Environmental Land Management and the tenant farmer: Key legal considerations
The UK’s Environmental Land Management (ELM) schemes act as a cornerstone to the government's post-Brexit vision for sustainable agriculture, rewarding farmers for delivering public goods. For tenant farmers, however, joining these schemes can present both legal and practical challenges.
In this article, Cassie Woodier, in our agriculture, estates and rural property team, explores the key legal considerations you should make when joining ELM schemes as a tenant farmer.
Tenant participation
Under both the Agricultural Holdings Act 1986 and Farm Business Tenancies (Agricultural Tenancies Act 1995), many ELM options require landlord consent, particularly where long-term land use changes are involved.
However, it is important to note that while tenant farmers do not need explicit landlord consent to join Sustainable Farming Incentive (SFI) schemes, they must control the land for the full three-year agreement period stipulated. Plus, if the tenancy does end prematurely, farmers may be required to repay some of the funds received.
In the face of this, tenant farmers often face challenges when navigating these schemes, which can lead to potential pitfalls, disputes, and missed opportunities to access government incentives.
Recent updates
Several important updates to the ELM schemes have emerged in recent months:
- A 10% increase in payment rates for both the SFI and Countryside Stewardship schemes.
- The introduction of a single application process for both schemes, which was introduced in Summer 2024, to streamline access for farmers.
- Enhanced payments for maintaining existing environmental features, making it more financially attractive to maintain sustainable practices on farmland.
However, as of March 2025, new SFI applications have been suspended due to budget constraints, leaving many farmers feeling uncertain. Tenants, in particular, may now face delays or exclusion from funding entirely. More details on the revised SFI scheme are expected in Summer 2025.
While DEFRA encourages cooperation, the legal obligations for landlords remain limited. As such, having clear, proactive tenancy agreements is crucial for navigating this evolving space.
What do our clients need to know?
Landlords:
- Understand the financial pressures tenants face post-BPS: The Basic Payment Scheme (BPS), which previously provided direct income support, is being phased out. This transition creates a financial gap for many tenants.
- Update tenancy terms to clarify scheme participation rights: Doing so will help address potential ambiguities related to new ELM opportunities.
- Evaluate the long-term value of in-hand management versus collaborative schemes: As environmental incentives grow, landlords should assess whether managing the land themselves or collaborating with tenants is the best option.
- Stay updated on ELM policy changes and funding timelines: Ensuring both parties are prepared for any shifts in support will help mitigate risks and maximise potential benefits.
Tenants:
- Review tenancy agreements before applying for any schemes: Ensure there are no requirements for landlord consent that may limit access to schemes.
- Secure written consent from landlords: This can be reviewed on a case-by-case basis where required, particularly if any changes to land use or farming practices are involved.
- Prepare for funding interruptions, and seek legal advice if there are concerns regarding scheme eligibility or tenancy terms.
- Reinforce clauses in tenancy agreements that enable access to environmental schemes: Ensuring tenants have the legal right to participate in future schemes.
The future of ELM and landlord/tenant cooperation
The success of ELM schemes hinges not just on policy but also on the ability of landlords and tenants to work together cooperatively. Both parties should be proactive in their approach to structuring agreements that bolster clear rights and obligations, in line with evolving environmental incentives.
Legal foresight is key to unlocking the long-term environmental and financial rewards that ELM schemes offer both tenant and landlord. Clear, updated tenancy agreements can help mitigate the risk of disputes, ensuring that all parties benefit from these new opportunities.
How can Muckle support tenants and landlords?
Muckle LLP's agricultural, estates and rural property team are experts in advising both landlords and tenants on structuring and negotiating agricultural agreements that align with evolving opportunities and our clients' needs.
Whether you are updating an existing tenancy arrangement or entering into a new one, our team can assist in navigating scheme eligibility and drafting robust, future-proof agreements.
If you’d like to discuss how to make the most of these policy and scheme changes, please contact our agriculture, estates and rural property team on 0191 211 7777.