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With all the pressure for more housing throughout the UK, you may have wondered about selling your own house or garden plot to a developer. If an opportunity like this arises, get advice early on from a surveyor/agent who is experienced in arranging sales of land for development.  This person will tell you the likely scope of development of the land and the potential value of this, and will sort out proposed terms with the developer. Developers will often pay or contribute to your legal and/or valuer’s costs, so it is worth asking about these at an early stage.

 

How Might the Legal Side of this Work?

   

Assuming you do not have planning permission to develop the land, the developer would want to buy it by means of an option or a conditional contract. An option is where the developer is able to trigger buying the land by giving you notice within a set time limit.  The price (including any initial fee (price) for giving the option) and other terms are in the option. Sometimes the price is fixed by reference to market value, in which case further advice would be needed from the surveyor agent once planning is given.  The option becomes a contract for sale when the notice is given. In practice, the developer is unlikely to give notice until it has planning permission, and the option will contain clauses obliging the developer to apply for this.  The option would prevent you dealing with the land while the developer decides whether to give notice.

A conditional contract would be subject to planning, and will become enforceable once planning is given. Again, there would be obligations on the developer to apply for planning. Usually the developer would have the right to approve the permission – so that it if was not acceptable (detailed clauses would define this), it would not have to go ahead.

   

If you were selling a garden plot, you would need to think about whether (i) you need to keep any rights over it (e.g. to drain through it), or (ii) the developer needs any rights over the land you are keeping, or (iii) the developer should give you any covenants limiting the use of the garden land (e.g. only one house can be built).

   

Planning permission will increase the value of the land, and if the price does not already take this into account, it is common to have a top up (overage) clause, which would give you a share of the increase in value.

   

For futher information on development or any other property transactions please contact our experienced Commercial Property Team today on 01256 844888 or email property@lambbrooks.com

       

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.