The favourable tax breaks for landowners coupled with the security it offers to the Lessee  makes it very attractive for both the lessee and lessor.  The security of tenure it offers to the Lessee enables them to plan for the long term while also allowing them to invest in the land i.e reseeding, erect new fencing, improve drainage etc. Shorter term leases do not offer this security. Furthermore, long term leases are especially important in securing bank credit from a financial institution as they generally match loan terms to lease duration.

Of significant importance now, is the maintenance of eligibility for Retirement relief by those who lease out their lands on a long term basis. Remember, this relief is no longer available to those landowners who let their land on a short term basis. 

The Lease Agreement

Where an agreement is reached in principle between a landowner and potential tenant then the next step is to have a written agreement between both parties. The standard agricultural lease used in Ireland today is the IFA Master Lease document and can be viewed and downloaded on their website. This agreement covers the main items such as commencement date, rent, term of lease, rent review, BPS Entitlements repayment and any special conditions. In order for the Landowner to be eligible for the tax relief it will also need to be stamped by the Revenue Commissioners. The lease is also a great way to minimise any risk or confusion between the Lessee and Lessor.

It is advised that both Lessor and Lessee pay particular attention to the ‘Special Conditions’ that they enter on the Master Lease. Issues such as land management conforming to GAEC, Soil Fertility maintenance , Break Clause conditions, should be carefully researched and professional advice taken in all cases.

BPS Entitlements

One of the first questions a Landowner will ask when he/she is about to enter into a long term lease is what can be done to preserve their BPS Entitlements.  Generally leasing entitlements for the Lessor has not caused any major issues as the entitlements were leased with land and were documented in the Lease agreement. The transfer of entitlements form from the DAFM does not provide any provisions to protect the lessor from non-payment by the lessee. It is to be recommended that a separate written agreement/contract for the entitlements (Lease or Rental) is signed by both parties. This avoids any uncertainty if a dispute arises and clarifies when the entitlements are to be reimbursed back to the owner.

Rent Payment

Traditionally rent was paid in two moiety payments, usually the first around Spring time (March say) and the second towards the fall of the year (September say). However it is becoming more apparent that landowners are now insisting that the rent be paid on a monthly basis by direct debit.

The standard lease agreement provides that if the rent is in arrears for 21 days after becoming due, the landowner is entitled to re enter the land and the lease will terminate. and the landowner may still pursue the tenant for the outstanding monies.

It is recommended that a common sense approach be used when entering into a lease and the landowner should know who he/she is dealing with and enquire as to the potential tenants track record.

There are many things to consider before entering into a long term lease such as practical, legal and tax considerations. You should get advice in respect of all of these aspects before making a decision.

Eamonn McQuinn B.B.S., MIPAV, QFA.

Estate Agent & Valuer

Qualified Financial Adviser.

We have over 20 year’s experience in property sales, conducting lettings, negotiating rental fees and the completion of rental contracts.

Currently, demand for rental properties is unprecedented and we understand that property ownership and letting is a time consuming and often difficult process. Dealing with potential tenants, property maintenance, rent collection and property inspections takes time and often can cause unwanted and unnecessary stress for Landlords.
McQuinn Property Services are in a position to offer an unparalleled service in all aspects of Property Letting, ensuring smooth and professional communication with the Landlord at all times.

We offer expertise and guidance to Landlords so that they can meet all of the legal, financial and administration requirements associated with renting your property. We take a strict approach to tenant screening and vetting to ensure landlords find the right tenants and to ensure the smooth running of the lease.

McQuinn Property Services provide support and management in all areas of letting and include the following services in your letting fee:

• We promote the property on Daft, our website, our window display and online portals.
• We carry out rigorous tenant vetting and reference checks. Tenants are selected in conjunction with the owner. We arrange viewings to suit clients on an appointment basis.
• We draw up the letting agreement and organise the security deposit as well as setting up the standing order for receipt of rent.
• We register the tenancy with the Residential Tenancies Board as required.
• We organise BER Certification of your property where applicable.
• We carry out regular property inspections and issue regular reports to landlords.
• We respond to all tenant enquires, communications and complaints on behalf of the landlord.
• We advise on budget and improvement to maximise the rental potential of your property.
• We administer all income and expenditure and seek owner approval for exceptional cost items.
• We constantly monitor rent payments and swiftly deal with any rent arrears should they arise.
• We carry out end of tenancy inspections and energy supplier meter readings. We administer the security deposit and arrange any end of tenancy repairs and maintenance.
• We only use registered, qualified and insured Maintenance & Repair contractors and we ensure that all Health & Safety regulations are adhered to.

McQuinn Property Services is fully licensed by the Property Services Regulatory Authority and hold full professional indemnity insurance cover. We are also members of the Institute of Professional Auctioneers and Valuers.

We currently have pre-approved tenants seeking good properties to rent.

For a no hassle, no obligation assessment of and valuation of your house or apartment for letting please contact us on 066-7129355 or email property@mcquinnconsulting.ie

So Supply is finite and in fact Supply is shrinking considerably on an annual basis. On the Demand side , it gets more complicated when we differentiate between needs and wants.

In order to attempt to predict  the future Land Market in Ireland, perhaps it is beneficial to look into the past and see how various factors have influenced this specialised market.

As already stated, the Supply of Agricultural land  coming to the market is small and typically only about 0.5% of the Irish farmland landmass. Thus, the average acre of Agricultural Land only comes on to the market once in every 200 years. This timespan represents up to Six generations of families. So ‘once in a lifetime’ saying is a complete understatement !!!

We often forget about or maybe we are unaware of the significant area of land that is taken away from farming on an annual basis. Consider areas withdrawn for Housing, Sporting facilities, Roads and Forestry. Remember, this land area, once withdrawn from farming, is not being replaced.

Various EU Directives have placed considerable areas of farmland in Ireland under Designation status. This designation once placed on lands, imposes an economic loss to the Owners as once land is ‘Designated’ , certain restrictions kick in and both the Capital Value and earning power of such lands decline straight away.

The Fishler reforms of the CAP, came into effect during the last decade of the last century. This change saw the advent of the Direct Payment system of the CAP. More recently, we see the arrival of ‘Entitlements’ under the CAP. Though not tied to any individual land area, these Entitlements have had a positive effect on the land market and in turn land prices

Land as an Asset, is now a very efficient way of transferring wealth through generations. As well as considerable Tax breaks available on the transfer of land, there are additional Tax advantages available for the long term leasing of Agricultural land. These tax incentives have attracted many non farmers into the land market in recent years and there have had  a very positive influence on land prices.

Dairy farmers , have been the main buyers of land in the recent past. However, lending institutions have now, quite rightly , switched the emphasis on borrowing requirements away from provision of Security and more on to an ‘ability to repay’. This means that there are fewer farmers who can fund significant land acquisitions through borrowing . This factor seems to have provided fewer but stronger farmer clients wishing to purchase land on the open market.

Much has been made of the term ‘zoned lands’ in the past. Indeed at one period in time if land was ‘zoned’ , it was akin to winning the Lotto. This is not necessarily true in modern times. Some land that is zoned, does attract a premium when it comes on the market but this premium is seriously influenced by many additional factors such as location, infrastructure, density etc etc . Indeed, some ‘zoned’ lands have come to market and struggled to attract any premium on the agricultural land price unzoned.

Negative Interest Rates first appeared around 2014 whereby the ECB introduced the policy for eurozone countries. It is reported that there is Circa €125 bn sitting on Irish bank savings and deposit accounts as of late 2020. It is very likely that Irish banks will move to negative interest rates in the near future thus charging depositors a fee to hold their deposits for them. While it is impossible to predict the future, but is possible that those with significant cash deposits will look at the Irish land market for a home for their spoils. This would create a sellers market in a very short time.

The age profile of Irish land ownership provides an interesting study in its own right. There are now  more farmers aged over 65 that under 35 years. This is coupled with the absence of a farming successor on many of these farms. While many of these farms are and will be leased out short term, it is likely that  some will be offered for sale on the open market.

Buying or Selling land is the most important decision many people will make in their life-time. We meet such individuals on a daily basis and we consistently try to summarise the process as much as possible while not loosing the importance of each element of the process. Due to Covid restrictions, 2020 saw a significant decrease in acreage offered for sale. Of the properties that were offered for sale, the vast majority were offered for sale by way of Private Treaty.

We very rarely advise our clients to take a property to Public Auction without first sounding out the market on a Private Treaty basis. We now have the additional option in the Online Auction which has proved very beneficial and totally transparent to all interested parties. Sometimes, a combination of a few options delivers the best result.

So it is clear that the Agricultural land market is a specialised market which is influenced by many factors and is ever changing. One fact is important though and this is that Agricultural land is a secure Asset into which to put money bearing the past performance in mind. Sellers must also bear in mind that the current market forces are pushing prices up and its impossible how long this will last.

Eamonn McQuinn

BBS, QFA, MIPAV