Dec 12

7 top tips for selling your land to a property developer

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There has been much debate about what to do about the current housing shortage. Estimates range from 200-300,000 homes needing to be built a year, with all major political parties in agreement that housebuilding is a priority. The apparent lack of suitable land in desirable areas on which new houses can be built is cited as one of the main reasons why supply is not keeping up with housing demand.

Landowners are now finding themselves sitting on valuable assets – farmland in particularly is highly sought after, and farmland with residential planning permission even more so. If you own land that could be suitable for development and you are thinking about selling, here are 7 tips to guide you in your understanding of what can be a complex process, and to get the best deal.


1. Work with a professional adviser

Unless you’re a seasoned pro, attempting to arrange a property deal of this nature without professional advice is not recommended. Even before you start to negotiate the deal itself, you will almost certainly need a land agent, a solicitor and an accountant. Developers are interested in maximising profits, meaning they will have certain criteria for purchasing development land. Getting the right advice at the outset will help you offer your land for sale in the most appealing way to the buyer and with the most lucrative sale prospects for yourself.


2. Minimise your tax liabilities

Again, you are highly advised to obtain professional advice at the start of the process to sell your land. An experienced tax account will make sure that the property transaction is structured in the most tax efficient way, maximising any tax reliefs and exemptions that may be available to you. This affects a whole raft of possible tax liabilities including Income Tax, Capital Gains Tax, Value Added Tax, Stamp Duty Land Tax and Inheritance Tax. What’s more, many developers will want to be certain that the seller has sought professional tax advice before exchange of contracts.


3. Consider promotional agreements

An increasingly popular choice among developers, a promotional agreement allow the buyer – typically a specialist planning consultant or a property developer – to seek planning permission at their own expense. Once consent has been secured, the transaction can go ahead. The landowner is obliged to sell and the promoter receives a fee out of the sales proceeds. For landowners, it’s critical that their interests are protected in such agreements, which requires specialist advice.

7 top tips for selling your land to a property developer


4. Make sure there are no title issues

If you want your sales transaction to proceed smoothly, make sure you’ve done all the preparatory work in advance, so nothing will delay the process or put your buyer off the purchase. Is the land registered? Are all documents in place? Does the land have direct access to the adopted highway? What about boundary issues or restrictive covenants? Rights of access and rights of way, or absence of easements? Is the land subject to a legal charge? Any issues of this nature should ideally be tackled before you offer your land for sale so that the title is good and marketable.


5.Prepare for environmental queries

Be prepared to give full information about any environmental issues affecting your land. Perhaps the land has a history of flooding or drainage problems leading to waterlogging. Has the land ever been used for potentially contaminative uses, or is located near to sources of contamination? Any actual contamination will clearly need to be remedied, which is costly and likely to substantially affect the value of your land. Make sure you have adequate documentation and any past surveys and reports that have been carried out, and be prepared to share them with the developer who is interested in purchasing your land.


6. Who obtains planning permission?

If you are selling your land to a property developer, planning consent will have to be granted before any house building can start. You could apply for permission yourself but how do you know whether you would be applying for the right one for the developer? A positive outcome is not guaranteed – you would need to take advice from a surveyor, planning consultant or your local authority planning officer to gauge the level of risk. You can see why many landowners prefer to enter into promotion agreements or conditional contracts, since the chances of success on the right terms are much greater that way.


7. Deal with any existing tenants occupying the land

Finally, if there are any residential or business tenants in situ, this can pose a problem when it comes to selling. Business tenants should be on a proper lease, contracted out of the security of tenure provided by the Landlord and Tenant Act 1954. Residential tenants should be on Assured Shorthold Tenancies. Agricultural tenants are most likely to be on licences or Farm Business Tenancies according to the Agricultural Tenancies Act 1995. Have all the necessary paperwork to hand and be prepared to work with long notice periods and possible compensation payments.

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