Navigating the Complexities of Converting Agricultural Land to Development
April 2023
By Mark Chugg, Partner
Negotiating the planning system and bringing forward greenfield land for development is complex.
Mark Chugg MRICS, Head of the Development Land & Planning Department at Greenslade Taylor Hunt (GTH) provides a summary of the alternatives. He also considers other factors when thinking about the promotion of land for residential, commercial or mixed-uses.
Those within the development sector call land to be converted, from agricultural to development, strategic land. It is not an ‘allocated’ site within an existing Development Plan and is outside the defined boundaries of settlements.
The two main routes for promoting land are by self-promotion, using the knowledge, experience and expertise of a planning and development consultancy such as GTH; or via a third-party - either a land promoter or housebuilder having entered into either a Promotion, Hybrid or Option Agreement.
Due to the cost, risk and time involved with promotion, most owners of strategic land tend to work with a third-party.
It means the landowner will be sharing a proportion of the gross sale proceeds with the third party. This is either via a share of the sale price under a Promotion Agreement or a discount to market value under an Option Agreement, less the agreed promotion and planning costs and other agreed recoverable/deductible costs.
It is vital to select the right party to enter into a legal contract with. A track record of delivering permissions, having the appropriate funding to promote the land, and sell/buy the land with a significant uplift in value created due to the permission are all important. The correct planning consultants to project manage the promotion and application are also key.
Landowners need to feel comfortable with either the land promoter or housebuilder promoting their land in terms of building a working relationship with them and their capabilities to deliver planning and the sale/purchase of the land.
Their aim should be to maximise the value and minimise the costs of the proposed development scheme taking into account emerging planning policies, financial viability, Section 106 Agreement contributions and Community Infrastructure Levy payments among a range of considerations.
For specialist advice, please contact Mark on 01823 334466 or by email mark.chugg@gth.net.