Strong demand for limited supply of English BPS entitlements

English Basic Payment Scheme (BPS) entitlements are in short supply, and with demand strong following recent policy announcements, prices have been climbing.

According to brokers, several factors are in play, including Defra’s announcements that 2022 will be the last reference year on which delinked payments will be based, details of the lump-sum exit scheme and the decision not to allow new entrants to apply to the National Reserve.

George King of Wiltshire-based WebbPaton said there were not many entitlements around this year, compared with previous years, so prices had risen.

See also: Lump Sum Exit Scheme to open in April with up to £100,000 available

“We are seeing very strong demand and very little supply. At the moment, I am not trading anything below £200/unit,” said Mr King.

“New entrants can’t claim on the National Reserve, so they must buy them on the open market. And the lump-sum scheme means that [anyone wanting to apply] can’t sell them – they have to hand them back to be eligible. So there are probably less entitlements coming to the market.”

Joanna Wall, from the Craven Arms office of McCartneys, said it had been a slow start to the trading window, but agreed things had taken off after Defra’s announcements about delinking and the lump-sum exit scheme.

“People are buying up the amount they require to benefit from those schemes going forward,” she said. “They are going very quick.”

At Cheshire based Rostons, graduate surveyor Alice Kearns said trade was stronger than anticipated, with average prices between £160 and £170 for English Non-SDA entitlements and £60-£65 for Welsh entitlements.

“There are a lot of people looking to purchase entitlements, but the number available on the market is considerably less, meaning that they are being bought quickly and at good prices,” said Ms Kearns.

“Last year’s prices were around £180 per entitlement, so we are not far behind this year, even with the changing payments.

“Our thoughts are that a lot of this is to do with the announcement that the Lump Sum Exit Scheme will require entitlements to be surrendered in order to receive payment.”

Non-severely disadvantaged area (non-SDA) entitlements had been selling from £160-£200/unit, depending on the size of the lot, while SDA ones were around the £170 mark, she said.

Hugh Townsend, of Townsend Chartered Surveyors, said prices for non-SDA entitlements had jumped over the past couple of weeks and the price was now flickering around the £200/unit mark.

Demand for SDA entitlements had also picked up with prices of £170-£180/unit being paid.

“Things are very busy and more akin to the final week of trading. There is a shortage of supply and still a very strong demand,” he said.

Townsend has forecast the potential value of an entitlement bought in 2022, based on the likely claim value up to 2027, to allow buyers to work out the return they will get from the initial outlay.

The figures suggest that one non-SDA entitlement bought in 2022 could generate a return of up to £435.34/ha over the period 2022 to 2027 for a small claimant (up to £30,000).

The value of the entitlement could drop to just over £303/ha for large claimants falling into the highest payment bracket.