Rural RICS APC Hot Topic - Sustainable Farming Incentive (SFI) 2026 Update
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What is this blog about?
As Agricultural Transition enters its most pivotal phase following the phase-out of the Basic Payment Scheme (BPS), the Sustainable Farming Incentive (SFI) has evolved from an emerging policy trial into the cornerstone of rural estate management across England.
With the launch of SFI26, the Department for Environment, Food & Rural Affairs (Defra) has restructured environmental land management to deliver a more targeted, flexible and accessible framework for agricultural businesses.
Featuring 71 available actions spanning soil health, agroforestry, water management, and wildlife habitats, SFI26 introduces key operational shifts, including 3-year agreement structures, a £100,000 annual business cap, a reduced 3-hectare eligibility threshold and phased application windows.
For landowners, farmers, and rural practice surveyors, integrating SFI26 is a fundamental driver of farm profitability, enterprise diversification and long-term asset value.
For RICS APC Rural pathway candidates, navigating SFI26 is a prime opportunity to demonstrate your technical competence. Advising clients on environmental land management requires a combination of landlord and tenant law, natural capital valuation, agricultural business management and regulatory compliance.
In this article, we examine the practical mechanics of SFI26, outline strategic design considerations for rural holdings and explore how Chartered Surveyors, and RICS APC candidates, can guide clients to optimise scheme participation alongside productive commercial farming.
Thanks go to Charlotte Brodie MRICS of Ceres Property who authored this article.
What is SFI?
The Sustainable Farming Incentive (SFI) is a Government scheme in England that pays farmers and land managers to farm in a way that protects the environment while still producing food.
SFI remains a key component of England's agricultural support framework, rewarding farmers and land managers for adopting environmentally sustainable practices whilst continuing to produce food and manage rural businesses. The latest iteration, SFI26, builds on previous schemes and seeks to provide a more streamlined and targeted approach to environmental land management.
What are the key features of SFI?
Part of Environmental Land Management (ELM) schemes
Available to most farmers and land managers in England
Agreements typically last 3 years
Payments are made quarterly
You select actions that fit your farm system
Why does SFI exist?
SFI is designed to:
Replace the Basic Payment Scheme (BPS)
Reward environmental outcomes, not just land ownership
SFI supports and aims to improve:
Soil health
Wildlife
Climate resilience
Water quality
When was SFI introduced?
The SFI abruptly closed in March 2025 and reopened in June 2026 in two stages:
Stage 1 in June 2026 aimed at:
Smaller farms (up to 50 hectares)
Farm businesses without an existing RPA administered ELM revenue agreement eg. SFI or Countryside Stewardship
New entrants who may not previously have accessed environmental funding
The funding available for Window 1 was limited and allocated on a first-come, first-served basis. Defra provided regular updates showing the proportion of the budget already committed, with 75% of the funding allocated by July 2026.
Stage 2 in September 2026 available to:
All eligible farming businesses, regardless of size
Holdings with existing ELM agreements
Businesses who current ELM agreements are due to expire
Defra has also introduced a 'Starting An Application Early' process for some applicants with expiring ELM agreements, helping to reduce funding gaps between schemes.
What's new under SFI26?
The 2026 scheme introduces several changes designed to improve accessibility and ensure funding reaches a wider range of farm businesses:
71 available actions covering soils, hedgerows, grassland, arable land, water management, agroforestry and wildlife habitats.
Three-year agreements with quarterly payments.
A reduced minimum eligibility threshold of 3 hectares.
A £100,000 annual agreement cap per farm business.
Application windows rather than continuous applications.
Increased focus on balancing environmental outcomes with productive farming.
The government has allocated a dedicated budget for new SFI26 agreements, reflecting the continued importance of environmental delivery within modern farming businesses.
Why does SFI matter?
As the Basic Payment Scheme (BPS) has been phased out, many businesses have reviewed how environmental schemes can contribute to overall farm profitability. SFI provides an opportunity to generate a reliable income stream from areas of land that may have limited agricultural productivity whilst simultaneously improving the farm's natural capital assets.
For many landowners, SFI can form part of a wider business strategy involving:
Estate diversification
Biodiversity Net Gain (BNG)
Carbon and natural capital initiatives
Improved environmental stewardship
Long-term soil health improvements
Enhancement of landscape and public perception
How does SFI work?
All actions now typically run for 3 years, replacing the previous 5-year options.
This is widely viewed as:
Positive for tenant farmers, offering greater flexibility
More aligned with shorter-term business planning cycles
While rotational actions remain available, a key restriction has been introduced where the area committed in Year 1 cannot be increased later in the agreement. This makes initial scheme design critical, particularly for arable enterprises integrating SFI into cropping systems.
Area caps:
Certain actions including enhanced overwinter stubble are now subject to a 25% land area cap, ensuring land is not excessively taken out of production.
A minimum of 3 hectares of agricultural land is required.
How does this link to my RICS APC as a Rural pathway candidate?
Based on the RICS APC Rural Pathway Guide, advising on SFI26 touches directly upon a number of Core and Optional technical competencies.
Agriculture:
Level 1 (Knowledge): Demonstrate knowledge of farm support systems, SFI26 scheme rules, the 71 available actions, eligibility thresholds (minimum 3ha) and how it replaces BPS subsidies.
Level 2 (Application): Conduct field-by-field appraisals and farm mapping to recommend appropriate SFI options (e.g., herbal leys, soil organic matter plans, winter bird food), preparing Detailed Farm Finance Plans and submitting applications via the Rural Payments Agency (RPA) portal.
Level 3 (Reasoned Advice): Provide professional farm management advice in writing. Formulate strategic land management plans that balance SFI environmental revenue with commercial arable or livestock margins, navigating operational constraints such as the 25% area cap on rotational actions.
Land Use and Diversification:
Level 1 (Knowledge): Understand the principles, criteria, and economic rationale for rural diversification, including how SFI26 acts as a baseline revenue stream alongside new rural enterprise initiatives.
Level 2 (Application): Prepare and analyse feasibility studies comparing traditional cropping income against SFI options, assessing how taking marginal land out of production for environmental actions impacts overall estate enterprise yields.
Level 3 (Reasoned Advice): Deliver strategic estate planning advice to integrate SFI26 actions alongside private natural capital schemes, such as Biodiversity Net Gain (BNG), carbon sequestration and nutrient neutrality.
Landlord and Tenant:
Level 1 (Knowledge): Understand statutory lease frameworks applying to agriculture, specifically the Agricultural Holdings Act 1986 (AHA 1986) and the Agricultural Tenancies Act 1995 (Farm Business Tenancies / FBTs), regarding tenant control and scheme obligations.
Level 2 (Application): Interpret FBT covenants and unexpired terms to verify whether a tenant occupier holds sufficient legal control to enter a 3-year SFI26 agreement without breaching user covenants or good husbandry clauses.
Level 3 (Reasoned Advice): Draft and negotiate formal landlord consent letters, tenancy variations or surrender-and-regrant structures to facilitate SFI participation while safeguarding the landlord's reversionary interest and capital tax positioning (e.g., Agricultural Property Relief / APR).
Conclusion
SFI26 represents a maturing of the Environmental Land Management framework. While it provides ongoing opportunities to support farm resilience and environmental delivery, it also introduces greater constraints that demand proactive management.
For agents, landowners, RICS APC Rural candidates and occupiers , the emphasis should now be on:
Early engagement
Careful scheme design
Aligning SFI participation with broader commercial objectives
Those who approach SFI26 strategically are likely to benefit most; not just financially, but in positioning their businesses for the future of agricultural policy.
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N.b. Nothing in this article constitutes legal, professional or financial advice.