Entitlement Trading 2020
Despite the current Pandemic H&H Land & Estates Sees Buoyant 2020 Entitlement Trading
As we pass the 15th May deadline for entitlement transfers, we look back and reflect upon this season’s trading and market for BPS entitlements. Here, Emma Smith H&H Land & Estates, Chartered Surveyor, reports on progress that has been made this season, under the unique circumstances of BREXIT and the COVID-19 pandemic.
This year, the online transfer window opened on 30th January allowing sales and transfers agreed throughout the previous eight months to be processed. We found the Rural Payments Agency (RPA) system to be relatively efficient this year with confirmations of transfer arriving in many cases within two hours, and the remainder arriving within 24 hours.
Between January and March, we compiled our databases of vendors with spare entitlements to sell, however, market activity was relatively limited in this period until the window for submitting BPS claims opened on 12th March.
Once the online BPS submissions started then trade began to pick up with more deals being agreed and more enquiries being received from purchasers. The middle two weeks of April was when we found trade to be particularly busy with plenty of purchasers wanting to secure entitlements prior to submitting their claims.
On the 28th April, the RPA announced it was extending the BPS submission deadline for a month until the 15th June. The deadline for entitlement transfers, however, was not extended and this seems to have surprised many claimants who had assumed that both deadlines were extended. We therefore continued to work towards 15th May deadline for entitlement transfers and saw demand outstripping supply from our stock of entitlements and enquiries being received for entitlements which we did not have on our books.
Trade continued up until 15th May with the final deal being done at 4.30pm on the afternoon of Friday 15th. No entitlements were left unsold, and we had a very successful outcome all round.
We saw trade primarily focused on Non-SDA Entitlements with prices ranging between £90-£100+VAT per entitlement for larger blocks with the deals for the largest block sizes being agreed in April. Smaller blocks ranged between £110 to £155 per entitlement with demand and interest right through from March-May.
There was limited interest in SDA entitlements this year with an abundance of blocks on the market. We found smaller blocks of SDA easier to sell with prices between £185-£200+VAT per entitlement, whilst the price for larger blocks fell throughout the season to finish at between £145-£160+VAT per entitlement.
There were very few Moorland entitlements traded at H&H with little interest from both buyers and sellers alike. Those that were traded were in the region of £25+VAT per entitlement for larger blocks with, again, a surplus of entitlements on the market with other agents. Commenting on the overall success of land trading entitlements under the current economic conditions, Emma summarised:
“This year we have found attention taken away from Brexit to the Coronavirus pandemic with no face-to-face BPS meetings being held with agents. The key difference we have found is more transactions being agreed via email rather than post, which is a more efficient manner, with payments being taken via BACS rather than cheque, which again is more efficient.
“We received many enquiries from purchasers regarding the effect of the phasing out of the Basic Payment, however, did not find this deterred purchasers, and potentially even encouraged those who were considering their options to ensure they had their full eligible area claimed in case of a reference year being set of 2020 in the future.”
In the trading of entitlements, H&H Land & Estates primarily acts for the sellers with the commission being borne by the seller rather than the purchaser. Purchasers therefore know that the price quoted for the entitlements will be the only costs they will incur. There is no increase to our commission as the deadline approaches and we find that transactions are usually more efficient within the last few weeks of trading due to the pressure of the upcoming deadline. Emma concluded:
“In summary, we have found the trade for Non-SDA Entitlements to be stronger than that of 2019 with SDA and Moorland slightly weaker. We found Brexit to have no/little impact upon the number of enquiries with purchasers remaining confident in the market to receive a good return on their investment in December.”