Your site has legacy development potential, but where to start?
Your site has development potential, but where to start? Two of Bidwells’ development experts answer the typical questions to consider from a landowner’s perspective.
Maximising the value of my land is important but there are other factors that drive my decision making. How do I handle that?
Hannah Beamish (HB): Consider what is most important to you and identify the key objectives that set out the vision of how you want to see your land developed. Objectives can range from maximising land value, leaving a long-term legacy, delivering a high-quality and sustainable development, retaining an element of control, or a mixture of all of these things.
It’s all those things. How do I pull it all together?
(HB): The key objectives will identify the type of partner you may want to approach and type of deal structure you may wish to enter into. You may determine that in order to maintain control of your key objectives, you wish to continue to self-promote your land until a certain planning milestone.
Sounds like I might need help. How do I find the right partner?
HB: It is important to consider what you are seeking a partner for. Is it to take on the risk and cost of securing planning permission? Is it because of the reputation that company has for delivering high quality developments? In any case it is recommended to test the market.
You may have been approached directly by parties expressing an interest in promoting your land. These may be speculative in nature and by entities that you are not aware of. It is therefore vital to ensure that you approach selection of parties that will share in your objectives and vision.
Rob Hopwood (RH): Seek to understand the planning context, opportunities and constraints of your land. Carrying out this due diligence early on will ensure that you are able to identify a strategy to mitigate any areas of risk before approaching any potential partner. Every piece of land is different and bespoke to the planning system in that area.
How is the deal brokered?
HB: The planning status, your objectives and vision will determine the type of deal to enter into with your chosen partner. This could range from an unconditional disposal, to an option or promotion agreement. Once you have selected a partner, you (or an agent on your behalf) will then need to negotiate the commercial terms of the agreement.
How do we understand the values involved?
HB: Generally, the longer you stay involved with a site as it goes through the planning system, the higher the land values generated Once the land is allocated for development in the council’s Local Plan, it has the potential for land values to rise significantly above previous agricultural values
What are the right conditions for securing planning?
RH: You need to look at each site closely and seek advice from the relevant experts. National and Local policy changes, local plans, the timing, the local need for housing need, all have a bearing. Having land with poor access, a risk of flooding or drainage issues can stop you before you’ve begun. Looking at proposals in the local area is a good indicator of what has received planning permission in the past.
How will the project be delivered?
HB: This depends on the type of agreement entered into. Under a promotion and option agreement, the promoter/developer will be obliged to use reasonable endeavours to secure a planning permission that meets your objectives. Once planning permission is granted, the price payable for the land will either be negotiated under the terms of the option agreement and then the scheme constructed by the developer or determined by the market under the terms of the promotion agreement. A promoter will generally not acquire the land once planning permission has been granted, nor will it build out the scheme.
There are other forms of agreements, such as joint ventures and build leases. These are often complex forms of contracts, but allow for the landowner to remain involved in the delivery of the development and share in the actual sales receipts from the development.
How should the land be disposed of at the end of the process?
HB: There is no single best way of disposing of land. The key is ensuring that your agreement has the flexibility for its disposal strategy to adapt to the market conditions at the time.
How do I secure a legacy for years to come?
HB: Finding the right partner, entering into the right agreement and understanding what you want to achieve out of the estate management strategy once the development has been built out.