With all the talk of a shortage of new housing, and the prospect of releasing green field sites for development, it is not surprising that developers are approaching land owners with offers to assist that landowners may find hard to refuse.

Obtaining planning permission on green field sites can be a slow and expensive process, and a political minefield, too. Success will be dependent on getting the land incorporated into the development plan for the area, and preparation of professional reports on subjects as diverse as archaeology, transport, drainage and the environment.

There will also be lobbying and a need for expert handling of public relations, as well as close liaison with the planning department before lodging the application.

Typically, the developer uses its own expertise and resources to help secure permission, and in exchange the landowners sign up to a “Promotion Agreement” which gives the developer exclusive rights over the land to seek planning permission, and then promote sale of the land to a commercial housebuilder. Usually the landowner will be compelled to sell on pre-agreed terms if the promotion of the land is successful.

With the prospect of riches if the land promotion is successful, the temptation to take up the offer is great, but with little or no payment to be made to the landowner at the outset, there is also a temptation to sign up straightaway, without taking advice from someone familiar with the traps that can lurk in these complex arrangements.

This could prove to be a costly mistake.

Among the issues to consider are how long the land will be tied up (it is likely to be several years). A well-drawn agreement must have a clear and final end date after which the land is released unless planning permission is obtained.

The agreement should set out clearly that the developer has legal obligations to get on with the promotion of the land without delay, and to pay the costs associated with it, and should at the same time keep the landowners informed of progress.

It is reasonable that the developer will expect to be given credit for the costs it incurs and management expertise, but clear parameters should be set, and accounts kept of the developer’s expenditure, as well as an agreement as to how the land should be marketed if planning permission is secured. There should also be a fair split of the ultimate proceeds of sale with a guarantee of an acceptable minimum price for the land below which the landowner will not be required to sell it.

There are usually restrictions on sales and leasing of the land, but there should be mechanisms to allow a sale to proceed whilst keeping the land bound by the arrangement, and an exclusion to allow for farm business tenancies and other short term arrangements.

A solicitor familiar with this type of agreement can guide you through the process and ensure that there are no nasty surprises.

For further help or advice, please contact Lupton Fawcett’s Julian Rowden on 0114 228 3280 or Julian.rowden@luptonfawcett.law

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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