The government has missed a chance to create more sustainable tenancy opportunities after it announced new details on the long-awaited lump sum exit scheme, the Tenant Farmers Association (TFA) says.
Applications for the lump sum exit scheme are due to run from April until September, with payments based on the average direct payments made to the BPS applicant from 2019 to 2021.
This reference figure will be capped at £42,500 and multiplied by 2.35 to calculate the lump sum, meaning that farmers could receive up to £100,000.
HMRC also confirmed that the payment will be treated as capital and not income.
The exit scheme is likely to attract older, owner-occupiers with relatively small holdings and without available successors.
In taking part in the scheme, Defra will allow retiring farmers to retain ownership of their land subject to granting a lease for a period of at least five years.
They will also be able to continue living in the farmhouse and retain a holding no bigger than 5 hectares.
While welcoming the scheme's details, TFA chief executive George Dunn said it was "very disappointing that Defra has not been bolder in its aspiration".
He said the government could have required owner occupiers who took part in the exit scheme to offer tenancies of at least 10 years or more.
"With 90% of all new tenancies already let for only five years or less, this would have been a good chance to create more sustainable tenancy opportunities,” he added.
Other possible potential beneficiaries are tenant farmers with rights of tenancy succession and who have eligible and suitable successors waiting in the wings, the TFA says. The scheme will allow the retiring tenant to participate with the successor taking on the holding.
And tenant farmers, either with lifetime agreements or without successors, might be attracted to take up the scheme, the group explains.
Mr Dunn added that landlords should not waste this 'time limited opportunity': "There are many who have been extremely keen to obtain the vacant possession of land that may have been held by generations of farm tenants.
"Disappointingly, we have heard of situations where landlords have sought to scale back offers for tenancy surrender previously made, on the basis that the tenant will now be obtaining the benefit of the exit scheme.
"Landlords should not be greedy, this scheme is designed to assist individuals into retirement, not to line the back pockets of landowners and to give them the option of a cheaper deal.”
The TFA also raises concerns that some tenant farmers will not be able to complete all the necessary legal steps to finalise arrangements in order to exit the industry within the time requirements set out by the scheme.
