Agricultural land prices in Northern Ireland over the past six months have continued to vary widely depending on the location, land type and demand from interested parties.

There has generally been a reduction in the amount of land coming on to the market this year. In particular, the number of larger blocks of land or full farms offered up for sale has reduced, with most properties on the market compromising of smaller lots of land.

Thomas Osborne of Osborne King Commercial Property Consultants, which specialises in land sales across NI, said that the strongest demand continues to be for the smaller lots of land on offer.

He said that land on the market up to 40 acres in size is most attractive to potential buyers, with fewer people interested as lots move closer to 100 acres or over.

“There are some areas where three-or four-acre fields can make £10,000 to £12,000 per acre, but if the same land was in a bigger lot over 50 or 60 acres you might only get £5,000 or £6,000. Availability of finance for the bigger lots is the main reason fewer people are interested,” he said.

Farm finances across all sectors have come under significant pressure over the past two years, which has been reflected on the demand for land from farmers as many are not in a position to buy land.

“Prices in certain areas would be back a bit but demand for good-quality land is still there. Anyone buying land views it as a long-term investment and still see good farmland as a sound investment,” Thomas said.

Demand

Auctioneers that the Irish Farmers Journal spoke to, said that a piece of land for sale that has interest from two or more farmers with suitable finances continues to make prices above what was expected. Likewise, if there is less demand from neighbouring farmers then prices for some lots of land can be a lot lower than anticipated.

Prices for residential and development land have improved recently as the housing market continues to pick up after the downturn. Thomas said that some farmers that sell land for development are often keen to invest their money back into agricultural land and have the capital to push prices up if demand is there for a particular lot.

Auctioneers are also stating that the uncertainty brought about by the Brexit vote surrounding the future of farm payments in the form of a UK domestic agricultural policy has not had an impact on the agricultural land market.

“We haven’t seen any knee-jerk reaction to Brexit at local level in either agricultural or development land markets. It creates uncertainty, but the only thing is that interest rates are at an all-time low, which helps borrowing. We won’t know until well down the line what a new UK policy will look like for farmers,” Thomas said.

Quiet land trade in the northwest of Northern Ireland

The amount of land coming onto the market in the northwest of Northern Ireland has reduced in 2016, with most auctioneers stating that land continues to meet a mixed trade.

Derry-based auctioneer Robert Gourley said that the last two years has seen an inconsistent land market in the northwest.

“It is a very up and down market at the minute in my mind. It depends who’s beside a particular lot and who wants it. If two men both want a bit of below-average land, it could make £6,000 to £7,000 an acre. Then there could be a bit of better-quality land with no one in particular beside it that is interested and you would struggle to get it to £8,000 per acre,” he said.

Overall, Robert said that most prices in the Derry area hold at around £7,000 to £8,000 per acre, with the best prices reaching £10,000. He said that the number of larger blocks of land coming up for sale has reduced over the past year, with most lots on the market being smaller areas of land.

“Over this last six or 12 months, the amount of land coming on the market has been quiet in the northwest but also across Northern Ireland. It is probably a factor that is holding up land prices with the market not being flooded,” he said.

Most land on the market tends to be of good quality, with Robert saying that there has been little hill land offered for sale recently.

“Farms in a scattered layout on poorer land tend to be hard to sell and can go for £4,000 to £6,000 per acre. Location is key for a lot of buyers and generally farmers like a well laid out block of land with good access – ideally something that runs beside their existing farm,” he said.

Robert said that pressure on commodity prices across sectors has generally not had an effect on most farmers’ decisions to buy land.

“Farmers won’t buy land based on a few bad years. If they want to buy land then it’s over a 20-year period that they look at the investment,” he said.

Robert said that customers are a mixture of full-time farmers, farmers with an additional off-farm income and business people investing money in land.

Land rental prices are

likely to remain steady

Low prices across sectors for farm commodities are likely to allow conacre rents to remain steady or move back on previous year’s levels.

Almost 30% of land in Northern Ireland is let out in the short-term conacre rental system, with many agreements set to commence again at the beginning of November.

“I don’t think there will be a big change in conacre, there will be no significant increase with farming in all sectors going through a difficult time,” Newry-based auctioneer Gary Best said.

Similar to the land market, conacre prices vary widely depending on land type, location and, in particular, the demand for land among farmers in an area. In general, most grassland is reported to be rented at around £120 to £160 per acre. In areas of high demand, prices can go significantly higher.

Only farmers actively farming land in NI can claim Basic Payment, so arrangements vary between landowners and tenants if entitlements are leased from the landowner or if the farmer owns the entitlements themselves.

Longer term leases

“There are a lot of guys trying to get into an agreement where they have it for up to five years.

“It is easy to do a bit of work to the land knowing that you have it for a longer period,” Robert Gourley said.

He added that some landowners are happy to have longer-term leases but others are sceptical and reluctant to commit. In NI, there are no tax incentives for long-term leases for landowners, such as the €40,000 income tax exemption per annum in the Republic of Ireland.

Efforts continue in the industry to promote longer term leases as a better land use mechanism for both tenants and landowners.

A report on recommendations for a strategic land management policy for government in NI, chaired by former Ulster Farmers’ Union president John Gilliland, is expected to be published at the end of this week.

Also, the UFU and Young Farmers’ Clubs of Ulster are in the process of developing a land mobility service in NI similar to the scheme operated by Macra na Feirme.

Funding arrangements and recruitment of a coordinator for the scheme are currently being worked on by the two organisations.

Low farmer activity in land

market in southeast of NI

Land prices in the southeast of Northern Ireland have historically been one of the most expensive areas of the country and the current land market continues to be liveliest here.

Newry-based auctioneer Gary Best said that the amount of land coming to the market has increased in the past six to nine months, with prices generally remaining steady.

“We would have sold around 33% more land this year up to September, compared to the same period in 2015. There is more land on the market but it is not depressing prices as yet,” he said.

Gary said that the best-quality, well-located land going through his books is making £12,000 to £13,000 per acre.

He said that most buyers tend to be business people not related to the farming industry or else farmers with an additional off farm income.

“Small lots are also more affordable for a business person or someone who wants a bit of land to run a few cattle,” he said.

Full-time farmers have become less active on buying land and tend to be interested in the smaller lots located close to their existing farm which are more affordable overall, Gary said.

“There is a mixture of the size of land coming on to the market. We have quite a lot of small lots from 10 to 30 acres, which attract a wider range of bidders, including farmers. There have also been quite a few larger farms that have come on the market recently,” he said.

Inheritance

He said that there has been an increase in the number of cases where family members have come together and put a piece of inherited land on the market.

“In the past, some holdings that were left to family members with no farming interests after a death would have stayed in the family for a generation and been leased out in conacre. But we are seeing that now there is a greater likelihood that siblings will get together and sell it within a year or two,” Gary said.

There have also been increases in the cases of larger holdings being bought by older people to avail of full agricultural relief for inheritance tax.

“Older people with money available that will eventually be inherited by a family member can invest it in land for the successor to inherit with no inheritance tax deductions,” Gary said.

Gary also said that Brexit and farm income uncertainty has had little effect on land prices. “I still believe that when a bit of land comes up, it is locals or people around it, who maybe only get an opportunity once every 20 years that are interested in it. If they have the money to buy, they aren’t too concerned about Brexit and will give it a go,” he said.