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Developing Land – Things to Consider


With an extra 220,000 homes needing to be built each year in England and with the government looking to significantly increase the supply of homes across the UK, landowners and developers are increasingly seeking to promote sites for residential development. As a landowner, it is a good time to consider if you can take advantage of this. The main issues to consider include;

(1) Collaboration – depending on the size and location of your land, consider approaching your neighbours and working together to enable your land to be promoted/developed together. Each party will need to be protected from the differences in high-value (e.g. prime housing) and low-value (e.g. open space, infrastructure) land use but working together can save time and cost, particularly if all parties employ the same professional team.

(2) Agreement Type – developers usually want to secure land before they apply for planning permission (as this applies to the property and not the applicant). The most common types of agreement include: options, conditional contracts, promotion agreements and joint venture agreements. Each agreement has its own distinct advantages and disadvantages and needs careful consideration to ensure it achieves what the parties intend and that there are no nasty surprises when the agreement comes to fruition.

(3) Title Issues – you should review the title to your land to check if there are any restrictive covenants which could prevent development. The title will also confirm if any third party consents (e.g. bank, utility provider) are needed to the agreement and early contact should be made to obtain these.

(4) Vacant possession – one of the most frequent issues we come across when advising clients is the ability of a landowner to provide vacant possession (VP). It usually takes a number of months/years to obtain planning permission and landowners are keen to maximise returns during this period. It is imperative that any form of occupation of the land is formally documented to ensure all parties know how and when VP can be obtained.

Break clauses are often included and it is important that tenancy agreements are reviewed at regular intervals to ensure break clauses remain effective. For example, where land is let on a short-form Farm Business Tenancy (for a term of 2 years or less) with rent payable “per annum” which contains short notice provisions (e.g. 3 months written notice to terminate). If this is not renewed before the end of the term, it will become an annual periodic tenancy, the short notice provisions will be ineffective and consequently at least 12 months written notice expiring at the end of the term must be given to obtain vacant possession unless an express surrender can be agreed.

(5) Tax position – professional advice should be sought in relation to the VAT, CGT and IHT treatment of any development land to identify and mitigate any potential issues.

for further information please contact Jessica Richardson.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.


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