Rural Payments Agency Issues

Watching the Rural Payments Agency (RPA) fail to get to grips with outstanding problems that exist from the introduction of the new Basic Payment Scheme (BPS) in 2015 is like watching a slow motion car crash.

The problem is that although the majority of farmers have received the correct payments for 2015, there are still a significant number of farmers who have not received the correct payments and in some instances this also means they have not been awarded the correct number of BPS entitlements which will impact on the 2016 claim and beyond.

The problem is that there appears to be no way of speaking to anyone at the RPA with whom one can actually discuss the problem.  All one can do is write in to the generic email address explaining the problem and then wait…and wait….

Eventually a letter will arrive re-assessing the claim and in most instances this is probably correct but I have personally experienced one situation where the re-assessment is still very wrong.  All I have been told is to email in again and explain the same situation yet again.

The problem is that there is no one to talk to who you can discuss the situation with and there appears to be no way of influencing the speed at which the claim will be processed.  This is an increasingly worrying situation because the 2016 payment window will open on December 1st and any problems from 2015 will be carried forward for a second year thereby making things worse.

If this is the case the consequence is that it will become increasingly difficult for farmers who have outstanding issues to get them resolved because understandably the RPA’s resources will become focussed on getting as many of the 2016 payments out as quickly as possible.

NFU vice-president Guy Smith has commented, “The problem is that, although we think they [the RPA] are about to draw a line under BPS 2015 payments, we are not convinced that everyone knows whether they have been paid correctly,” He went on to comment that it needs, “the skills of a forensic investigator and the time of a land agent” to work out whether or not one has been paid correctly.

But as a land agent myself I think the main problem is that even when one has established there is an error there is just no way of discussing the problem with anyone within the RPA who has the skills or knowledge to deal with this issues themselves.

If this results in last year’s errors being compounded in to 2016 and beyond it seems very likely to me that we will be arguing about missing Common Agricultural Policy support payments well beyond our eventual exit from the EU.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Airline immigration case just the ticket for landlords

While the worlds of lettings and budget air travel might appear disparate, landlords might want to show thanks to Ryanair after it successfully challenged a recent legal claim over an immigration dispute.

When the Home Office imposed a penalty on the budget airline after it was found that two Albanians had illegally entered the UK on a flight from Spain using forged Greek passports, Ryanair went to the Central London County Court to state a challenge.

Spanish officials had failed to notice the forgeries, but UK Border Force officers were more vigilant. As a result, the Home Office penalised Ryanair £2,000 for each Albanian, but the airline contested the charge.

Parallels are clearly drawn for landlords under the Right to Rent scheme, which stipulates that documentation has to be checked to ensure that potential tenants and other occupiers of a property aged 18 or over have a legal right to be here.

The Code of Practice that accompanied the implementation of the Immigration Act 2014, set out in the Immigration (Residential Accommodation) (Prescribed Requirements and Codes of Practice) Order 2014, says that landlords “will not be penalised, if, having taken all reasonable steps to check a document’s validity, they are fooled by a good forgery which appears to be genuine.”

The difficulty comes in knowing what a good forgery is, but the Ryanair case seems to give at least a clue as to a definition.

Two immigration officers gave statements that missing security elements in the passports used by the Albanians were in their view “reasonably apparent” to a member of airline staff and that they should have been spotted. However, other immigration officers in similar cases had found that the forgeries were not “reasonably apparent”. The Court took the view that missing security elements that are relatively hard to find, even for trained professionals, would not be reasonably apparent to busy airline staff, even though they have an annual refresher course.

Lisa Simon, 

Partner Head of Residential Lettings

T: 020 7518 3234 

E: lisa.simon@carterjonas.co.uk

EPCs 10 years on – time to reassess their impact?

It’s a decade since residential properties in the UK were first required to have a ten year Energy Performance Certificate (EPC) before they could be sold or let. As the ten year anniversary approaches, the time has come for the early starters to be reassessed.

Originally part of the Home Information Pack (HIP), loved by a few and loathed by many - but which would have been useful if implemented as originally intended, the EPC survived when the HIP requirement was abandoned in 2010.

At first regarded as a bureaucratic irritation rather than a necessity, the EPC gained more traction recently when the introduction of Minimum Energy Efficiency Standards (MEES) meant that from April 2018 it will be difficult, but not impossible as some suggest, to let a property with an Energy Efficiency Standard below Band E on its EPC. There are exemptions that can be registered, but these are subject to re-application every five years, and it is by no means certain that this will continue ad infinitum. Indeed, it’s expected that the rules will become tougher and eventually exclude Band E properties.

With that in mind, it could be beneficial to review the EPC for your property even if you are not yet required to replace the original purchased 10 years ago. In fact, some landlords are relying on an EPC that exists from when they purchased the property, and therefore was provided by the vendor rather than themselves.

Where a property is Band F or G, but also for those with a low score in Band E, having a new EPC assessment could make the difference between 10 years of worry-free letting and the stress of not knowing whether an exemption granted in time for April 2018 will be renewed in 2023.

The energy assessor who provides the EPC will check for items such as double glazing, boiler efficiency, radiators, and insulation for the hot water tank, walls, and loft. The results are fed into a software program that produces a figure for the EPC, which in turn determines the banding in some instances. The assessor can override the program if there’s visual or written evidence that standards are higher than the software assumes.

Where you are borrowing to fund the purchase of a lettings property, your lender may want confirmation of its energy efficiency standards, especially where the current banding could make it borderline in the future and therefore bring a possible diminution in its asset value. Therefore, taking care of what was once regarded as a merely administrative necessity could pay dividends.

Certain classes of building are exempt from the need for an EPC. As far as residential landlords are concerned, the principal category concerns those that are officially listed as of historic interest.

From April this year, tenants have had the right to ask their landlords to approve their installation of energy efficiency measures. Originally this would have fallen under the Green Deal - a scheme that already had drawbacks before its funding was withdrawn because of low take-up.

Improvements were supposed to be funded through energy bills applicable to a property, provided the benefits of the improvement outweighed the cost of making them.

But it’s much better to make these improvements independently, as part of an investment in your lettings property, rather than using a scheme that allows tenants to take charge, as this may ultimately restrict which energy company you can use in the future, as not all energy providers are involved. While this may seem insignificant, consumers are growing more energy aware and may resent having their opportunities to switch curtailed.

My recommendation is that where tenants ask to carry out an energy survey, you allow it to go ahead, but then consider whether or not it’s to your advantage to implement the improvements yourself so you retain control. It may also be that the work can be completed at lower cost than the tenant’s chosen contractor offers.

Lisa Simon, 

Partner Head of Residential Lettings

T: 020 7518 3234 

E: lisa.simon@carterjonas.co.uk

Upturn in milk prices

Dairy farmers flocked to the Dairy Show held at the Bath and West Showground on 5th October and I was struck by how positive many of the attendees were despite the very difficult year that many have experienced.

This generally positive attitude is perhaps a reflection of the recent upturn in milk prices and the hope that there will be further more significant increases to come. However the picture painted by farm accountants Old Mill appears to be rather more gloomy than the mood at the show would indicate.

Based on analysis of both Old Mill and the Farm Consultancy Group clients’ accounts this showed that on average dairy farmers lost 2.71p/litre in 2015/16 and are set to lose a worrying 2.81p/litre in 2016/17.  However these figures exclude non-milk income such as calf and cow sales and when these are included this produces small profits of 0.99p/litre and 1.08p/litre respectively.

Even so, these are not huge profits but although they are average figures and what always astounds me is the huge variation in performance between the top and bottom 25% of dairy businesses and this was once again borne out by Old Mill’s analysis.

Their figures showed that production costs among the lower quartile were a hefty 33.87p/litre, against 22.84p/litre in the top 25%. The bottom 25% also received 2.29p/litre less for their milk, at 25.01p/litre. This meant they made a loss of 5.65p/litre in 2015/16 – including non-milk income - compared to the top quartile’s average profit of 8.75p/litre.

Andrew Vickery, head of rural services at Old Mill, commented that, “It’s encouraging to see that, even in these tough times, the UK’s top dairy farmers are still managing to make a profit,”  but he went on to add, “all producers have looked hard at their cost base and found ways to reduce expenditure. However, while many have improved efficiencies, there is now very little meat left on the bones for any further cost reductions.”

As a result, following a prolonged period of low milk prices, cash flow is a significant issue for many dairy farmers and so now more than ever it is important to look forward and plan ahead.  In this context having a clear understanding of one’s cost of production is vital according to Phil Cooper from the Farm Consultancy Group.

Phil commented, “Improved dairy commodity values are now starting to filter through to farm-gate milk values, so producers need to make sure their business is in the best possible shape going forward, he adds. Don’t make drastic changes in times of uncertainty, but do plan ahead. Take professional advice and understand your costs of production, so that when you make a decision to change you’ll know it’s the right one.”

So, after a challenging year it appears most dairy farmers are keen to hang on to fight another day which demonstrates to me the resilience of this very important part of our farming community here in the south west.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk