Development Land - Realising Potential
Claire Cooper an Associate Solicitor in the Commercial Property team at Talbots Law says “with a growing society, more houses are needed and local authorities are reviewing green belt parameters and encouraging infill of already developed areas.
This means that there is an increase in speculative purchasing as developers look to buy up sites and piece them together, or acquire interests in potential future development land. As a result we are seeing more and more complex agreements involving significant sums”.
Landowners need to be vigilant when entering into any form of agreement relating to their land – for instance
- A licence agreement with a telecoms provider who pays a license fee for placing a telecoms mast on their land;
- A promotion agreement with a potential investor or developer promoting their land for future development, and who might even fund planning applications in return for a percentage of the uplift in value of the land once planning permission has been granted and/or a buyer has been sourced;
- An option agreement subject to planning permission being obtained, where a developer agrees to purchase land, subject to planning permission being granted for its development;
- An overage agreement where, when selling bare land with hope development value, a landowner may wish to preserve a right to share in any uplifted value in the land based on a future event, usually planning permission. This type of agreement will often run for 20 or 30 years after the sale.
In addition, landowners need to be certain that they understand the extent of any deductions that will be made before net proceeds are paid to a landowner, as this can have a massive impact on the return to a landowner and distort the outcome of the proposition originally put to the landowner. They should also be clear on whether any such agreement binds future purchasers of land.
Talbots Law’s Commercial Property Team are always on hand to discuss this and any other commercial property matter - for more information or assistance call us now on 0800 118 1500.