If you’re wondering how to sell land to a developer, you’re in the right place. Selling land to developers can provide a fantastic opportunity for landowners to capitalise on the value of their property.
However, navigating the intricacies of this process requires meticulous consideration and planning, and the support of a legal team with commercial acumen and depth of experience in development deals. This is where our team of commercial property solicitors, with their wealth of knowledge and experience, comes in. In this post, we will address some of the key questions you might have about selling land for development, and provide a comprehensive overview of the process.
Can I Sell My Land to Developers?
The first thing to consider when selling land to developers is whether you can actually do it. In other words, is your land suitable for commercial property development?
Firstly, you may want to consider the property’s location. For example, obtaining planning permission on protected natural areas is unlikely. On the other hand, in areas where development could enhance the local surroundings, gaining planning permission may be simpler.
Landowners can sell to developers for a variety of projects, from residential and commercial to mixed-use and joint ventures. However, each situation and plot of land is unique. Therefore, it’s crucial to seek specialist advice at the outset, in order to fully understand your options.
Why Would You Consider Selling Land to Developers?
There are plenty of reasons someone may want to sell land for development. Individuals may be able to benefit from:
- Financial gain
You might be able to sell for a higher price due to developers’ investment plans. Furthermore, land with planning permission can considerably increase in value, making it a potentially lucrative purchase for the developers.
- Simplified process
Quicker transactions may be realised since developers are usually prepared for long-term investments. Furthermore, as developers are usually familiar with handling complex planning and regulatory requirements, this can ease the burden on the seller and streamline the process.
- Community development
Selling land to developers offers the chance for the land in question to be developed and used by the local community, increasing the value of the area and creating jobs and opportunities.
- Flexible options
Selling land to developers can sometimes come with options to enhance financial gain and/or to limit risk to the seller. Such options may include conditional contracts, options agreements, and promotion agreements.
Considerations in Selling Land to Developers in the UK
Whilst selling land to developers does come with a range of benefits, there are a few considerations you should keep in mind before taking things further.
- Permissions
Consider planning permission. Selling land for development with planning permission generally demands a higher sale price than without it, because planning permission decreases risk for prospective buyers about what can be built, thereby saving time and money during the planning application.
Some buyers may be put off by a lack of planning permission, as they may not want to risk attempting to gain planning permission themselves (and potentially being rejected) once the purchase has already gone through. This could limit your chances of selling. On the other hand, this can be where a conditional contract comes into play, where the developer agrees to complete the purchase subject to achieving planning permission which meets specific parameters.
- Registration
If the land in question is not registered at the Land Registry, then registering it should be one of the first steps you take, enabling you to confirm land ownership and helping you uncover any liabilities or rights that benefit or burden the land in question.
A first registration process can be somewhat labour-intensive (dependent on the nature and extent of deeds held), but registered land will almost always be a more attractive prospect to a developer than unregistered land. So, it is worth progressing with a voluntary first registration if a sale is in contemplation, as the process can take quite some time.
- Sales Pack
Conducting detailed research in advance and creating a sales pack will be useful when you find a buyer for your land. Often, this task is only addressed once the sales procedure begins. However, issues discovered at this stage can result in frustrating (sometimes even deal-breaking) delays and considerable costs. Ensure your sales pack includes the following:
- Titles;
- Utility details;
- Search information;
- Planning information; and
- Responses to land enquiries (including any specific additional enquiries which may be relevant, e.g. if the land is agricultural).
Our specialist solicitors can help you develop your sales pack, ensuring it includes all the necessary details, thereby streamlining the selling process.
- Rights of Way
You need to establish rights of access to the property when selling land to a developer. Consider if you can reach the property publicly or need to enter through private property. This can affect whether you have to gain permission from private property owners to continue.
Furthermore, agricultural land could contain public rights of way. If developing the land in question will affect such rights, it may be a challenge to obtain planning permission. Discover more about agricultural conveyancing here.
- Utilities
When selling land to developers, you also have to consider how the property in question accesses utilities like electricity and water. For example, consider if the land is connected to the mains supply, or if there are private connections. Developers will likely be looking for a mains connection, so you could put this in place before putting the land up for sale. If you are not in a position to arrange mains connections yourself, it is worth drawing the connections to the developer’s attention at the outset so that they can begin making the preparations required, thereby avoiding unnecessary delays.
- Part-Sales
If you only want to sell a portion of your land for development, you must consider the consequences on the part you’ll still own. For example, will you need any rights of way (for vehicles or services), and do you want to impose restrictions on buyers (for example, a cap on the extent of development so as not to devalue your neighbouring land)? You should discuss this with your solicitor at the earliest possible stage to help ensure that you do not damage your property’s marketability in the process.
- Tax
There are a few tax considerations, which may vary depending on your land details – again, this is something a solicitor can help you navigate successfully. Our expert team is cognisant of the potential tax liabilities and is used to working closely with our client’s accountants in order to ensure that liabilities are mitigated so far as possible.
- Agricultural Occupancy Conditions/“Ag Tags”
Agricultural ties (or “Ag Tags”) should be factored into the situation if you wish to sell land to developers for residential use. Agricultural Occupancy Conditions typically limit the land occupation to individuals involved in farming and can be tricky to remove. It is vital that you speak to a solicitor as early as possible if your property is subject to Ag Tags – seeking to lift these is a complex process and requires applying to the Local Authority as soon as possible in order to avoid delays and/or possible abortive transactions.
How Much Do Developers Pay for Land in the UK?
Different factors can impact how much developers pay for land in the UK, including:
- Property size;
- Location;
- Market demand;
- Local planning policies;
- Development potential; and
- Environmental factors, such as flood risk,
To better understand how much a developer would pay for your land, try researching sales of similar properties in your area, setting up a meeting with a real estate professional, or contacting one of our team of experts who can recommend surveyors in your area.
What Is the Fastest Way to Sell Land?
Typically, selling land for development can take anywhere from a few months to a year or more. The time frame varies, dependent on the complexity of the transaction, any issues uncovered during due diligence, and delays in planning applications.
Fortunately, there are a few ways you can speed up the process of selling land to developers. For example, you could offer a competitive price based on an analysis of your market, making the property more appealing to buyers in the area. You could clean up your land, address maintenance issues, and add features like mains connectivity to make it more attractive to potential buyers.
In addition, you could take advantage of online listing platforms to reach prospective buyers quickly. This will raise awareness of your land and help you build connections with those in the local area. If you find the idea of this intimidating, you could collaborate with professional estate agents who specialise in land sales.
What Are the Pitfalls of Selling Land to Developers?
There are a few potential pitfalls of selling land to developers, which you should be aware of before making a decision. Let’s take a look at the most common ones below.
- Legal and regulatory complications
Certain laws and regulations may limit certain development types, restricting your land’s potential value and making it less attractive to potential buyers. The same applies for planning permission. Many developers want to avoid having to apply for planning permission themselves, so if you fail to secure it, you may narrow your field of buyers.
- Financial risk
Any transaction comes with a financial risk, and the same goes for selling land to developers. Market conditions are subject to considerable change, which could lower the value of your land or the agreed-upon sales price. Also, hidden costs like taxes and land surveys could decrease your profit. Obtaining guidance on commercial property finance could be highly valuable.
- Lengthy process
While we have covered ways to potentially speed up the sale of land to developers, this process is by no means quick. Finalising the sale can be lengthy, subject to various delays. Furthermore, developers can back out of the deal if they encounter unforeseen obstacles, forcing you to begin the process again.
- Market dependence
Successfully selling your land to developers can largely rely on the demand from buyers, which can change based on market conditions. Reduced demand and economic recession could decrease your land’s value.
How to Sell Land for Development: The Process
Below, we’ve outlined how to sell land to a developer so you can better understand how to approach this process.
- Assessment and Preparation: You must start by getting a better idea about the land’s market value, any relevant limitations or regulations, and potential for development. Additionally, you’ll need to gather the necessary documentation for selling to developers, such as title documents and surveys.
- Understand Your Options: There are a few options you can consider when planning to sell land for development, such as options agreements, conditional contracts, promotion agreements, and obtaining planning permission yourself – you can speak to our specialist team to better understand these options.
- Seeking Professional Help: Selling land for development involves making initial enquiries with professionals like commercial agents and surveyors, solicitors, and planning consultants. This will help smoothen the process while keeping your best interests at heart. For example, real estate agents/surveyors can help you with marketing and negotiation.
- Due Diligence: Developers can execute financial evaluations, environmental assessments, and other checks. Be prepared to address any issues raised during this stage in order to continue with your sale.
- Sale Finalisation: Once a buyer has been identified, you’ll work with your solicitor to outline all the sale’s terms and conditions in the appropriate legal agreements. Once documents are agreed upon, contracts can be exchanged, and ownership is ultimately transferred in accordance with the terms of the contract.
Can You Sell Land to a Developer Without a Solicitor?
While you don’t have any obligation to use a solicitor when selling land to developers, it is strongly recommended.
A solicitor can help you check that contracts are drafted in your best interests, advise you of potential risks and issues, and ensure compliance with regulations so your interests are protected throughout the sale transaction. Our team can also help to address and resolve any concerns that might arise during due diligence to lessen your burden.
Remember, even at the outset, you should seek advice before agreeing on any heads of terms. Parties can often be in a rush to sign these, particularly given that they are generally not legally binding. However, despite the legal enforceability of heads of terms, remember that it can often be challenging to deviate from terms agreed at an early stage. Any attempt to renegotiate can lead to a breakdown in goodwill between the parties and can often be terminal.
Contact Us About Selling Land for Development
Selling land to developers isn’t always as straightforward as clients hope, and the process can be time-consuming and come with its own set of tricky considerations. With this in mind, our friendly, expert team are always here to help you navigate the complexities of selling land for development. For more insights, check out the rest of our blog or discover why you should choose Newtons.
If you’re seeking legal advice on selling land to developers, please get in touch with us today. We can help you make informed decisions regarding commercial property law, from buying and selling commercial property to navigating business leases.