Tenants warned to check end-of-tenancy CAP entitlement clauses

Landlords are being accused of holding on to CAP entitlements that should be given to tenant farmers.

George Dunn, chief executive of the Tenant Farmers’ Association (TFA), warned that landlords were snatching single farm payment entitlements away from tenant farmers with “little or no compensation” at the end of tenancy agreements.

English farm tenants, especially those with farm business tenancy (FBT) agreements ending this year, were most at risk of losing entitlements, he stressed.

“Having looked carefully at a large number of agreements that purport to be able to allow the landlord to take entitlements, there are many where the clauses simply do not work and tenants are able to retain their entitlements,” he said.

“However, sadly we have also seen clauses which do provide landlords with the ability to remove entitlements from tenants.”

See also: Five top tips for farm business tenancy applications

Therefore, Mr Dunn urged tenants to check CAP entitlement clauses in their farm tenancy agreements, pointing out that each agreement “must be looked at individually”.

In 2004, the Tenancy Reform Industry group, which consists of farming, land-owning and professional bodies, drew up guidance on fairness between landlords and tenants.

In particular, the group highlighted that it would be “unfair if the individual to whom entitlement had been allocated were required by a clause in the agreement to give it up for little of no consideration in comparison to its value”.

The guidance went further by suggesting: “At the end of the tenancy, the tenant should be able to either retain control of the entitlement allocated to him for use against other land or pass it to his landlord or a nominee for fair compensation”.

Mr Dunn urged all landlords to abide by this best practice – even in cases where contractual clauses allow a landlord to acquire entitlements.

“Tenants should be aware that this is not legally binding,” he said.

In particular, the TFA said it was “disappointed” that despite this cross-industry guidance, some landlords, including the Crown Estate, have insisted on enforcing unfair clauses to remove entitlements from tenants for no compensation.

“It is very sad that a landlord such as the Crown Estate is using its dominant position to enforce a clause that the cross-industry guidance clearly states is unfair,” added Mr Dunn.

Ken Jones, director of rural and coastal at The Crown Estate, said: “The Crown Estate considers each  of our tenant’s entitlement on a case-by-case basis encouraging them to seek third party advice. We believe that a fair, commercial balance should be struck between landlord and tenant, taking into account all circumstances.”