Demand for letting land soaring across country

REPORTS from around the country indicate land letting is off to a flying start with €150 to €250/ac being paid for grazing land and up to €350/ac for tillage ground for potatoes.

Auctioneers and l e tt i ng agents report that a distinct shortage of land is driving the market.

Cork auctioneer, Dan Fleming, maintained that if he had 1,000ac of land for letting he would have clients for it.

“The land is being leased on longer leases now. And with young f armers putting i n serious inputs, they don’t want to fertilise and lime land just to give it back a few months later.”

According to Mr Fleming the tillage farmer is being squeezed out by dairy farmers.

“There is no way a grain man can pay more than €250/ac and make money,” he said.

“At the moment grain ground is making €250/ac near the city, grazing ground is making between €250 and €300/ac, while potato ground is making between €300 and €350/ac,” Mr Fleming said.

COMPETITION

Tom Crosse of GVM says that grazing land in the midwest is making €150 to €200/ac and he believes the price will get stronger as the year goes on. He regards the roll-over lease and local sensitivity as among the key contributors to the shortage in letting land.

“When lettings come up for renewal neighbours will not bid against the sitting tenant or, in the case of a new letting, they won’t oppose a neighbouring farmer who is known to be interested in taking the ground. There is no competition in the sector.”

According to Mr Crosse, when a new farm comes on the le tting market farmers are willing to travel 20 to 25 miles to farm it. Another fac tor impacting on the letting market is the belief that 2014 is going to be a reference year for the SFP entitlements.

“The search for expensive entitlements is on,” said Mr Crosse. “And there is no clarity around on who will be entitled to what when the reference is set.”

This year also sees changes in t he legislation governing lettings. From the beginning of the year, the landowner will pay the agent ’s fees on all lettings.

Prior to this, the purchaser paid the fees on an 11-month lease, with the landowner paying the fees for year one of the five-year lease.

“This i s one of t he fi r s t changes brought about by the new regulator for the auctioneering industry,” explained Mr Crosse.

ADVANTAGEOUS

The Limerick-based auctioneer pointed out that this new arrangement will make no difference this year to the price paid by farmers leasing land but he expects the fees will be built into the rental price in the years ahead.

“Of course we must also remember that the tax break for leases of longer than five years will be advantageous to the landowner and it will be interesting to see what impact this will have on the short-term market,” he said.