Here’s how it’s done – transferring entitlements

Entitlements come in a number of different varieties, though most of them are either “normal” entitlements or set-aside entitlements.

There are also authorised ones (for fruit, vegetable and potato growers – see next page), special ones and national reserve ones.

In England and Wales, each one will also be classified lowland, severely disadvantaged upland or moorland depending on location, and can only be claimed on land with a corresponding status.

As well as permanent transfers (with or without land), they can also be leased, gifted or transferred through inheritance.

To make a transfer, the vendor must fill in an RLE1 form which has to be ordered from the RPA, divisional offices of the Welsh Assembly Government, area offices of the Scottish Executive or local agriculture offices in Northern Ireland.

The form should arrive with the owner’s entitlement numbers pre-populated.

One form will be needed for each separate transaction, so sales of three lots will call for three forms.

Certain restrictions apply, however.

Entitlements can also be let, but only if they are accompanied by land let in a farm business tenancy over exactly the same period.

The same six-week notice period applies for processing the transfer, and six weeks’ notice must also be given if the lease is ended before term.

For those who are already tenants on the land and want to attach entitlements, it will be necessary to end the existing lease and start another with the entitlements.

Most brokers believe there are ways around the “with land” rule.

Philip Wynn, head of agribusiness at Savills, says: “It is difficult to see how DEFRA or the RPA could prevent the sale of an entitlement with the vendor retaining an option to buy it back, to get around the need to transfer land with entitlement under the lease rules.”

Another trick would be to let out the income from the SFP, not the entitlement itself, said Mr Wynn.

This could be attractive to banks that could use the income as collateral for lending, similar to a mortgage.

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