Neglecting the legal formalities when you sell your Land could create huge costs in terms of time and money.
Title, Deeds and Covenants
Are you the legal owner of the freehold land that you believe is yours? It’s simple to obtain from Land Registry the details of your land-holding but you may find, to your horror, that a fence or other boundary has been moved, which will lengthen and complicate negotiations.
Ensure the land is free from covenants which may affect potential development.
How are you going to sell your land-holding? You can choose to sell privately or instruct an Agent: Choose your agent carefully and ensure that the agency has the right experience in the right fields e.g. residential/commercial/general practitioner. Check out all the terms and conditions of Instructions and ensure that fees to ‘tie-in’ periods are clearly stated.
Planning Permission: providing you’re the owner of the land, you can sell it with or without planning permission, but you will ordinarily obtain a better price if it has planning permission.
There are three main types of planning permission:
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- Outline Planning Permission
gives a basic overview of the nature of the development you want to build and in what location along with some basic plans. Should this be approved in principle you can then go on to apply for detailed planning permission within 3 years.
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- Detailed Planning Permission
covers detailed designs and the finer details such as the materials of the building, the landscaping of the property and so on. Construction must begin within 2 years.
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- Full Planning Permission
is a combined application of outline and detailed planning. If there is a possibility that it may be rejected it can be wise to submit a full application to cover all details and any doubts the authorities may have. Full planning permission may be subject to conditions, some of which may require changes to your proposals. Planning permission normally lasts for 5 years. You may be required to make a financial contribution towards the construction of any road, water supply or sewerage that may be necessary.
What is the definition of your land in planning terms?
Greenfield land is land on the edge of a town/city, or away from larger urban areas. It is undeveloped but has development proposed for it. Greenfield land is often sought and bought for a speculative land investment, as planning may be granted in these areas in time to come.
Green belt is often thought to be in place to protect the countryside – it is a regional strategic planning tool. The largest Green Belt in the UK is around London with further major green belt land around the West Midlands conurbation, Manchester, Liverpool, and South and West Yorkshire.
Brown Field is the classification given to previously developed land which may have been for housing, commercial, industrial or retail purposes.
Agricultural land is used for agriculture as a business. Increasingly, farmland is becoming redundant with the decline of farming in the UK and agricultural land is often sold off cheaply. While the land will have no planning permission, you may apply for planning permission for a change of use of the land. Housing pressure in the South East is high, so well-positioned farmland may provide an investment or future building plot.
Tread carefully when buying agricultural land – if it is not near existing housing it may be unlikely to gain future planning permission.
Deed Restrictions: Don’t make the mistake of assuming that a property is restriction-free because it isn’t a development. Deed restrictions, rules and prior agreements may be recorded on an individual deed. Therefore, read the current deeds of your property before you agree to sell.
Restrictive Covenants: Check if your land has any Restrictive Covenants (your solicitor should be able to look into this for more detail). You will need to establish that sufficient ownership of land (or rights over land owned by others) exists to enable your scheme to proceed and to subsequently operate and manage it. Again, check for restrictions on development or use.
Restrictive covenants may include:
- Setbacks (how far homes must be from streets and interior lot lines)
- Easements (such as a pathway for power lines or roads)
- Fees for road maintenance or amenities
- Rules regarding changing or voiding the covenants
- Rules about pets and other animals (for instance: no breeding, no livestock, no unchained pets)
- Regulations dealing with in-home businesses and home rentals
- Rules that limit tree cutting
- Clauses that dictate what type of fencing can be used, or that forbid all types of fencing
- Clauses to reduce clutter on lots, such as prohibiting owners from storing a vehicle that doesn’t run within view of others, or parking a recreational vehicle on the property.
- Some restrictions limit the paint colours that can be used on a home’s exterior. Some might require that all homes have a certain type of sliding.
Purchaser Agreement: If there is more than one purchaser purchasing or selling land, you may wish to draw up an agreement as to who gets what settlement, as further down the line this can cause problems.
Solicitors: You and your purchasers will require solicitors to carry out the conveyance of the land. (Check your solicitor is conversant with land transactions.) This can, depending upon circumstances, take some time for all the agreements to be resolved such as price, deductions, a date for the exchange of contracts and legal completion, vacant possession, etc.
Third Parties: If your land is subject to the Section 106 Agreement (see below), you may be involved with Solicitors from the Planning Authority.
Section 106 Agreement:
Section 106 of the Town and Country Planning Act 1990 allows a local planning authority (LPA) to enter into a legally-binding agreement or planning obligation, with a land developer over a related issue. The obligation is sometimes termed a ‘Section 106 Agreement’.
Such agreements can cover almost any relevant issue and include sums of money. Examples of Section 106 agreements include:
- the developer will transfer ownership of an area of woodland to an LPA with a reasonable fee to cover its future maintenance.
- the local authority will restrict the development of an area of land, or permit only specified operations to be carried out on it in the future e.g., for amenity use
- the developer will plant a specified number of trees and maintain them for a number of years.
- the developer will create a nature reserve.
- the developer can be bound to make certain financial contributions towards the provision of local amenities.
Section 106 Agreements can act as a main instrument for placing restrictions on the developers, often requiring them to minimise the impact on the local community and to carry out tasks providing community benefits.