Selling Farmland For Redevelopment

Year Published: 2018

Our Agricultural Law team are often approached by clients who are considering selling farmland for redevelopment or who have been approached by developers. Understandably there are lots of questions surrounding this topic. James Goddard, our Senior Property Associate who specialises in agricultural law, has answered a few of the frequently asked questions below to help you know where the start when considering selling farmland for redevelopment.

Q: My parents own some farmland and as they have retired, are considering selling it for residential development. How do we go about this?

James Goddard, Associate in the Property team at SAS Daniels Chester office.

James Goddard, Senior Property Associate

The first step is to check that your title is registered at the land registry and if not, to ask a solicitor to review the deeds for you. You should also check there is nothing on the title that is likely to be a cause for concern for a potential purchaser. For example, does the property have adequate access or is it subject to rights for adjoining land owners that could hinder development?

The next stage is to approach a land agent or promoter to see whether the land has development potential. A land agent can advise you on the different methods of proposal. Broadly speaking, there are two methods for selling land for residential development, which are:

  1. Promotion Agreement – This gives a promoter a fixed period of time to obtain planning permission and to find a developer to purchase the land. There is an incentive on a promoter to obtain planning permission quickly and to maximise the sale value of the land, as they will take a fixed percentage of the sale value.
  2. Option – In this case, the developer has a fixed period of time to get planning permission and serve notice to purchase the land. In contrast to a promotion agreement, the purchase price can be fixed and the developer will proceed when they are ready.

Finally, you should inform your accountant of the proposals and consider the tax implications of the sale.

Q: I’m in the process of selling land for redevelopment. Part of the land is let out for equestrian use but there is no written agreement. Is this likely to be a problem?

It is essential that you check your records to establish how long the land has been let for and for what purpose. There is a clear distinction between land that is used for agricultural business use, such as the commercial grazing of horses, and land which is used for stables or for horse training and exercising. The latter is likely to be classed as ‘for business use’ meaning that the tenant may be able to request a renewal lease at the end of the term. Gather up as much information as you can and take advice from a solicitor on how to document the tenancy, taking into account the developer’s requirements for the land to be vacant prior to sale.

For more information of selling farmland for development or any other property matters, please contact James Goddard in our Agricultural Property team on 01244 305912.

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