A template tenancy agreement has been developed by the Central Association of Agricultural Valuers (CAAV) to encourage longer-term leasing of farmland in NI.

Speaking to members of the NI Rural Valuers’ Association last week, Jeremy Moody from CAAV said that a lack of familiarity with a useful model for tenancy agreements was a reason for the low uptake of longer-term leasing in NI and for around 30% of farmland being leased in conacre instead.

He said that it is now known that conacre has no advantage over longer-term tenancy agreements when claiming CAP payments and also in taxation, in particular agricultural property relief for inheritance tax or capital gains tax. It is widely accepted that the conacre system does not encourage farmers to invest in land to improve soil fertility and productivity. The wider use of longer-term leasing in NI was also recommended in the Sustainable Land Management Strategy for NI published last October by an expert working group chaired by John Gilliland.

Moody and Gilliland both said at last week’s event that the template tenancy agreement should be used as an option for land leasing and that it was not developed as part of a process to bring to an end the conacre system.

“If we could get 50% of conacre land into ?ve-year leases that would be fantastic, but we are not preaching for a ban on conacre,” Gilliland said.

In the Republic of Ireland, uptake of tenancy agreements has been encouraged by annual income tax breaks of up to €40,000 for landowners’ rental income from longer-term leases.

No such incentive exists in NI and any changes would be a matter for the British Treasury, not a Stormont Executive.

However, Moody pointed out that there remains no disincentive for longer-term leasing and Gilliland added: “When is it not in either party’s interest to have land better managed?”

Tenancy

The template agreement developed by CAAV allows for tailored changes by landowners and farmers and is available from land agents that are members of the NI Rural Valuers’ Association or from CAAV directly. The agreement itself is for a tenancy of grassland but can be altered for other crops. “The length of time of the tenancy is up to the landowner and farmer and involves consideration of a wide range of factors by each party,” Moody said.

A rent review is included at a maximum of once every three years with six months’ notice and rents should link to market returns.

“The rent review clause disregards the tenant’s improvements to the land, so that they are not paying for their own sweat,” Moody added. There are also clauses contained within the agreement for death, as well as appointing an arbiter in the event of a dispute to avoid going to court. “There is a break clause provided within the agreement, so the parties can break out if they felt that their businesses were going to be really challenged by Brexit,” Moody confirmed.

Timeline

Commenting on the implementation of the recommendations from his Land Management Strategy Group, Gilliland acknowledged that the collapse of the Stormont Executive has cast doubt over the timeline. “I cannot give a de?nitive answer when this will be in place,” he said.