keep up with the demand.”
Further information is on: www.ccmproperty.com.