Brexit – What does it mean for Rural Land and Property?

Now that the dust has settled, we’ve all calmed down a little and more accurate assessments are coming through, it’s a good time to review the current understanding of how the Brexit vote will affect our industry.

There’s still no firm “Brexit” date, but here is our appraisal of where we stand at the moment:

So what do we know?

We know that as soon as Article 50 is triggered it will be a two-year process to exit the EU. We also know from Greenland’s experience that two years soon disappears.

It is clear Theresa May and her team are not being pushed into triggering Article 50 immediately and clearly wish to get their ‘ducks in a row’ and aligned with our European counterparts in advance, which will hopefully make the process go smoother.

This does however leave us in a very difficult position regarding any grants and subsidies which are received from Europe.

So what is the position?

Basic Payment Scheme

The Basic Payment Scheme (BPS) is a European scheme, we now have confirmation that we will continue on the current BPS scheme and budget until 2020.

Countryside Stewardship Scheme

Countryside Stewardship applications are for a five-year period. It is almost certain that if a new agreement is entered into now, before it ends we will be out of Europe. So how is that dealt with? 

An announcement is expected in this year’s autumn statement. Whether or not agreements due to commence on January 1st 2017 will be honoured remains to be seen. However the deadline of September 30th 2016 is still in place for applications to be received and reviewed.

While this is still being addressed by DEFRA, it makes it extremely difficult when advising clients whether they should enter in to Countryside Stewardship Scheme. It is a huge risk for a client carrying out a potentially costly application with no real guarantee of securing a five year contract.

LEADER Funding

DEFRA has confirmed projects signed before the autumn statement will be fully funded. The RPA will be contacting LEADER groups to inform applicants if they have been successful.

What impact is this having on our UK farms, property and land values?

Surprisingly, it was clear that a lot more farmers than originally envisaged wanted to leave Europe, despite the negative impact that could arise on their cash flows. It appears there is hope that the lost EU income will be made up by the UK Government.

While the land market remains steady, local knowledge is still the key to ensuring a good sale. If land or farms are overpriced, they stay on the market and interest is lost.

So what does the immediate future hold?

Realistically, more of the same uncertainty! DEFRA has not got its collective head around how any subsidy/support mechanism will work post Brexit.

It is likely though that any future support is going to be linked to substantial environmental measures.