CAP reform is still distorting the tenanted property market, according to the Central Association of Agricultural Valuers.

The amount of let land covered by the organisation’s latest tenanted farms survey – launched at its agm in Devon last week – fell by 4.5% in 2005.

This adds to a 2.5% fall in 2004, which followed eight years of continuous growth after the introduction of farm business tenancies in 1995.

Jeremy Moody, CAAV secretary and adviser, said the results of the survey were probably distorted by the introduction of the single farm payment.

This was because they covered both the last months in which owners and farmers could maximise their position ahead of the critical 15 May SFP application date, and the months following during which claimants had to make the best use of what they had been allocated, even if they did not know what that was.

“Under the English single payment scheme, many landowners wanted to regain occupation of their land to gain entitlements – if only at the area rate of payment – at the least to re-let with new clauses protecting their perceived interests in the entitlements,” said Mr Moody.

The number of seven-year agreements had also grown sharply, said Mr Moody.

These will run until 2012, when historically-based SFPs will be replaced entirely by flat-rate regional payments.

George Dunn, chief executive of the Tenant Farmers Association, said this was a worrying trend, even if seven years was longer than the average agreement.

“What has been the cost of signing up to these agreements?”

he asked.

“Will landlords be taking back the entitlements at the end?”

Mr Dunn said he was very worried that CAP reform would continue to depress the tenanted sector.

“The system that DEFRA decided to implement the SFP with has caused yet another year of confusion.

To see the loss of more land from the sector is depressing, to say the least.”

Taxation issues and uncertainty about obtaining agricultural property relief were also causing landlords to opt for contract farming arrangements over FBTs, added Mr Dunn.

“There are so many things working against the sector.”

Mr Dunn said the TFA was lobbying the government to make renting land more tax efficient for landlords.

andrew.shirley@rbi.co.uk