Agricultural Tenancies and Environmental Schemes Survey 2022 (England)

With so many new schemes coming to the fore, there were always going to be questions about who was eligible to enter these schemes and how Defra’s ambitious targets were going to be met across the whole of the farming sector throughout England. What is clear is that 2022 and 2023 are a time of huge change for all land managers in England, be they landlords, tenants, or owner occupiers. At the same time, the Defra Environmental Land Management (ELM) scheme is only partly developed, Biodiversity Net Gain (BNG) is awaiting full implementation, and carbon markets too are embryonic.

There has been some debate as to how tenant farmers and owners of tenanted land will engage with the new ELM scheme, and in particular, the measures within Local Nature recovery (LNR) and Landscape recovery (LR). Defra collected data through a tenants-focused survey on these issues in April/May 2022.

This prompted the CLA to run a similar survey to pick up the landlords’ position, to inform the Tenancy Working Group and Defra also. This CLA survey was open throughout June and July to capture landowners’ approaches to tenancies and these schemes.

250 landlords responded to the survey and they provided data on 5,275 tenanted holdings.

Over 70% of respondents had already engaged with their tenants on the new schemes, despite there being limited information available. However, the figures for landowners with portfolios of between 1-5 tenants showed only a 50% engagement and there are likely to be several reasons for this. It is expected as more scheme detail comes forward engagement will increase.

The majority of landlords said that they would amend tenancy terms or the length of tenancies, if requested, so that they could allow the management prescription and scheme length. There were a third that said they were “not sure”, which we suspect reflects the lack of scheme detail.

The survey reflected that 50% of landlords covering over 4,500 were concerned that some of their tenants may not enter these tenants which would impact on the farm viability, and the loss of environmental management on biodiversity. 67% of respondents said that they would be happy to enter collaborative schemes with their tenants.

60% of Agricultural Holdings Act (AHA) tenancies include dwellings, and these could carry significant maintenance of obligations. Half of AHA tenancies have not got an identified successor which could impact on long-term planning and will concern the landlord.

There is a lot of talk about Farm Business Tenancies (FBTs) only being for an average of three or four years. This average is driven down by a number of seasonal or short-term lets, and such averages are not always helpful. Interestingly, our survey shows that the average FBT is eight years and almost half were longer than 11 years.

Where tenancies come to an end, most said that they would let their current tenancy roll on or relet to the same tenant, and some said that they would go back out to tender. Only 18% said that they were not considering reletting some of their tenanted holdings in the future.

It is encouraging that landowners are already engaging with tenants on the future management of their holdings. The lack of scheme detail hampers this engagement, not the willingness of the landlord. Of course, agri-environment schemes are not new, even if the new suite are more focused on environmental outputs.

Landlords are prepared to reach agreements with their tenants to enable these schemes to be implemented on holdings. The key is reaching agreement, in the main, this will only be required where there is land use change or a longer time commitment and will avoid problems later on.

Most would welcome the opportunity to enter into a collaborative scheme, which could enable larger-scale projects to be delivered across a number of holdings. This is an area that Defra may wish to invest in.

For those responding to the survey, longer-term tenancies are the norm, and this will become more so when there is certainty on schemes. It is encouraging that after over 10 years of persistent debate on tenancy reform, confidence is still out there. However, further proposals for tenancy reform run the risk of damaging confidence in letting land.

There is concern over the impact on viability and environmental management on tenanted land that is not under-pinned by an environmental scheme.