Landlords Stripping Tenants of SPS Entitlement

The Tenant Farmers Association has expressed disappointment that some landlords are using unfair clauses in tenancy agreements to deprive farm tenants of their Single Payment Scheme entitlements.

 

Following the implementation of the Single Payment Scheme (SPS) in 2005 a number of landlords took the opportunity of requiring tenants to sign up to new tenancy agreements containing clauses which forced those tenants to give up their SPS entitlement to the landlord at the end of their agreements for no compensation. A large number of those agreements were taken out for a five-year period and are now coming to the end. A further significant proportion of tenancies were drawn up for a seven-year period and will therefore be coming to an end in 2012.

 

TFA Chief Executive George Dunn said “Looking back to 2005, whilst some tenants were well placed to resist the insertion of clauses which would 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”.

 

A code of good practice issued in 2004 by the Tenancy Reform Industry Group, which includes representatives of landlords, tenants and professional bodies, stated that it would be unfair to force tenants who had been allocated SPS entitlement to give it up for little or no consideration in comparison to its value.

 

"At the time DEFRA took the opportunity of sending a copy of the code to all major landowners in the country urging them to take heed of the new guidance when discussing arrangements for tenancy arrangements and stating that SPS entitlement should not be used to gain unfair advantage for one party over another. Whilst many landlords did act reasonably it is becoming increasingly clear that a number decided to ignore the guidance. This includes some private landlords and some institutional ones such as The Crown Estate and National Trust,” said Mr Dunn.

 

"The EU never envisaged a situation where landlords were able to hold and control SPS entitlements. Without the annual payments provided by these entitlements most producers would be forced into a loss making position. With the entitlements in the landlords’ hands, tenants will be forced to rent them back which clearly gives the advantage to the landlord and not the farmer,” said Mr Dunn.

 

“DEFRA Ministers gave an assurance that it would monitor the situation to see if further measures were required to preserve a fair balance between landlords and tenants. The TFA is therefore gathering evidence to present to DEFRA and would urge all affected tenants to report their experiences to the TFA,” said Mr Dunn.