As the 2013 Reform of the Common Agricultural Policy (CAP) calls for the harmonisation of Single Payment Scheme (SPS) payments, we estimate the implications of this mandate on agricultural land rental rates over time as Germany began harmonising payments in 2010. Using Bavarian farm‐level panel data we find strong capitalisation effects that increase substantially in the years following 2009. On average, the marginal effect on rental rates of an additional SPS euro is 37 cents, growing over time to 53 cents as harmonisation develops.