Rents must 'reflect end' of agri-environment schemes - TFA

The Tenant Farmers Association is advising landlords and tenants involved in current rent review negotiations to factor into their discussions the impact of the termination of classic agri-environment schemes such as Countryside Stewardship (CSS) or Environmentally Sensitive Areas (ESA).

TFA Chief Executive George Dunn said "A large number of agreements under classic agri-environment schemes will reach their natural end over the next couple of years and unfortunately there is no guarantee that it will be possible in every case to transfer into the Higher Level Environmental Stewardship Scheme (HLS). Whilst it might still be possible to join the Entry-level Stewardship Scheme (ELS) there is likely to be a reduction in revenue particularly if the farm continues to operate in accordance with the previous schemes conditions".

"Historically just over 50 per cent of ESA agreement holders and less than 40 per cent of those with terminating CSS agreements have been able to transfer into HLS. Despite the fact that the Government is keen to suggest that there will be an 80% increase in HLS activity next year it is clear that with more stringent targeting and with pressure on resources the number of classic agri-environment schemes transferring into HLS is likely to be lower than in the past," said Mr Dunn.

Both tenants and landlords are advised to look carefully at the targeting statements for HLS published by Natural England and to consult at an early stage with Natural England to ascertain the likelihood of being able to move into HLS following the termination of classic schemes on holdings which may be subject to rent review. It will also be important to review any existing rental agreements which have taken agri-environment payments into account.

"If there is a strong likelihood that a move to HLS will not be achieved then this must be taken into account in relation to any existing rental agreement and for the next rent review which will fix the rent for the farm for the following three-year period," said Mr Dunn.

"There are also many situations where it is the landlord who is the participant in the agri-environment scheme and in return for requiring the tenant to comply with the rules of the scheme through the tenancy agreement, a lower or discounted rent is agreed. If the landlord is no longer going to be in receipt of an agri-environment payment, the parties will need to think through how this will impact upon the landlord/tenant relationship going forward. I would advise those in such situations to discuss this without delay," said Mr Dunn.