Attention to Detail - Retirement & Delinking Schemes
In this changing world of farming, there are new schemes which will raise practical issues for landlords and tenants.
The ‘Retirement Scheme’, has been talked about for many years since Agenda 2000. The consultation process does not give us the scheme detail and that is what we will need to see to fully understand the implications for landlords and tenants. The recent Tenant Farmer’s Association survey of 360 tenant farmers indicated that 75% will consider retiring from their tenancies on introduction of the scheme. But what will be the scheme’s rules and eligibility criteria – can everyone apply? How is eligibility assessed? Is there a ‘reference’ year’? Do you have to completely give up farming? And of course, how much is it worth?
At the expected likely payment level, there will have to be several other factors used to make the retirement decision for the tenant, including the potential rehousing cost as well as the harsh economics of farming, with no BPS and uncertainty over potential income from schemes, such as ELMS. But it will also include the landlord’s wish to add to the financial incentive to the tenant to retire. This will almost inevitably depend on the landlord’s view of the future health and strength of British agriculture, to farm in hand or let again – with the continued difference between FBT rents and the AHA rents still encouraging them to enter into talks with the tenants.
The detail for the ‘Delinking’ of the BPS from the land is also eagerly awaited as again we need to know how this will practically operate. With this uncertainty comes concern that current tenancy agreements may not cope with this delinking scheme. The experience of the decoupling of payments in 2005 (for example, the extreme concentration of high value payments such as Beef Special premium into a small number of entitlement units) should emphasise the need to look at how current tenancy terms will protect the payment rights. Of course, as we adapt to farm without BPS the impact will disappear but, in the meantime, it is a detailed matter to look at especially, for short term FBT agreements.
For further information please contact Ellie Allwood
To take part in the Consultation process see the Government's Consultation on Exit Payments to Farmers and the BBC article