You or your business may considering buying bare land to develop. You can then sell it or lease it and earn from your development, or you might use it yourself (for residential or commercial purposes). Here is an outline of the steps associated with purchasing land for development and what you need to consider:
Purchasing land for development
Location, size and use
Before buying any land for development, it is vital to consider location, the size of land needed and what you want it for. Will it be for personal use and/or as a long-term investment, or will you look to sell or lease out the development in full or part? Will it be for residential or commercial purposes?
Knowing the answers to these questions is essential for various reasons, including financing the purchase and development of the land, particularly if a loan is required from a bank or lender, and with respect of obtaining planning permission.
Financing the land purchase and development
It is essential to seek advice from a bank or lender in respect of funding the land purchase and development. There are various options available, such as a residential/commercial mortgage, bridging finance or development finance.
Remember that generally a 10% deposit will be required to purchase land.
Being aware of any associated risks by obtaining legal advice
Once you have agreed the purchase of a suitable piece of land and know how you want to develop it, then it is worth obtaining independent legal advice, so that you can be made aware of any potential risks associated with the land purchase and subsequent development. These risks include:
- Any rights of way and/or road issues relating to the land
- Any restrictions on the land, particularly in relation to restrictions on use
- Being aware of any boundary issues with neighbouring land and/or properties
- Planning consent
- The condition of the land that you are looking to build on, e.g. that it is not a flood plain or contaminated.
Your solicitor will be able to advise you on the legal title to the land that you are proposing to buy and whether it is suitable, including any planning application considerations that you need to be aware of.
Buying the land
When going through the process of buying the land, your legal representative will contact the sellers’ solicitors and will request an information pack for the land, which will generally include the Land Registry title documents, replies to Commercial Property Standard Enquiries and the draft Contract.
Whilst the sellers’ solicitors acquires this documentation, your solicitor can carry out the necessary searches (Local Authority, environmental, water and drainage, mining, etc.) on the land.
Once you have been provided with this information, any issues (including any boundary, rights of way issues, restrictive covenants, etc.) can be addressed with the sellers’ solicitors. These issues will generally be identified during the Land Registry title investigations and enquiry stage.
It is also essential that you obtain a survey of the land (undertaken by a surveyor) which will identify any areas of concern and may also provide a valuation of the site. You should tell your surveyor that you are intending to develop the land.
Once these issues have been dealt with and all parties are happy, the Contract can be signed and the purchase can be completed.
In some instances, the exchanging of the Contract may be prolonged if if you are awaiting the approval of a planning application for your development. An alternative may be a ‘Contract Conditional on Planning Permission’ or a ‘Purchase Option Agreement’, so you secure your ability to buy the land while you obtain planning permission.
Developing the land
When you legally own the land, have all of your necessary approved planning and other necessary permissions and the finances in place, you can start developing it.
Purchasing land for development – How Nelsons can help
Sarah Burns is a Solicitor in our expert Commercial Property team.
There is always an element of risk when purchasing land for development. Our Commercial Property team can advise on these risks, working with commercial and residential developers to identify land and advising on its financial and practical suitability.
Our team can advise on the full range of issues relating to land acquisitions and developments, including:
- Promotion agreements
- Option agreements
- Conditional contracts
- Pre-emption agreements
- Overage agreements
- Infrastructure agreements
- Collaboration agreements
- Ransoms
- Tax issues
- Planning
With a wealth of experience in planning, development and environmental matters, our team in Derby, Leicester and Nottingham help clients make the very best of their land options and their developments. For more information on our services, please call 0800 024 1976 or contact us via our online form.