Specific rules need to be followed to avoid financial sanctions when it comes to the sale or purchase of land that has been included in a farm business’s support scheme agreement.
Before buying or selling agricultural land in England, it is important that you carry out due diligence checks, particularly where the land has been included in a support scheme. The Seller should provide the Buyer with all relevant paperwork and information well in advance, and the Buyer should understand the full extent of what is expected from them when taking on these agreements.
For landowners who are looking to dispose of land used to claim payments under the Basic Payment Scheme (BPS), it is important that the land remains eligible up until the 31st December 2021. This means that the land must remain as agricultural (permanent grassland or crop) and exclusively used for agricultural activity (producing, growing, or rearing agricultural products and maintaining the land in a suitable state for grazing or cultivation).
If, however, the Buyer of the property intends to change the use of the land, for example, the Buyer is a developer and proposes to use the land for housing, then the Seller would need to withdraw their BPS application or face over-declaration penalties for their payment, even if the Buyers actions have caused the land to become ineligible.
For landowners wishing to sell a property which is tied to an Agri-environment scheme agreement, such as a Countryside Stewardship (CS) or Environmental Stewardship (ES), both the Seller and the Buyer must be clear on whether the Buyer is expected to take on the agreement. It is only possible to transfer a CS multi-annual management option agreement and not any claimed capital works element or standalone capital agreements.
Effectively this means that the Buyer must take on the Sellers responsibilities in order to meet the eligibility requirements set out under the agreement. The Rural Payments Agency (RPA) should be notified of the change of parties within a set number of days after the sale of the land. If the Buyer decides not to take on the agreement, the Seller must inform the RPA and have the agreement terminated, again within a set number of days. No repayments are needed to be made by the Seller unless there has been a breach of the agreement.
It is important to note where ES agreements differ. Where an ES agreement is terminated, the Seller may be required to repay the monies received. Whether you are a Buyer or a Seller of agricultural land continuing to claim rural payments such as BPS and CS, cross-compliance requirements must continue to be met up until the 31 December in each year of the scheme.
For more information on Land transactions, how penalties apply and the specific provisions on who is responsible for meeting these requirements, please contact Frank Smith & Co Solicitors on 01242 801748.