UK FARMING could be penalised once again under the recent CAP reforms if tenants and landlords do not work together to safeguard subsidy entitlements, says the Royal Institution of Chartered Surveyors.

Under the Mid-Term Review agreement, a high proportion of EU support payments will be decoupled from specific parcels of land as from January 2005.

Julian Sayers, RICS rural spokesman, said: "If a tenant qualifies for an entitlement, having occupied a farm during the base years for the initial assessment 2000-2, it can only be claimed if the person concerned is still farming in 2005.

"A problem therefore arises for the tenant who wishes to retire in the interim and hand back the farm to the landlord. Not only will the present occupier lose the chance to transfer the entitlement, but the landlord will also have no opportunity to negotiate to ensure there is ongoing EU financial support for an incoming tenant.

"It is crucial that, during this period of limbo, tenants and landlords work together to ensure potential entitlements are not allowed to slip through the net.

"While a national reserve is due to be established, the procedures and rules governing its operation are far from clear at this stage. Steps should therefore be taken to ensure the best possible chance of retaining entitlement within the system for the benefit of all concerned.

RICS believes this is likely to be a particular problem in the UK, where one-third of UK farming is based on a landlord/tenant arrangement. EU regulations do not give member states the flexibility to bring in their own approach to dealing with this national problem.

RICS urges landlords and tenants considering any form of change to their tenure agreements to seek professional advice.