30th Mar 2015

How to unlock the development potential of your land

The population of the UK is increasing and, whilst this is most keenly felt in London and the south-east, the effect is nationwide.The Harrogate district is no exception, particularly as we often read that this town is one of the most desirable places to live in the UK.

Councils are required by central government to have a 5 year supply of deliverable new housing sites.Like it or not, the need for increasing numbers of new houses in the Harrogate district – especially affordable homes for those who are less well off – is set to continue.It is not simply a 5 year issue, but is likely to continue for 10 or even 20 years.

For those landowners who are in the lucky position of owning land which is able to meet the relevant planning requirements, the opportunities are there to be taken, but it is an expensive business.With no guarantee of success, the costs of making a planning application and taking it all the way through the planning (and potentially) appeals process can be very high.Traditionally, an option agreement or a conditional sale contract was recognised as the best means of achieving this - indeed both are still used – but in recent years the land promotion agreement has become popular with landowners and developers alike because it is far more of a collaborative arrangement, with both parties sharing the same end goal. The principles are very straightforward:

  • 1.The developer (or promoter) agrees at its cost to promote the land, apply for planning permission and pursue the planning process until its conclusion.
  • 2.The promoter markets the site with the benefit of the planning permission.
  • 3.A purchaser (i.e. a housebuilder) having been identified, the landowner sells the land.
  • 4.The proceeds of the sale are divided between the landowner and the promoter according to a pre-agreed formula, with the promoter receiving reimbursement of all of the costs it has incurred in securing planning permission plus a success fee.

From the landowner’s point of view, the beauty of such arrangements is that there is normally no cost to be borne by the landowner unless and until the land has been sold, with the promoter bearing all the risk until the point of sale.

If you would like to talk to us at Berwins, please contact any member of the Commercial Property team on 01423 509000

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