A RECENT change to Irish tax law has 'significantly boosted' both the amount of land in the let sector and the average length of tenancy – prompting UK land valuers to call on the Government here to follow suit.

According to a review of the Irish land market by the Central Association of Agricultural Valuers, 2015's substantial increases in Income Tax relief on long term letting of Irish farmland produced an 'impressive response' in terms of increased letting activity

“Tax returns point to around 300,000 acres having been newly let in 2015 and 2016 on such terms, with the area let on five years and more increasing from 2% of Irish farmland in 2001 to 6% (c.660,000 acres) in 2016,” noted CAAV secretary and adviser Jeremy Moody. “As land management decisions frequently take time to implement, that is a striking initial response.”

With the Irish let sector wound down a century ago, Irish landowners have since only used conacre seasonal agreements, which cover around 30% of the farmed area. While some let land is coming from that conacre, some was also moving directly from in-hand farming, reported Mr Moody. “The area of conacre fell by 3% in 2015, 15% in 2016 and 28% in 2017, suggesting a progressive shift to longer term lettings as desired by the Irish government, as well as drawing more land into the let market.”

Tax figures show that the level of relief claimed increased from €9.2m (£8.3m) in 2014 to €13.9m (£12.5m) in 2015 and €19.4m (£17.4m) in 2016: “With a 33% increase in the number of taxpayers claiming the relief in 2015, and another 24% increase in 2016, these measures have encouraged more landowners to become landlords,” he said.

One of the Irish government's reasons for implementing the tax change was to improve agricultural productivity by moving farmed land into the hands of ‘trained’ people, giving security for investment and improvement. “Based on a large econometric study, that was found to be two or three times as effective as moving land out the hands of the over-65s, resulting in a 12% gain in overall production,” said Mr Moody. “Such a gain would be a major and necessary boost for farming’s profitability and resilience.”

With the UK Government now looking to boost agricultural productivity, the hard evidence from the Irish Revenue showed that tax relief could have rapid and long-term effects, he added. “This demonstrates how tax relief can open up land occupation in the UK, providing important flexibility to handle the changes and challenges post-Brexit. I’d urge the Government to follow this and follow it properly, not to make a token gesture – if you want to achieve something significant, make sure it’s big enough to work.”