While there has been an increase in the popularity of long-term land leasing in recent years some land owners are still hesitant of the measure.
That’s according to a new report by the Society of Chartered Surveyors Ireland / Teagasc Agri Land Market Review and Outlook 2016.
It says there has been an increase in long-term leasing in recent years, with the measures introduced in Budget 2015 seen as further supporting this development: 61% of chartered surveyors that responding to a survey in the report said that these measures had either a moderate or significant impact on transactions with long-term leases in 2015.
However, the report says while there are clearly benefits to tenants and landowners in engaging in long-term leases, some chartered surveyors believed that some landowners were still hesitant and were taking time to come around to the idea of leasing out land for longer periods.
However, chartered surveyors also suggested that the consequence of longer lease terms meant land was taken out of the market for longer periods, leading to tighter supply in the rental market.
Land rental market
According to the report, Connaught/Ulster was the only region to record growth in rental values in 2015.
The largest increases recorded were for grazing lands, rising by between 7 and 8%. Rents for crop lands rose by between 2 and 6%, but are still just below 2010 levels.
Rents in Leinster remained mainly unchanged but relative to 2010 rents for crop lands are 40% higher while rents for grazing lands are around 25% higher.
In Munster rental values fell by between 2 and 4% for grazing lands and between 4 and 9% for crop lands. However rents in the province are still between 29 and 43% higher than recorded in 2010.
This report highlights the fact that Ireland has only 16% of agricultural land in rental agreements. While this is the same figure as Poland, the share of land in rental agreements in other countries is much higher.
It ranges from 27% in the Netherlands, to 32% in England to 63% in Belgium and 78% in France.
According to the report countries like Ireland with a low level of land market regulation tend to have a relatively lower share of land in rental contracts.
New entrants into farming are more likely to rent than to buy
Some chartered surveyors suggested there are fewer new/young farmers and small farmers in the market to buy agricultural land than in previous years, primarily as a result of farm incomes coming under considerable pressure since the latter half of 2015 due to the decline in dairy and beef prices.
New/young farmers without significant equity available to them are finding it difficult to access finance and are therefore being pushed into the rental market.