Keep tenancy agreements flexible

Landlords and potential tenants need to think much harder before signing new farm business tenancies following the introduction of the single farm payment, says Graham Smith of East Anglian law firm Roythorne & Co.

Agreements for crops like potatoes and vining peas were less problematic because they tended to last for only one year, said Mr Smith.

But longer-term deals on cereal land were more complicated because nobody really knew what would happen to the SFP in the future.

“It is a new world and we are still feeling our way.”

Some landlords were asking for the SFP to be passed back to them with the rent reduced accordingly – or in some cases cut to zero – said Mr Smith.

However, this left them exposed to any cuts in payment rates through modulation or other deductions.

Likewise, tenants keeping the payment could lose out if they agreed a rent based on the current level of SFP.

To mitigate the risk, tenancy agreements should be as flexible as possible – perhaps with more opportunities for a rent review, Mr Smith advised.