A new market in rented rural land is expected to emerge next year, as agricultural subsidies paid to farmers are split from the land and become separate commodities, and this is going to have ramifications well into 2005 and beyond, the Royal Institute of Chartered Surveyors (RICS) has said.
The introduction of this new EU Single Payment scheme means that farmers will no longer need to grow a crop or keep an animal to receive a subsidy, and for instance, if an occupier leaves their land taking the subsidy with them, landlords will be left with what is being termed ‘naked acres’ which will have considerably less value than those with the entitlement still attached to them.
This is bound to lead to rental prices dropping in areas without entitlement, says the Institute.
The impact of this scheme is currently having little effect on the market say surveyors, but this is all due to change as upheaval kicks in for much of 2005, and the market has to readjust.
RICS rural spokesman, Hugh Fell, who chairs a panel of rural chartered surveyors who have looked at this issue said today: ‘It used to be that a farmer who grew an acre of cereal on arable land was eligible for a subsidy. In the future their entitlement to subsidy will be divorced from the land and attached to the person or company.’
And it is this which will so affect rental values, says RICS. Land without entitlement will simply not command the prices which land plus entitlement will be able to ask, and this will adversley affect some landowners.
For further information on the changes to farm subsidies, visit Defra’s dedicated website which aims to answer commonly asked questions about this undoubtedly complex development in British farming.