41 - Elle's investment in residential property: planning and development
Elle’s career has gone from strength to strength in the last few years. Following a well-received season playing for Paddington WFC, Elle is finally taking a well-deserved break away from the pitch. Marking a personal milestone for her, Elle has settled into her dream home with partner Anna and their new baby. She is particularly excited about the acres of land surrounding the property and hopes it will be the perfect spot to recharge and celebrate her success.
However, Elle hasn’t had time to relax for long before another exciting opportunity lands right on her doorstep. She has just been approached by a land promoter with a proposal for a development opportunity which would transform some of the land surrounding her property. The land promoter thinks that planning permission could be secured for a development of around 40 new homes. This would provide much-needed housing for the local area while also securing an attractive financial return for Elle.
Elle’s initial thoughts
Elle has never worked with a land promoter before and knows very little about the planning process, so she has approached Mills & Reeve to work out if this is the right move for her:
Having recently moved to the area, Elle is keen to make a positive contribution to her community. She wants to play a part in shaping a vibrant new neighbourhood that would deliver real benefits for the local residents.
It is important to Elle to be a positive role model for others and make the most of her rising success. She is keen to cement her legacy off the pitch through her investments.
Elle’s current priority is to diversify her income streams beyond football to ensure that she is not reliant on her sporting career to support her family. She knows that a footballer’s career can be unexpectedly cut short, so the potential for strong returns on the development aligns with her goal of financial stability.
However, Elle is worried that local residents might oppose the new development. If the project faces controversy, Elle is concerned how this might affect her public image and the potential knock-on effects this may have, particularly as an emerging “influencer” hoping to secure more brand deals in the UK.
Practicalities of the proposal
To make an informed decision, Elle wants to understand more about how the land promoter’s proposal might come to fruition and the legal process involved.
What is a land promotion agreement?
The land promoter wants Elle to enter a legally binding contract (a land promotion agreement) to sell her land to be used for the new housing development if a satisfactory planning permission is obtained. In return, a land promoter typically agrees to make a planning application for the new development, and once permission is granted (and the value of the land therefore increased), market the property so that it can be sold for an uplift. It is important that Elle’s solicitors carefully review the terms of the agreement to protect her interests. For example, the agreement should set out that Elle is not liable for any costs incurred by the promoter in making the planning application even if it is refused, a cap on the land promoter’s costs and a minimum price below which Elle doesn’t have to sell. If permission is granted and the land is sold, the contract should clearly set out the promoter’s costs recovery and profit-sharing terms between Elle and the land promoter.
Planning strategy
Securing planning permission is critical to the success of the land promotion deal. Without it, the land remains undeveloped and will be valued at a fraction of its potential, meaning Elle will miss out on the lucrative returns that the development could bring. However, the planning application process can be long and complex, and Elle wants to know that the land promoter’s planning strategy maximises their chances of success. Elle’s solicitor’s will therefore be on hand to provide advice throughout all stages of the planning process.
Pre-application - before the planning application is submitted, a ‘Pre-App’ may be suitable. This will allow the land promoter to work with the local authority to identify and resolve potential problems with the proposed development before the application is made, as well as engaging with key stakeholders and the local community at an early stage.
Submission – planning applications are usually submitted for full or outline planning permission. If outline permission is granted, the development is given approval in principle, but is granted subject to conditions requiring the subsequent approval of one or more ‘reserved matters’. In either case, when applying for planning permission, the applicant must submit a number of planning documents to the local authority (with slightly less detail required for an outline application). Elle’s solicitors and consultant team will work with her and the land promoter throughout this process, giving strategic planning advice and can also assist with reviewing the planning documents ahead of submission.
Section 106
The local authority will often require a developer to enter into a s.106 agreement before planning permission is granted. This allows the local authority to reduce potential negative impacts of the development and ensure key facilities that the new development will require are funded. The developer’s obligations could include paying contributions towards the expansion of local schools, medical facilities or ensuring open spaces and parks are built into the proposals. Elle is keen for her development to provide these community benefits, and her solicitors will negotiate the agreement to ensure that the contributions are fair, paid at appropriate intervals and there are suitable obligations on the local authority to use the funds for the intended purpose.
The outcome
After her discussions with Mills & Reeve, Elle considers her options and decides to go forward with the proposal. She feels confident in her prospects of making a good financial return and also providing welcome community benefits to her local area. Whilst the land promoter begins the planning process, Elle can turn her attention (at least for the meantime) to enjoying her new home before the start of the next football season.
