Most landowners will have had some experience in either selling land for residential development or perhaps putting sites forward into local area plans. Often, the transaction will be very lengthy, costly and will require the need to maintain a clear line of communication throughout between the seller, solicitor and land agent. In spite of this, the financial rewards can be life-changing in the right circumstances.
So what do you need to consider when putting land forward for development?
First and foremost, you will need the right team of professionals behind you. Whether this is your legal advisor, accountant or land agent, it is important to instruct people who can advise you on the potential benefits and risks as well as to ensure that any conditions of sale meet your intended objectives. Additionally, there may be planning opportunities or threats that may need to be taken into account well in advance of any potential sale, so as soon as possible these should be ironed out.
The second point that you should consider is the size/ scale of any potential development and the impact it may have on your remaining land. How much of an impact will this have on the business (if there is one)? What land is to be left? What rights and restrictions should be conveyed with the development Property? Furthermore, would you want to stay near to the land once development has started? Any form of sale involving possible development will require a lot of consideration and therefore it is important to discuss this with your relevant advisors in depth.
Finally, if you are looking to develop land you will need to ask the question, who owns the land? Until a solicitor can confirm this, presumed ownership of the land is not acceptable, so ironing this detail out from the start is an important step. The ownership question also presents a tax planning opportunity. You may want to consider who is to benefit from the sale of the development land. At this time there could be major tax factors to consider. Whilst you are probably of the view that you want to maximise as much post-tax value of any sale as possible, it is important to bear in mind that making money from a land sale could leave you exposed to tax at a higher rate. Obviously, it would be less than ideal if an elderly and unwell landowner is receiving a large sum of cash, 40% of which could be lost shortly afterwards to Inheritance Tax.
These sorts of questions may bring about structural changes to the transaction so it is important to communicate this with your professional team, so that ideas can be scrutinised, flexed and implemented to achieve your intended outcome. By instructing professional advisors, you will ensure that your intended outcomes are clear, and all parties know where they stand once the transaction concludes.
If you wish to discuss a potential sale or purchase of development land, or have any other queries relating to Property Law, please contact Frank Smith & Co Solicitors on 01242 801748.