Environmental Stewardship

    Environmental Stewardship - Transferring Agreements

    Problems can arise when transferring Environmental Stewardship schemes on sale of part of the land.

    The problem usually relates to the underlying ELS (very few HLS schemes standalone).  Where part of an ELS is transferred, both parties (buyer and seller) have to secure the 30 points per ha on their respective blocks although the length of the agreement will remain the same as the original agreement.  If the distribution of options is uneven this may be expensive for one of the parties.  
    If the party transferring the agreement does not ensure that the new occupant of the sold land enters the ELS on the transferred area there is a risk, at least, that all the payments made to date will have to be paid back to Natural England.
    ELS rules change at the end of the year and the new guidance booklet should be available from the middle of October although applications under the current rules will be permitted up until the 1 December.  Points for several of the options will be reduced making it harder to enter although there are also some new options.
    Natural England will sometimes allow the new occupant to start a new five-year agreement so that a buyer or new tenant can combine any existing scheme and the transferred obligations into a new scheme under the current rules rather than the (generally) less favourable rules post-January 2013.  This does not necessarily mean that it is worth doing so.  For residential estate sales the post-2013 options might be more favourable because of the ability to be paid for more attractive mixes.
    It is also possible to adopt a different route on transfers.  With schemes which are due to finish relatively soon it may be possible NOT to transfer the scheme but instead impose management requirements through the sale contract so that the scheme is maintained as a single unit until it ends.  This is only sensible when there is a short period to run and/or if the farm is sold in several lots so that it avoids the need for several parties to put in new options for a short period. It is unlikely that the dual use issue would arise in a short period (under 1 year) but should be covered by the contract under current rules.
    This is a surprisingly complex area so professional advice is advised.

     
     

    Key contacts

    Andrew Wraith

    Andrew Wraith

    Director
    Food & Farming

    Savills Lincoln

    +44 (0) 1522 508 973

    +44 (0) 1522 508 973

     

    Steve Hollis

    Steve Hollis

    Director
    Food & Farming

    Savills Salisbury

    +44 (0) 1722 426 853

    +44 (0) 1722 426 853

     

    Keith Preston

    Keith Preston

    Director
    Food & Farming

    Savills Oxford

    +44 (0) 1865 269 170

    +44 (0) 1865 269 170

     

    Ashley Lilley

    Ashley Lilley

    Director
    Food & Farming

    Savills Cheltenham

    +44 (0) 1242 548 012

    +44 (0) 1242 548 012

     

    Giles Hanglin

    Giles Hanglin

    Director
    Rural Research

    Savills Margaret Street

    +44 (0) 207 016 3786

    +44 (0) 207 016 3786