‘Locked up’ land in long-term leases is driving the rise in rental prices, chair of the Society of Chartered Surveyors Ireland (SCSI) rural agency group James Lee has told the Irish Farmers Journal.

Tax-free incentives on long-term leasing has been highlighted as the main reason fewer farmers are choosing the conacre system and has led to a tightening supply of land for rent on the market.

“Long-term leasing appeals to farmers greater than the conacre system, as it offers extra security in that you know the land will be looked after and also they will save big on tax,” Lee said.

“A farmer who leases his land for between five and seven years can make a tax-free income of €18,000/year.”

Environmental pressure

According to the SCSI Teagasc Agricultural Land Market Review and Outlook Report 2021, rental prices in Connacht and Ulster are expected to rebound by 6% this year, a little behind Leinster on 8%, but ahead of Munster on 5%.

Lee said that 24% of agents reported a decline in the volume of land leases in 2020, compared with just 8% in 2019.

“Year on year we may see land rental prices jump by up to 10% as a result of this locked-up land. It varies slightly between provinces, but the general trend points in one direction.

“Demand for rental land is set to increase as a result of environmental pressures from the new CAP, which will see farmers look to expand their land base and spread their environmental impact.”