41 - Elle's investment in residential property: planning and development
Introduction
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 her partner Anna and their new baby. She is particularly excited about the acres of land which came with 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 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 community 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, including 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, as well as wanting to retain enough garden for her own use, 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, put a cap on the land promoter’s costs and include a minimum price below which Elle doesn’t have to sell. It should also ensure that Elle is kept fully in the picture during the planning application process. 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, as needed.
Pre-application – before the planning application is submitted, a ‘Pre-App’ conversation with the local planning authority may be suitable. This will allow the land promoter to work with the local authority to identify and resolve potential problems with the development proposals before the application is made. The promoter should also engage with key stakeholders and the local community at an early stage, to ensure everyone is clear on what is proposed and has an opportunity to be involved in shaping the proposals.
Submission – planning applications are usually submitted for either full (i.e. detailed) or outline planning permission, and Elle will need to agree with the promoter how that process is to be managed, to ensure the site is marketable and the development a success in the future. If outline permission is granted, the development is given approval in principle, but before any development takes place further applications to approve ‘reserved matters’ such as the precise location of the new homes and details of the access arrangements will need to be made. Sometimes for larger schemes it makes sense to do that, then different housebuilders can buy parcels and seek approval for their own ‘reserved matters’ but for Elle’s land it may be worthwhile applying for a full consent at the outset.
In either case, when applying for planning permission the applicant must submit a number of supporting assessments and other documents to the local authority (with slightly less detail required for an outline application). Whilst the promoter would be responsible for leading that process, it will be important for Elle to have a say in the process, bearing in mind her desire to create a positive legacy, so Elle’s solicitors and consultant team will work with her and the land promoter throughout this process, giving strategic planning advice and reviewing documents, if needed ahead of submission.
Conditions and planning agreements
Whether Elle’s promoter obtains a full or an outline consent, it is likely to be subject to a number of conditions regulating the development.
The local authority may also require Elle, as owner of the land, to enter into a planning obligation (known as a s.106 agreement) to mitigate the impacts of the new development, which will need to be signed and completed before planning permission is granted. This agreement, would aim to reduce the potential negative impacts of the new development and could include requirements to provide some of the new homes as affordable housing, as well as paying contributions towards the expansion of local schools, medical facilities, libraries and provide open space and a play park at the development, amongst other benefits. 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, necessary, paid at appropriate intervals during the development process and that there are suitable obligations on the local authority to use the funds for the intended purpose.
Conclusion
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.
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