Strategic land is a specialised area and if well managed delivers excellent financial reward to landowners but comes with high risk if planning is not granted.
We work with landowners who hold land that they are considering putting forward for planning. We advise them on the many options that are available to them on large parcels of land.
When promoting strategic land there are a number of contract types that may be applied. The contract type that is entered into largely depends on the landowner’s situation in relation to tax, land availability, time frames for vacation of current tenants and trustees appointments.
Contract Types:
Freehold purchase
Enables an outright purchase of the land with no rights reserved by the seller, ensuring that the entire uplift in value following promotion and allocation benefits the purchaser. Full payment for a site will be required upfront and the landowner relinquishes all ties to the land once completion has taken place.
Conditional Contract
The freehold title is purchased subject to a number of conditions, for example, the obtaining of planning permission or further technical work such as a Phase 2 Ground Report or a particular planning condition. Once those conditions have been satisfied the land sale completes.
Hybrid Agreement
The site secures planning permission and a proportion of the site is openly marketed to achieve market value and sold to a third party. The developer then purchases the remainder of the site at market value less any costs and discount. This tends to relate to larger sites of over 300 units.
Option agreement
This type of deal grants a housebuilder exclusive rights to purchase the land at a specified price or discount once it has secured residential or mixed use planning permission. Responsibility for promoting the site, securing the allocation and receipt of planning permission are borne by the option holder. This model requires a lower initial capital outlay where the ongoing promotion costs are also borne by the option holder. Once allocation or outline planning permission has been achieved, the landowner receives a majority proportion of the eventual uplift in value.
Promotion agreement
The cost of promoting and securing an allocation and outline planning permission is borne by the promoter in exchange for a percentage of the eventual sale price of the site. An upfront payment is usually made to the landowner in order to secure a promotion agreement and once planning has been granted, the site is fully marketed to housebuilders to ensure optimal pricing is secured. Typically, if a land owner wants a larger upfront payment, the percentage of discount is greater and the opposite applies if the landowner does not want an upfront fee. The length of the agreement varies according to the local authority's planning policy and adoption stage.
Joint venture agreement
Creates an arrangement between a housebuilder or developer where they agree to share the cost and risk of securing a planning application. The parties then jointly service the site, sell the completed properties and share a proportion of the land cost and profit.
Once a strategy has been agreed with the landowner we project manage the selection of the land promotor or developer, assemble the planning team and all of the relevant consultants required to give the site the very best chance of securing an allocation or planning permission.
If the landowner is willing to promote their land independently, we work with them to advise them on the process and manage the consultancy teams to deliver a value adding development site.
A successful scheme would deliver a significant uplift in value and our bespoke approach to the land sale will ensure an expedient and value adding outcome.
