Landowners and developers – the importance of an effective working relationship

Adjustments to the National Planning Policy Framework (NPPF), a pledge of more funding for affordable housing and the establishment of the National Housing Bank are all aimed at helping to meet the pressing need for new homes.

If a landowner is considering making a site available for development there are certain practical measures that should be taken.

But it is also important for the landowner and developer to have an understanding of each other’s priorities. This relationship can require careful management, with agreements drawn up that outline responsibilities and shared goals, alongside a strong foundation of trust.

Considerations for the landowner

First and foremost landowners should have a clear sense of what they hope to achieve from a sale. Are they selling the land to help with generational succession planning, for example, or are there other reasons that have motivated this particular course of action? Have they been approached directly by a developer? Or are they looking to launch to a wider market?

What timescales are involved? Does the landowner require a relatively quick sale, or is it part of a longer-term strategy? What are the tax implications? Will it cause any issues – financial or otherwise – if there are delays in selling the land?

It may also be important to consider the developer’s longer-term plans. Are they hoping to buy additional neighbouring land, for example, or is it just the one site under consideration? Does the developer already operate locally with a good market knowledge? Or are they new to the area? 

Before committing to an agreement we also often suggest that landowners visit two or three housing developments. This can help them to get a feel for a certain developer, but also a sense of the type of development they would like to see on their land in terms of layout and housing type.

Of course, a developer needs to make sure the land works for them and delivers value – ensuring it’s viable from both a planning and financial perspective.  

But an open dialogue from the outset will help the landowner understand the potential for their site, as well as address any concerns around land use, design and community impact. It can also help with the negotiation of fair agreements and method of sale – whether it be a promotion agreement, joint venture, overage or a short- or long-term option.

Considerations for the developer

Many landowners play a central role in their community and the land in question could well have been in the same family for generations. They could also live close to the potential site and have friends and family in the local area – very often living next door or close by. 

Consequently, financial considerations may not necessarily be the landowner’s only motivation. Instead, they could have altruistic ambitions, with the aim of creating a development that benefits the local community for years to come. 

As a result, developers should consider what they can offer a landowner in addition to land value. What makes their schemes different to others? Is there an improved street scene or housing type that might appeal to the landowner’s sense of legacy? Are the homes generally more energy efficient with a focus on the environment and sustainability? Or are there other community benefits that could be added to the scheme?

The developer should also consider how the land is owned. Is it held by just one individual or are there a number of landowners? Has it been in the same family for hundreds of years or is it a more recent acquisition? Is the land kept in a series of trusts or by a company? 

If there are multiple owners, is everyone aligned in their vision? If it’s owned by two or three members of the same family, what is the relationship like between them and are there any restrictions or caveats in place that could restrict design or the sales process? What can the developer do to help mitigate this? 

Similarly, it may also be important to consider what the land is currently used for. Are there any existing occupants – and if so could this impact timescales and costs? Is the landowner in a position to pay any expenses themselves? Or will they have financial issues if the sale takes longer than expected, potentially putting any final agreement at risk? 

A strong working relationship with the landowner is not only essential for securing the land needed for development. It can also help navigate the planning process, address any concerns raised by the local community and enhance the developer's reputation. 

To conclude

Ultimately, if landowner and developer trust one another and share the same goals it benefits all involved. In both cases a degree of compromise may well be required. 

Very often, of course, a land agent will act as the point of contact for both parties – ironing out any potential issues, navigating any complexities and identifying any possible pitfalls. Seeking professional advice at the earliest opportunity helps ensure everyone is working together for a mutually beneficial outcome.

Further information

Contact Joshua Spink or Richard Shuldham