Selling Land for Development Guide

Farmland is undoubtedly the most valuable asset an agricultural business will have. A rising population and increasingly difficult operating conditions mean more and more people are selling land for development purposes. 

Whether for residential housing, continued agricultural use, or other development opportunities, understanding exactly how to sell land to developers is essential. This is where we can help.

Is it suitable to sell your land to developers?

The first thing to think about when selling land for development is whether or not the land is suitable. The location of your property is a good place to start, as you are unlikely to gain planning permission in a conservation area or other places of natural beauty. 

If the farmland has not been used much over the years, development might improve the local surroundings — perhaps making obtaining planning permission more straightforward. Each circumstance and plot of land is different, so you should seek specialist advice at your earliest opportunity.

A planning consultant will be able to assess whether selling land for development is a viable option and provide you with an in-depth planning appraisal. This should prove extremely valuable if you do decide to sell. Speaking to a specialist agricultural solicitor would also be a prudent course of action, as they will possess a wealth of knowledge about the possible ways to structure a transaction that involves obtaining planning permission.

Deciding to sell land to developers can be a large undertaking. There are many different elements to take into account which can make the process more straightforward if tackled correctly. These include:

Registration

Farmland is typically held within the same family for generations. This makes it likely that your property will not be registered with the Land Registry. Registering your land should be your first course of action, as it can help you easily confirm ownership of the land and uncover any rights or liabilities that may be attached.

If your land is particularly sizeable, several different titles of ownership may exist. You will therefore need to compare the title deeds with the layout of the land to work out who owns what.

Rights of way

When selling land for development, determining access to your property is crucial. Can you reach it via a public right of way or do you need to go through private property? If it is the latter, you may need to obtain permission from the owners for this to continue. 

Agricultural land may also contain public rights of way which will need to be considered as well. If developing your land will disrupt this in any way, you would be unlikely to receive planning permission unless some mitigating actions take place. Should you only be selling part of your land, you will also need to think about the access requirements of the land you are keeping.

Utilities

The next thing to consider when selling land for development is how the property accesses utilities such as water and electricity. Is the land connected to the mains supply or are there things like private connections or water abstractions in place? A mains connection is likely to be much more appealing for developers, so you may want to consider arranging this before you put the land up for sale. Wayleave agreements for electronic and telephone lines, plus the presence of gas pipes underground will also need to be declared to potential buyers. 

Sales pack

Doing your research beforehand and putting together a comprehensive sales pack will prove invaluable when a buyer for your land is found. In a lot of cases, things such as registering land or determining access are looked into once the sales process has already taken place. Should an issue be found during this time, then it could cause considerable delays which end up costing a lot of time and money.

Your sales pack should include things like titles, details about utilities, search results, and planning information. It also needs to contain replies to standard agricultural land enquiries. A specialist agricultural solicitor will be able to help you put together a sales pack that includes all relevant information, making the selling process as hassle-free as possible.

Interests

Making sense of occupational interests is essential to understanding the process of selling land for development. These include things like tenancies or grazing licences which could disrupt the sale of your property if not adequately dealt with. Developers will understandably want the land to be vacated upon completion, so you should speak to a specialist agricultural solicitor for guidance on existing tenancies.

Agricultural ties

If you are wanting to sell land to developers purely for residential use, agricultural ties (also known as Agricultural Occupancy Conditions) will also need to be factored in. These usually limit the occupation of the land to people actively involved in farming and were implemented to permit landowners to build houses on their land.

An agricultural tie can sometimes be difficult to remove, so this will need to be dealt with at the earliest possible opportunity. This can be done by applying to the Local Authority for the restrictions to be removed. You would need to prove there is no need for the dwellings to be occupied by someone working within agriculture for this to succeed.

If the property’s use has already been in breach of these conditions for more than 10 years, another option is to apply for a Certificate of Lawfulness. Your solicitor will be able to assist you with all of this.

Tax implications

Selling land for development can also have considerable tax implications once the process is completed. These include Capital Gains Tax (CGT) and the loss of Entrepreneurs’ Relief. VAT may also be payable in some circumstances. Another levy to be aware of is Inheritance Tax (IHT), which can prove quite costly if not prepared for.

Fully understanding your tax liabilities is crucial if you want to limit your exposure. Your solicitor will be able to help you put together a comprehensive tax strategy to deal with this. 

Part-sales

Should you only wish to sell part of your land to developers, you need to consider the implications of this on the property you will continue to own. This includes whether you would want to impose certain obligations or restrictions on buyers, something to discuss with your solicitor to ensure you would not adversely affect the marketability of your property. Another point to think about is how your land will continue to access things like electricity and water. 

There are four main options when selling land for development, which are:

• Options Agreements
• Conditional Contracts
• Promotions Agreements
• Obtaining Planning Permission yourself.

Each of these has their own advantages and disadvantages. For example, an options agreement involves putting responsibility for obtaining planning permission squarely on the developers — meaning the landowners will not have to do a thing. Meanwhile, getting permission themselves is more beneficial when the sale is complete, as none of the proceeds will need to be shared.

Your solicitor will be able to advise you on the most appropriate option for your circumstances and motivations.

Securing the right advice is crucial

If you are at all unsure about selling land for development, obtaining the right legal advice is essential. An experienced agricultural solicitor will have a wealth of knowledge at their disposal, so can help you navigate the process as seamlessly as possible. They will likely have seen all manner of complications, so know exactly what to look out for.

Better yet, a full-service law firm can take care of all ancillary issues such as developing a tax strategy or dealing with your employment obligations if you run a farming business. This ensures absolutely everything is dealt with, so there will be no complications further down the line. 

As you can see, selling land for development can be complex, and managing your obligations promptly is key to a smooth, successful sale.

We have a strong track record of supporting clients selling land to developers, and our attention to detail has been crucial in securing positive outcomes. We ensure every aspect is covered, leaving nothing to chance. 

As a legal and professional services business with over 1,000 professionals delivering premium services tailored to your needs and region, our Agricultural team can assist with everything from resolving disputes to tax and succession planning. We take the time to understand your goals and create tailored solutions to achieve the best results for you. 

To learn more about how we can help you sell land for development, contact us today.