Land Development

We have significant experience in acting for both developers and landowners. Recent real estate transactions include:

• Acted for Blackonyx Holdings on multiple options across sites in Surrey, Cate Kent the Managing Director said “Frances is our trusted Solicitor for all property matters, her in depth knowledge, professionalism, and ability to explain complex issues in a clear and approachable way make the process seamless from start to finish. She is responsive, relatable and always acts in our best interest.”
• Acted for a client on an option agreement in Oxshott for £2.4m and the acquisition of the site as two separate plots for 4 dwellings.
• Acted for a client who entered into option to purchase for site in Wokingham. Following grant of planning permission taking form of permitted development, a detailed planning permission for a new building option was exercised and back-to-back sale on for 5m.

We are seeing an influx of landowners being approached by developers who offer to try and obtain planning permission for development of their land in return for the right to purchase the land at a once they have obtained planning permission. This arrangement would be formalised in an Option Agreement which is a binding contract between a landowner and a developer where the developer has the opportunity to purchase land from the landowner within an agreed time frame.

Before an Option Agreement is entered into, most developers will wish to conduct pre-contract enquiries into the land to determine if there are any restrictions or other matters which will prevent or interfere with the intended proposals to develop the land.

The advantage of an Option Agreement for the landowner is that the developer will apply for the grant of planning permission at their own cost and risk. Any legal costs the landowner may incur are usually met by the developer. This allows landowners land to progress through the planning process without having to go through the costly process of obtaining planning permission themselves. Landowners can also take advantage of the experience and skills of the developers when it comes to obtaining planning permission, potentially increasing the chances of the development going ahead.

Conversely, the risk to the landowner of entering an Option Agreement is that it does not guarantee a sale at the end of the option period. As they will be entering into an agreement for a number of years, this is likely to restrict a land owner from selling their property during the option period.
There are no standard commercial terms for an option, and this will be dependent upon a number of factors. Both parties should take professional advice on the terms from a land agent or surveyor.

Once the developer is satisfied with the feasibility of the proposed development, they can trigger the purchase of the property by exercising the option, making it obligatory for the landowner to sell to them on the terms set out in the agreement. Note, whilst the developer can choose to exercise their option to purchase the land, there is no actual obligation on them to proceed with the purchase.

Option agreements work well for developers as they are able to secure the opportunity to purchase a site and progress the planning process without needing to expend the full purchase price and tie up their funds.

If the parties agree a conditional contract, a developer will be compelled to purchase the property once planning permission is granted, which can give a landowner greater comfort that a developer will proceed.

Once land has been developed, it will have an increased market value – so landowners may also want to think about methods by which they may share in the developer’s profits or uplift in the value of their land even after they have parted ways, known as Overage Agreements. For an Overage Agreement to be effective, the correct legal framework will need to be put in place and there are many considerations that will need to be negotiated.