How do I develop my land for housing?
It’s a frequent question from our clients here at Oakwood as they seek to add value to their property portfolios “how do I develop my land for housing?” The gains from securing a residential planning consent are massive when compared with agricultural land values. However, there is much work to do before planning consent can be obtained, let alone land sold.
Much of the land we see at Oakwood is classed as Green Belt so there is a presumption against development. However, this does not mean there is nothing we can do to assist. Demand for housing continues to grow which puts pressure on green belt land, particularly land close to existing settlements.
Many rural landowners and farmers are asset rich and cash poor. It can often cost several hundred thousand pounds to remove land from the green belt and secure an outline consent. Besides the availability of funds, many landowners would regard the expenditure as very risky. This is where development promoters have a role.
Our role at Oakwood is to do an initial appraisal of sites and then invite Promoters to tender for funding and planning consultancy. Promoters have different requirements and different skill sets so it is important that the landowner chooses wisely. They also have varying attitudes to risk and this affects how much they will take for their work.
The promoter will package land and make it attractive for the local authority to consider. One of the key issues is deliverability; for example ascertaining the correct ownership and ensuring that access rights are available. The promoter will also undertake some preliminary checks on the land, such as ground conditions and environmental issues, again to ensure that when time comes for consideration the land is clearly suitable. They will also review local highways and carry out assessments to check capacity and requirements for road improvements. Councils are wary of granting consent on land that may not be delivered as this impacts negatively on the provision of housing.
Oakwood advises landowners on the negotiation of promotion and option agreements and would never recommend that an agreement be signed without professional advice. Clear Heads of Terms need to be agreed and passed to solicitors who will prepare the formal documentation. We will be there at every step of the way, continuing to advise as issues arise. For example, there may need to be ancillary agreements with neighbours or family members. We work with expert solicitors who have day to day familiarity with these matters.
We try to provide holistic advice but recognise the need for clients to take specific advice on matters such as tax. The tax treatment of development land can be complicated, and we need to consider VAT, Capital Gains Tax and also Inheritance Tax. The sums involved with development sites can be significant so getting the right information is paramount.
We are always pleased to undertake a basic review of sites where there may be potential for development without charge. In most cases our fees are funded out of the promotion costs so landowners do not have to meet charges for our services until the land is sold.
Graham Bowcock MRICS
Residential Property Market Update – What will Coronavirus do to it?
The RICS reports monthly on the residential property market, gauging the sentiment of agents across the UK, looking at trends…Read more