Late Single Farm Payment will leave cash shortage for rents
13/09/05

The Country Land and Business Association (CLA) and Tenant Farmers Association (TFA) are urging landlords and tenants to have early discussions about possible implications arising from late receipt of Single Farm Payment particularly in relation to rent payments.

In a joint statement the CLA and TFA said "We know already, despite our lobby of Defra and the RPA, that most farmers will not receive the 2005 Single Farm Payment (SFP) much before the end of March 2006 and it may even be later. Faced with that position some farm tenants may find it difficult to access sufficient funds to meet rent demands when they fall due. Tenants who are worried about their ability to pay rent when due should start talking to their landlords now. It might be possible to agree a deferment of the rent until the SFP is received, or an alternative arrangement."

September and March are the most common times for rent to be due on agricultural tenancies. It is quite possible that SFP will miss both these dates.

"Landlords and tenants affected by late SPS payments should act reasonably, by talking to each other with an aim to work together, before considering any formal action. This is a sensitive issue for both parties and sensitivity should be displayed from both sides. Landlords should not react by an automatic service of formal notices and tenants should not expect the rent automatically to be deferred or waived. This is an issue of cash flow for both parties and a little bit of dialogue as early as possible could save a multitude of problems later on" said the CLA and TFA.

Where rent is being deferred by agreement it might also be the case that some landlord's expenditure on repairs and improvements may have to be deferred until the rent income becomes available.

"Arrangements need to be put in place for the mutual benefit of both parties. Rent should be paid when due unless there is full and open disclosure of the position, and an agreed solution. At the same time, where parties have been in discussion, the occasion of late payments should not be exploited for individual gain. The delay in payment of SFP should not be used by either side to justify long standing disputes between landlords and tenants" said the CLA and TFA.

Ideally, where justified by the facts, the parties should come to a formal written agreement of any new payment terms agreed.

CLA and TFA are ready and willing to advise members faced with this problem.