Recently we have seen a rise in enquiries from individuals looking to purchase land or property with the benefit of planning permission. A property purchase of this type is more complicated than a standard conveyancing transaction because there are additional points to be considered and this article covers the key points that you will need to address with your lawyer.
Does a planning permission transfer to the buyer upon sale?
Yes. A planning permission attaches to the land and so if you own the land to which the planning permission relates, you can implement the planning permission (subject to compliance with conditions associated with the planning permission – more below).
What should you be aware of when purchasing a property with granted planning permission?
1. What should the Sale Contract include?
If your seller obtained the planning permission, they will have directly engaged an architect to prepare the drawings attached to the planning permission and consultants to prepare the reports and surveys that assessed whether the site was suitable for residential development.
Why is this important?
- To use the plans attached to the planning permission, you will need to obtain a copyright licence from the architect (to avoid breach of copyright); and
- To rely on the reports prepared by the consultant, you will need to procure Letters of Reliance (otherwise you will have little to no economic redress if the reports are inaccurate).
Your lawyer needs to recognise that the contract will need to deal with both points and the seller will typically be under an obligation to deliver these to you on completion.
The sale contract might also need to deal with any CIL liability – see our comments below about this.
2. What should the transfer include?
The transfer is the legal document which transfers ownership of the land from the seller to the buyer. This is the document that is registered at the Land Registry following completion.
Does the land being sold form part of or the whole of the seller’s title?
If the land being sold forms part of the seller’s title, then you will need to consider whether you require any rights over the retained land to develop and use the property. Transfers of Part are complex by nature, and you need to make sure that they cover everything that you and your development will need over the seller’s retained land. You will need to be thinking about rights of access, rights to maintain boundaries, rights to lay, connect into and use shared services. You will also need to think about whether you need to impose covenants on the seller’s retained land to protect the amenity of your land and development. These questions should be asked and thought about at the outset of the transaction.
3. What property searches should be done for development land?
A full set of property searches, tailored to the requirements of the development site, should be undertaken as they will reveal important information about the property and the potential for development. Is the property affected by any existing land charges? Is there a risk that the land could be contaminated? Are there any utilities on or near to the property to service the development? All of these questions should be answered and will assist in creating a clear picture of the development site.
4. What do I need to know about the planning permission for the development?
The planning permission should be reviewed to ensure that you fully understand the effect of the conditions attached to the planning permission and the implications that they may have for the development (this is particularly important if you do not have a planning consultant).
You need to think about the time period for implementation and any conditions that need to be satisfied prior to commencement of development or prior to the occupation of the home. You will need to be confident that you can satisfy these conditions and in good time.
What do I need to know about any planning agreements that affect the development land?
In order to obtain the planning permission, the seller may have entered into a planning agreement which may impose additional obligations on you (some of these may be financial in nature). Your lawyer should help you understand these obligations and your responsibilities.
5. What is ‘CIL’ and will it affect my build?
‘CIL’ is the Community Infrastructure Levy which is payable on certain developments. If the property is within an area where the Local Authority has introduced a CIL charging schedule which captures residential development, CIL will be payable on commencement of that development.
How is CIL calculated?
CIL is a charge that is levied on net additional floorspace created as part of a development and it can be quite expensive!
Are there any reliefs from CIL?
Yes. An important relief is the CIL Self Build Exemption. If you are going to use this, you will need to follow a series of steps very carefully prior to commencing your development works. Failure to do so could trigger the liability.
What happens if the seller has already implemented the planning consent, but the works are unfinished when I buy the land?
If CIL is payable on the development and if development has commencement prior to the sale of the land to you, CIL will be payable and the contract should deal with who is responsible for paying it.
6. What about the construction of the development?
Depending on the size, scale and value of the development, you may also need to instruct a specialist construction lawyer to assist with the JCT/build contracts, collateral warranties and any appointments that are required following completion of the sale when work can begin.
What experience does my property lawyer need to have to help me buy a property which has planning permission granted?
Appointing the right lawyer to help is key. Your lawyer needs to be able to advise you on both planning and development matters, as well as being able to provide comprehensive advice on the development project.
How Moore Barlow can help you
Buying a property with the benefit of planning permission presents a huge opportunity, but you need to make sure that you get the right advice from the word go to ensure that you avoid potentially costly pitfalls and we’re ready to help you with that. Contact Moore Barlow’s residential property team today and discover how we can help you and your family.