With only seven days to go until the end of the 2014 SPS entitlement transfer window, the market is furiously busy with last minute purchasers coming to the market.  We are now seeing an influx of purchasers looking for large blocks of Non-SDA entitlements at the current market rates between £125 and £140 per unit plus VAT, depending on the size of the block.  This is an interesting development considering the current surplus of entitlements and may be a result of purchasers thinking that many of the under five hectare vendors will not wish to take the time to register onto the CAP Information Service (CAPIS) in 2015 simply to transfer a small number of entitlements.  Therefore on this basis there may be less over supply in the market after the 21st October, which could strengthen the price next year.



NON SDA



With prices averaging around £130 per hectare this represents the cheapest rates for purchasing entitlements for a number of years, effectively at a Flat Rate multiplier of 0.7 times the value (based on estimated 2015 payment value and 2014 Euro exchange rate of £0.77730).  This, combined with the continuing oversupply, means that there are bargains to be had now, however purchasers should remember that vendors will also have a chance to transfer their surpluses next year, therefore offering well below the market rate may not achieve the desired outcome, as vendors may not take these offers seriously, choosing to sell to those buyers making sensible offers.



SDA



The SDA price remains slightly stronger than the Non-SDA, because it has been in short supply.  However as the first transfer window draws to a close the price seems to have dropped slightly, perhaps on the basis that the demand we were seeing earlier on this year and during the previous season has ‘dropped out’.  Therefore, similar to the Non-SDA market, this is the time to buy, particularly with the SDA payment rate being brought in line with Non-SDA rate with effect from 2015.  Prices have been high at £170 to £180 per hectare throughout most of this year, however offers are now being considered at £140 per unit plus VAT.



MOORLAND



The price of Moorland entitlements remains relatively strong at £60 per unit, effectively a multiplier of 1.25 x the value (based on DEFRA’s predicted figure of €61/ha and the 2014 exchange rate of £0.77730), despite the market remaining relatively quiet, and although some offers are being received, vendors are not accepting offers below this rate.  This is perhaps on the basis that the Euro rate for Moorland is increasing from 2015, perhaps by €16.53 per ha from the 2013 payment rate, therefore those looking to sell are content to hold out for offers closer to the market rate.



HOSTING & LEASING



With more and more vendors realising that they may not be able to sell their entitlements, certainly before the 21st and perhaps even during the second transfer window in 2015, many are looking to other options.  We are receiving lots of interest from those with surplus entitlements looking to lease them out in 2015 and onwards.  However with the current surplus threatening to continue, there may be a shortage of claimants with land/naked acres and no entitlements who would be interested in leasing in the surplus.  Some entitlement owners who have hosting agreements for the 2014 Scheme Year are already looking to repeat these agreements on the basis that they want to be ahead of the crowd and reduce the risk that they will not be able to find naked acres to place their entitlements on in 2015.  On this basis we are receiving offers around the £45 per acre (£111/ha) mark for hosting in 2015, with entitlement leasing expected to follow a similar price.



Those with land/naked acres for which they do not have any entitlements are encouraged to contact Ashley Taylor as soon as possible to discuss their options for 2015.  We have entitlement owners looking for in excess of 300 hectares to activate surplus entitlements on in 2015.



 

For entitlement trading please contact Ashley Taylor or Jessica Bradley.

 

Hugh Townsend

Hugh Townsend
FRICS. FAAV. FCIArb.

01392 823935
htownsend@townsendcharteredsurveyors.co.uk