Tenants could lose SPS entitlements as rental terms end

Some English tenant farmers could risk losing their SPS entitlements as their rental agreements come to an end.

That’s the warning from the Tenant Farmers Association, which says producers could find themselves exposed to clauses within contracts stipulating entitlements are handed over to the landowner at the end of the term.

It is particularly an issue this year as many agreements set up in 2005 – the year the SPS was introduced – come to a close.

“Looking back to 2005, while some tenants were well placed to resist the insertion of clauses that have seen their SPS entitlement taken away by the landlord for no compensation, many others were given no option and had to sign up to these agreements for fear of losing their livelihood and, in many cases, their dwelling,” said TFA chief executive George Dunn.

He points out that this goes against the EU’s vision of how entitlements should be allocated and DEFRA’s assurance to preserve a fair balance between landlords and tenants.

“We are gathering evidence to present to DEFRA and would urge all affected tenants to report their experiences to the TFA.”

The Country Land and Business Association‘s chief surveyor, Oliver Harwood, believes the picture is not quite as bleak as that painted by the TFA.

“This is not quite as big an issue as it might seem. First, SPS entitlements are now plentiful and relatively cheap to buy,” he explained.

“Moreover, the rent will generally reflect whether it is the landlord that holds the entitlement or the tenant.”

He believes it is important that landlords should write clauses into tenancy agreements to ensure entitlements stay with the land.

“It is not unreasonable for landowners to seek to restrict departing tenants from walking away with claims at the end of the term.

“And, where the agreement is being renewed or extended, negotiations will usually see the tenant retaining the payment.

“After all, it’s not in landlords’ interest to hold the entitlement. Don’t forget that if they go for more than three years without exercising the SPS then it is lost – to claim you have to be the occupier of the land so most wouldn’t qualify.”

The fact that there are now more SPS entitlements than eligible land has had a significant effect on their value. Each year some 28,000-36,000ha (70,000-90,000 acres) comes out of agricultural production for forestry, development, mining and environmental schemes, according to Mr Harwood. The net result is that some entitlements have recently sold for their annual payment value.

 SPS claims which amount to tiny sums are costing DEFRA millions of pounds, according to the Liberal Democrats. In the worst example, the party discovered that each year a payment of one penny has been made to one claimant.

As each SPS claim costs £1743, the Lib-Dems propose introducing a minimum payment of £300 and claim that this would save up to £14m in payments and processing costs. The party would then use those savings to fund a hill-farming apprenticeship scheme.

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