Thinking About Selling Your Land?

Points to consider when selling part of your garden land for development…

With the ever-increasing pressure to build more houses throughout the UK, you might have considered selling your land, or at least part of it to a builder for development.

It is worth seeking initial advice from a surveyor and agent to consider the likely scope of development and potential value of the land. They will also assist you in negotiating proposed terms with the developer.  Developers will often pay or contribute towards your legal and valuation fees. So it is definatly worth raising this at an early stage.

So what are the legal issues?

There are various legal issues to consider when selling part of your land for development.  We are frequently approached by clients who have negotiated a price for their land, but have yet to consider further important points. Points which can create difficulties further down the line. This article addresses some of the matters which should be considered at an early stage.

First things first…

The first point to consider is the structure of the transaction.  You may be approached by a developer who suggests entering into a conditional contract.  Alternatively, they may propose an option agreement or an outright purchase of your land.

Deciding which of these is most appropriate will depend on the circumstances and a full comparison of the various types of agreements is beyond the scope of this post.

However, it is true to say that rarely will a developer be prepared to take on the risk that planning permission will not be granted. For this reason; it is sometimes appropriate to have a Conditional Contract, which will require the developer to buy the land if certain conditions are met. Alternatively, you could have an Option Agreement. This gives the developer the right to buy the property at a later date.

In other situations, a developer will be prepared to acquire the land outright, particularly if you have secured planning permission for your land to be developed already.

If it is not to be an outright sale, you should consider how long you are prepared to limit or restrict what you can do with your land. In some situations where an immediate sale is agreed, you may wish to impose some form of “overage”. This would then require an additional payment to be made in the future if there is an uplift in value. For example if the land is developed. These are all points to agree with your buyer, in addition to the sale price itself, when the initial discussions are taking place.


Image of two model houses in the grass. New house and old house.

Moving things along…

As well as discussing and agreeing the structure of the deal, it is also important to consider the following points:

  • Title: It is worth disclosing any issues that currently affect the land at an early stage. There could be restrictive covenants which prohibit or limit development. These could prevent a developer building what they want to on your land. If you are aware of exactly what affects the Title then you will be in a good position to anticipate and deal with any problems.
  • Other Constraints on Development: In the same way as there can be title issues there can be other matters affecting the land. For example:  Tree preservation orders, planning restrictions or service media. All of which could affect development potential on the land transferred. These would be apparent from searches. Whilst these will usually be carried out by the buyer, it is worth looking back at any information you were given when you purchased your land. This would give an indication of any issues. Although this would not necessarily show the up-to-date position.
  • Mortgages:Depending on what you are proposing to do with the land you are selling off, if you have a mortgage over your property then the lender may need to consent to the proposed sale. Consent will not be required if the lender is being paid off in full immediately. However, if consent is required the lender may require a formal valuation to be carried out. They will expect their fees to be paid. Obtaining lender consent to the transaction can take some time. So the sooner their consent in principle can be obtained, the better. They may also want some or all the money from the transaction. Again this is something to factor in when agreeing a deal.
  • Planning Permission to Be Granted: Something else to bear in mind is what is going to be built on the land you are selling. How much control do you require over what is built? Are intending to continue to live in your existing property? If so, you might want to place restrictions on the height, size and type of building that can be constructed on the land and its proximity to your own house. This can all be dealt with in the transfer deed to the developer. It does however,  make things simpler if these points have been considered at the outset.

Other Practical Points…

How will the new dwelling be accessed? Will access be shared with the new dwelling? Are there current services running through or over the land that is being sold? Will the boundary be fenced? If so, it is often advisable to stipulate the height and type of fencing. These points are all worth considering as early as possible in the process.

If you would like to discuss the issues raised in this post further, please get in touch either via email, or via telephone on 01530 564498

Matt Rice

October 2018

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