Tax incentives could double the number of landowners in NI who are prepared to let land out in long-term leases, a new study has found.

Researchers at the Agri Food and Biosciences Institute (AFBI) used interviews, discussion groups and surveys to investigate the factors influencing land tenure in NI.

Among landowners who already let land out, only 32% said they are “likely” or “very likely” to use long-term contracts. However, the figure rises to 65% if tax incentives were available.

“The use of tax incentives to encourage long-term land leasing is likely to increase its adoption in NI,” the AFBI researchers state.

The study found that 91% of respondents who currently let out land do it under short-term conacre arrangements. Only 5% use long-term leases, with the remaining 4% using both conacre and long-term contracts.

One-third of all agricultural land in NI is estimated to be let out in one-year conacre agreements at present, although most deals tend to roll over annually and become longer-term arrangements. However, the AFBI researchers point out that, while conacre allows flexibility between landowners and farmers, it is not a secure business arrangement.

“The system does not allow for a farmer renting the land to make longer-term investment planning and decisions, particularly around sustainable land management practices and productivity improvements,” the researchers state.

The study, which has been published in the scientific journal Land, found common trends among the respondents who were open to letting land under long-term contracts in the future.

These respondents were often members of discussion groups, larger landowners, dairy farmers, and those with higher educational attainment.

ROI tax breaks

In the Republic of Ireland, income tax breaks of up €40,000 are available for landowners who lease land out in long-term contracts. For a similar incentive to be introduced in NI, the decision needs to be made by the British Treasury in London.

However, the AFBI researchers suggest decisionmakers in Belfast could use policy levers at their disposal to incentivise a move away from conacre in NI.

“There is also the need to explore other means such as linking it to accessing government grant schemes and environmental regulation given that the environmental management of the land was considered a very important factor to the farmers that currently rent out land,” the paper states.