Unlocking the Value of your Estate Through Development
In times of economic uncertainty there are opportunities for farmers and estate owners to diversify and maximise value through development which is thriving due to record levels of demand for housing and warehouses (often referred to as beds and sheds by politicians).
Orchestra Land is a company providing a commercially driven approach to deliver new homes, industrial and commercial units. Specialist planning and development companies are more favourable given their specific knowledge of the latest planning and development changes. Furthermore, marketing a site to multiple developers or advising landowners on how to obtain planning consent themselves is a specialist skill set which achieves the maximum value from land and estates.
The aim is to deliver projects which provide a satisfactory outcome for all parties by working with the council, local stakeholders and residents whilst considering the landowners personal situation. A bespoke service for landowners is essential given each parcel of land is unique and the potential sums of monies involved. It’s therefore important to employ a professional who is a member of the Royal Institution of Chartered Surveyor (RICS) and the Royal Town Planning Institute (RTPI).
There are two main types of agreements on a ‘No win No fee’ basis for landowners to have a development partner on board who will fund and obtain the planning. These are:
Rather than a land purchase transaction, a Promotion Agreement might be viewed as a type of joint venture between the landowner and the ‘Promoter’, with the joint aim of maximising the value of the land to the benefit of both parties. The Promoter would be committed to promoting the site for planning, with all the associated risks of funding the planning promotion and application. When permission has been granted, the property is marketed for sale to a range of developers and the net proceeds are shared between the developer and the landowner when the land is sold, with the majority share going to the landowner.
An Option gives the buyer a right to purchase the land during an agreed period when permission is obtained (the option period), typically in return for funding and delivering the planning.
Usually the option is exercised on the basis that planning permission has been granted, which will significantly increase the value of the land compared to the value without the benefit of planning permission. The price for the option may be fixed, based on a formula or subject to market value determination by a surveyor. Often the developer will get a % discount to the value of the land with planning for funding at risk and obtaining the planning permission, or a fixed price could be agreed per acre of developed land.
Alternatively, the landowner could pursue planning permission themselves but with this comes risk of not obtaining planning and losing the planning costs. Another method is for a landowner to sell the land without planning to a developer for a value reflecting whether there is an uplift payment on grant of planning and reflecting the risk of no planning permission on the land.
For advice or a free land consultation, get in touch with Orchestra Land on:
Phone: 01707 830 222