LAND PROMOTION

Endurance Estates Strategic Land work with Landowners to add value by promoting a site through the planning process. The company enters into an agreement with the Landowner and organises the obtaining of planning permission, pays the costs of a professional team and sells the land to the highest bidder once consent is granted. This note sets out the background for Landowners or their representatives who are considering appointing a partner.

Land Promotion

THE PLANNING PROCESS

This system in the UK has been fraught with delays since the government overhauled the planning system in the late 1990’s and changed the plan led process. A new system was introduced with local development frameworks (LDF) prepared by the local authority which would have more local power. Strategic decisions would be made by a combination of the County Councils and other bodies acting on a regional basis through a regional assembly.This process was incredibly time consuming and involved considerable levels of administration. Sites have been delayed and often now there is no plan in place for developers to bring forward the proposal. This led to a frustration amongst Landowners and scarcity of residential land.

In 2010 Eric Pickles, the Minister responsible for Local Government introduced the concept of “localism”. The idea is essentially to reverse the top down regional targets and put the responsibility on Local Authorities to provide their own housing and to decide where that housing should be located. Regional targets will be abolished but Local Authorities still have to have regard to an evidence base of National Statistics to demonstrate that they have an adequate supply of residential and employment land to meet predicted targets. Planning policy will be set out in a Local Plan which combines the Core Strategy and Site Allocation processes in order to streamline its creation.

In many instances, local Parish Council’s, or groups, will also be able to prepare a Neighbourhood Plan which will help determine additional local opportunities and ideas for development. The responsibility for new development will therefore now sit much more within communities and Parish Councils. Increasingly proactive thinking communities are drawing up Neighbourhood Plans to ensure they have a say in how the plan should shape up. Landowners can now consider at a local level what may be best for their community and whether any benefit could be facilitated by the development of private housing and affordable homes. Communities can be more proactive in considering the needs for more village facilities e.g. playing fields, village halls, cycle ways, paths and potentially these could be leveraged on the back of the Landowner receiving a planning permission for alternative use. Proactive developers engage at the local level in order to identify community needs and factor these into their development proposals.

In more urban areas where farmers have land on the edge of urban settlements, there are opportunities under ”localism” for Landowners to proactively identify land that could be suitable for development and bring it to the attention of the Local Authority. The NPPF was introduced in March 2012 and is an important opportunity for Landowners considering trying to get planning permission. It replaces over a thousand pages of previous planning policies with around fifty. It refocuses planning policy on encouraging growth and includes a powerful presumption in favour of sustainable development. Government expects that this presumption should run as a “golden thread” through all plan making and decisions on planning applications. This provides an opportunity now for Landowners.

In rural areas, Councils are encouraged to support economic growth. Authorities are also encouraged in particular to consider whether allowing some market housing would facilitate provision of significant additional affordable housing. Councils must continue to maintain a rolling 5 year supply of housing land. Many Councils can’t demonstrate this and it provides an opportunity for Landowners to get housing on their land.

Local Authorities are now urged to get their new style local plans up to speed as quickly as possible.

There will be transitional arrangements for 12 months but most Local Authorities are now racing to get plans in place and are seeking representations from Landowners.

It is important Landowners provide a well researched and deliverable case. Endurance Estates can help demonstrate the development will come forward if the land is allocated.

In a nutshell the NPPF is strongly probusiness and thus pro-development but it does not release unchecked development.

Important checks and balances will remain in place, such as the plan-led approach and the continued protection of the Green Belt. It is however a major policy shakeup that provides an opportunity for those with potential development land.

WHY DO YOU NEED A LAND PROMOTER

The level of detail that is now required for a representation is considerable, as a Landowner needs to demonstrate to the Local Authority that sites are deliverable eg. have no adverse ground conditions, do not flood, do not have transportation issues and are suitable for development. The process is increasingly expensive.

Traditionally a Landowner may appoint a planning consultant themselves. This is costly and a local authority will not always think the Landowner is capable of delivering the project.

Often Landowners appointed a house builder under an option agreement to promote the site. The housebuilder often does not dedicate enough time and resource to the land owner’s site, their targets, staffing and requirements constantly changed depending on their own land bank. Once they obtain planning they want to minimise the price they pay for the land.

THE FINANCIAL BASIS

The land promotion agreement works on the principle that the promoter provides all the costs for the fees that are now needed to make representations and then ultimately obtain an outline planning consent. The costs run into hundreds of thousands of pounds over a 2 to 5 year period and these are provided in total or part at risk by the promoter.

Once planning permission is obtained the Landowner and promoter jointly appoint an estate agent to sell the site and invite bids from a range of house builders or developers. Once sold the cost of promoting the site, legal costs and any works that the purchaser has required the vendor to undertake have been reduced, the proceeds are shared. Typically the Landowner will share between 20 and 35% of the uplift in value with the promoter depending on the risk, timescale and costs involved.

THE BENEFITS TO THE LANDOWNER

There is usually no cost to the Landowner in promoting the land and they merely share in the upside.

The interests of the Landowner and the promoter are aligned as they both want to see the highest price. (In option agreements the house builder wants to reduce the price they pay for the land to increase profitability). The promoter can work quickly as this is his dedicated activity and is therefore incentivised to perform. They make no profits until they deliver the result. The Landowner may have more flexibility to structure the transaction in a more tax efficient manner and to have input into the treatment of the sale proceeds.

THE ENDURANCE APPROACH

Endurance Estates Strategic Land will either appoint an existing team that has been assembled by a Landowner, or provide a dedicated new team. This would include planning consultants, engineers, landscape and environmental consultants, who have a considerable track record of results. In addition to using traditional methods of influencing policy through representations (by a planning consultant) the company have a policy of engaging with local stakeholders at an early opportunity to encourage them to “champion” the scheme. They have extensive high level contacts within the relevant councils and work with councils to help deliver their political target.

Endurance Estates is based in Cambridge and works on schemes between 2 and 200 acres.

CASE STUDY - WEDOW ROAD THAXTED

A family trust approached Endurance Estates and entered into a development/land promotion agreement, with the company financing and promoting the 15 acre site.

We carried out a thorough due diligence exercise, concluding that there was capacity for the local authority (Uttlesford) to accommodate 5 acres of the site for a scheme of in excess of 50 residential units. The company appointed a civil engineering contractor to evaluate drainage issues raised by the Local Town Council and to carry out a Transport Assessment. The planning consultant made representations at the options stage of the LDF process. In January 2008 Uttlesford confirmed in their core strategy document that they have the intention to allocate land for 60 residential units in Thaxted. Endurance Estates argued that Thaxted is an attractive market town with shops, restaurants and other infrastructure that could accommodate growth and that not all growth should be put into the major commercial centres or in a new town.

Land Promotion

The company also engaged with the stakeholders including the Parish Council and District Council and to involve the public in a number of consultations where options for the site were discussed.

A planning application was submitted. The first application was refused and Endurance appealed against that decision. All parties had the opportunity to present their views to an Independent Inspector. Subsequently a second permission was granted.

The overall costs of the professional team ignoring time costs from Endurance Estates ran into hundreds of thousands of pounds but the site is now consented so the value has risen substantially and much needed new homes can be delivered.”

LAND INVESTMENT

If you are seeking to sell agricultural or industrial land with potential, Endurance Estates would also be interested in purchasing the land unconditionally as it has considerable ‘in-house’ and third party resources available to purchase sites sometimes with the Landowner maintaining an on-going profit share in the land.

THE NEXT STAGE

If you are interested in Endurance Estates evaluating the potential for a site please contact Tim Holmes at tim.holmes@endurance-estates.co.uk or Ben Hooton at ben.hooton@endurance-estates.co.uk with a copy of the site plan, a note on any representations that have been made and any feedback that has been received to any previous planning application.