Entitlements sold for three times their value

HIGH value basic payment scheme entitlements are trading for up to three times their value as demand outstrips supply.

Auctioneers report farmers with naked land are paying up to €2,500 per entitlement to purchase, while entitlements of €750 including greening are being leased at up to €550/year.

Most of the activity is expected to happen over the next two weeks as the deadline approaches.

Auctioneer Joseph Naughton, Ballinasloe said that entitlements worth €750 are being leased for up to 74pc of their value, with those in the €200€300 range making 58-63pc.

“Farmers renting land are tending to lease and farmers who own the land have a preference to purchase.

“For entitlements worth up to €200, we are getting 2.3-2.6 times their value for 80pc of them sold,” he said, advising that farmers with even small numbers of entitlements not being used “are foolish not to sell” because it is dead money otherwise.

Auctioneers state that the volume of entitlements being traded mirrors last year, however, it is sharply down on the 2011-12 period due to Capital Gains Tax and “clawback” which is having a serious impact.

Farmers are being warned that entitlements which have not been activated will be forfeited if not used, leased or sold in 2018.

Clawback

Entitlements being sold without land are subject to a 20pc clawback; for example, for 20 entitlements offered, only 16 will transfer to the purchaser. The purchaser pays for the number transferred.

John McGee, HMG Auctioneers, Kells, Co Meath said leasing was dominating the market.

“They are paying up to 75pc for lease entitlements worth over €600. The high value entitlements are in strong demand but not very plentiful.

“The €300-400 value units are leasing for up to 65pc and €200-300 leasing at 55-60pc with very little change in the price from last year,” he said.

“We are getting up to 3.25 times value for high value units being sold. Entitlements in the €600-700 range are making 3 to 3.25 times value. The only problem is the supply is very tight. Those over €300 are making 2.5 to 3 times their value,” he added.

Michael Guiry, Waterford said the main problem is that the supply is very, very tight.

“It is a ratio of at least 10:1 on supply and demand. The supply is down 90pc on 2011-12.

“They are not being sold because of the clawback. Pressure needs to be applied to have it lifted,” he said.

“The clawback of 20pc and CGT of 33pc is killing the business at the moment and it needs to change.”

North Tipperary auctioneer Eoin Dillon believes the trade will be late due to the bad weather.

John Earley of Roscommon reports prices on a par with last year.

“People are buying entitlements for 1.75 or double their annual worth. In leasing it is shared 50/50 between the parties or 60/40 with 60pc of the value staying with the owner and 40pc going to the tenant,” he said.

Cork’s Dan Fleming said it is beginning to pick up with 1.65 to double being paid to buy entitlements, less the greening.

Mike Brady, who is also Corkbased, said on the whole leases were far more popular.