Robinson & Hall’s core patch lies within one of the strongest areas in the country for residential development land activity.
Lying in the centre of the Oxford-Cambridge Arc, beyond the London Green Belt and with excellent access to the railway and motorway networks, this area is easily commutable to London with good connections to Birmingham and the north. It is no surprise that considerable residential development is focussed on the counties in which we operate. We have achieved many significant successes for our landowning clients, with every expectation that this will continue.
Clearly, the housing market has been tested since September of last year with increased interest rates on top of significantly increased energy, materials and labour prices. Nevertheless, during this time we have been able to conclude four major sales, all to housebuilders who need to maintain their presence in this all important region.
As we enter 2023, sales rates are climbing again and there is increased confidence that both inflation and interest rates will come under control. While there remains a degree of caution, a housebuilder needing to hold a presence within the Oxford-Cambridge Arc will not have many sites to pursue and good sites continue to sell well.
Sale prices per acre can vary considerably but we are still expecting most sales to achieve many hundreds of thousands of pounds per acre and even in excess of £1,000,000 per acre on occasion. We are also involved in zoning land for distribution warehousing where even higher prices per acre can be achieved for the correct location.
The journey for our landowning clients usually starts with a planning appraisal. We then offer the site to a small number of professional development promotion firms with whom we have strong contacts. A promoter can be engaged to manage and fund the promotion process, usually over many years, in return for a share of the development proceeds. We oversee this process on behalf of the landowner, acting as the liaison between landowner and promoter.
Releasing land for residential development can be extremely rewarding but the pitfalls are many. It is important to assemble a strong, experienced team if a positive result is to be achieved.
For more information please contact Hugo Bryan, Assistant Development Surveyor on 01234 362894 or email email@example.com
When it comes to land that sells for development, it may appear that some landowners are just lucky but that is not the case; such landowners have made their own luck! Turning farmland into a potential housing development happens by actively and successfully promoting the land (usually over several years). If a landowner is not trying to promote the land or working with third parties to do so, they have little to no chance of success.
Is now the right time to promote my land for development and what’s the current development market like?
It is no secret that the development land prices have dropped from the 2022 peak (prior to Liz Truss’s mini budget in October 2022). A few examples of issues that housebuilders and purchasers are contending with are:
On the flip side, development land prices continue to benefit from a limited supply of good development sites available on the market and in turn, limiting the current reduction in sales prices. Looking forward, it is predicted that the inflation rate will slow to around 5% by the end of the year, which will also benefit the sector.
Development sites often take many years to promote and a few years to construct. Therefore, there is ample time for the market to recover for a development scheme that begins the promotion process today. In addition, a net minimum sale price (per acre) can and should be put in place to protect the landowner. Our knowledge of strategic development sales is invaluable in the sales process to ensure that the best price can be achieved given the current market circumstance.
What are my promotion options?
A promotion agreement is a legally binding contract between the landowner and a land promoter. The promotion agreement is created to bind the parties to work together in achieving a desirable planning permission. The promoter funds the planning process entirely at their risk and if they are unsuccessful then the landowner has nothing to pay. However, if the promoter is successful then the land is marketed, a proportion is paid over to the promoter and the remainder is available for the landowner. There are of course many other important terms within a promotion agreement to protect the landowner which would need to be carefully negotiated. The correct land promoter will bring with them experience and expertise that is invaluable to achieving the desired outcome.
An option agreement is a legally binding contract between the landowner and a developer. The option agreement grants the developer the right to purchase the land from the landowner during an option period in return for an option fee. The developer may look to gain planning on the land during the period. The purchase price the developer will need to pay the landowner will be pre-agreed within the option agreement. The price could be a fixed price or a discounted percentage from the agreed market value of the site at the point of sale. The right to exercise the option lies with the developer.
Land can be promoted by the landowner, usually with the help of an agent and other third parties. The landowner will look to fund the promotion of their land themselves, the benefit being that if their promotion is successful, the landowner will keep a higher amount of the proceeds. It is usually more viable for a landowner to promote their land on a smaller scheme.
How can we help?
Robinson & Hall, acting as land promoter, has promoted smaller sites for clients and the costs for the promotion are shared between Robinson & Hall and the landowner. We would take a pre-agreed percentage of the final sale if the promotion was successful, similar to any other promoter.
Robinson & Hall can increase your odds
We act for the landowner, not the promoter, to achieve the most favourable terms. Factors that are often negotiated include the upfront payment to the landowner, the length of the term of the agreement and the percentage split of the proceeds.
Robinson & Hall has a preferred list of promoters who we approach on behalf of our clients and who have a track record of successfully promoting sites for development.
From instruction to the point of sale, we will be working on behalf of the landowner to achieve the best results.
If you are considering your options and would like to find out how we can help you, then please contact David Jones, Partner at Robinson & Hall, on 01234 362906 or Hugo Bryan, Assistant Development Surveyor at Robinson & Hall, on 01234 362894.
When approached by clients with potential development land, our first task is often to select a professional promoter to take the project forward. A land promotion can easily cost hundreds of thousands of pounds, even millions in some cases, and few landowners wish to risk such sums on an uncertain outcome. A promoter will take on the cost of the promotion at risk in exchange for a slice of the sales revenues if a consent can be achieved and the land sold.
But, which promoter to choose? There are hundreds claiming to be the next big thing, but few have both the experience and the finances to make it onto the Robinson & Hall shortlist. Negotiating good terms is an important part of our role but selecting the right partner to work with is arguably the most important decision of all. Much better to achieve a sale at more generous terms to the promoter than to choose the promoter offering the keenest terms only to find that they are unlikely to produce a positive result.
We work with the client’s solicitor and accountant (it is never too early to take tax advice in these matters) to produce a promotion agreement and it is then for the promoter to survey the land, produce masterplans, make representations to all relevant bodies, woo local politicians and planning officers, deal with local objections, overcome technical issues and many other things besides. We remain close to the promoter throughout this period, reporting to the landowner and often having input into design and the handling of local politics. We monitor the many surveys which will be required (ecological, archaeological, landscape impact, highways, ground investigations and many more), ensuring the minimum disruption to farming activities and negotiating compensation where necessary.
Hopefully, usually after some years of input from the promoter and ourselves, we will eventually arrive at the happy day when a planning committee resolves to grant consent for the residential development of the land. Our work is just starting. There is a Section 106 agreement to be agreed and signed, the planning consent must be issued by the local authority and we begin preparations for a sale of the land. Often, we need to commission further work to clarify matters such as archaeology, contamination or ground conditions. We bring all the title, technical and planning documentation together into an online dataroom and we market the land to our database of national and local developers. Our work is not over until a sale contract is signed and it takes great experience to ensure that the best possible price is actually achieved for our landowner clients.
Over the past year or more, residential development land values have been assailed by higher materials prices, higher labour costs, increasing fuel costs, rising interest rates, political turmoil and the covid pandemic. Yet we have continued to achieve rising prices for our land sales. Part of this success comes from the continued strength in the housing market, but part lies in knowing which housebuilders are in greatest need of a new site in any particular area. Our local knowledge is invaluable.
No doubt there are new challenges to the market now upon us. How the market will react in the short term I cannot say at this time. However, in the longer term, the demand for new housing in this region must continue and the opportunities for careful landowners are obvious. Promoters are as keen as ever to secure good sites and the housebuilders know that they need to buy land if they are to continue to build houses.
If you are considering your options and would like to find out how we can help you, then please contact David or Andrew.
Robinson & Hall’s agency teams have in-depth knowledge of a range of property markets across the region.
The sector which has been most active for our teams this year has been the sale of residential development land. Our offices lie in the middle of the Oxford-Cambridge Arc which is a focus for new housebuilding. With easy commuting into London and good transport links to the remainder of the country and internationally, our region is an obvious area for the release of land for housing developments.
Of course, the competition to receive a coveted planning consent is fierce and nothing is won easily. Often sites have to be promoted for years or even decades before a success can be achieved and many will never make it despite the efforts and money which have been sunk into the project. It is a risky business and the development world is inhabited by every variety of shark. It is our job to steer our clients through this dangerous and ever-changing maze.
For more information please contact David Jones.
At this time of year, we look forward to the prospects for the agricultural land market. We would normally expect to see the first properties coming to the market by this time, but the big news is that there is very little available. This continues the theme of recent years when supply has been very tight with well-funded purchasers chasing the better farms and blocks of land which become available.
Some observers have predicted that much more land will come to the market this year as a result of the Agriculture Act, increased fuel prices, increased fertiliser prices and increased interest rates. Likewise, it is predicted that buyers will be in short supply for the same reason.
My own prediction is that we shall see little difference from last year. In reality, there is little pressure from the banks for farmers to sell. Meanwhile, there is a considerable number of well-funded buyers who are willing to compete for whatever is available. Smaller blocks of bare land will continue to be dependent upon local interest, which could give rise to a wide range of outcomes. Well-equipped large farms, whether commercial or residential, will certainly attract interest.
Residential Development Land
Many landowners dream of the possibility of releasing a few acres for residential development. We have certainly been able to assist many across the Oxford to Cambridge Arc and beyond, in converting farmland into residential development land worth a multiple of between ten times and one hundred times its agricultural value.
Such sales can be life-changing, often providing a broader range of opportunities for the next generation. However, a lot of time and money has to be invested to maximise potential. There is much to be won and much to be lost. Proceeding in the correct manner is key.
We work with a select list of professional promoters in securing Local Plan allocations with great success. We are always keen to manage the marketing of the land to ensure that best value is secured and also to deal with important matters such as retaining the correct rights to any retained land. The development world is full of sharks and egos and it is important to be well represented.
If you are considering your options and would like to find out how we can help you, then please contact David Jones.
Autumn drilling is all but over, the clocks have gone back and Christmas songs are playing in the shops. It is the time of year to reflect on the year gone by and to speculate what might be in store for 2022.
The past 12 months have seen a constant fight against the weather, Brexit disruptions, soaring fuel and fertiliser prices and continued uncertainty over what will replace the Basic Payment Scheme. As I write, the 2021 United Nations Climate Change Conference (COP26) is in session which could bring unimagined changes to the way in which we farm, with perhaps the greatest threats in the livestock sector. Tax rates, inflation rates and interest rates must surely rise soon to pay for the unprecedented costs of the pandemic.
On the back of such turbulence, surely many farmers will wish to leave the industry. The market should be awash with land and farms for sale with just a few choosy buyers taking their pick if the price is right.
Nothing could be further from the truth. There is no panic to leave the industry. There has been little land on the market, particularly across central England. If anything, land prices have risen again slightly and the average price for decent arable land might be approaching £10,000 per acre again.
The low supply of land for sale arises from the lack of any pressure from the banks. Farming has been a safe investment for the banking sector with low interest rates and significant asset values. Farmers have used the better years to ensure that borrowings are under control and many now have diversified income, making the farming income less critical. Given all the lifestyle, family and tax advantages of farming, why stop now?
We are also seeing significant money available for investment into farming, largely from development proceeds or from non-farming sources. In difficult times, farmland appears to be a safe investment despite the poor returns. As they say, “nobody is making it anymore”.
Notwithstanding the above, we have seen an enormous range in prices for farmland. Large, fully equipped farms have been in short supply and attract good interest where they are found. However, smaller blocks are very much dependent upon local demand. If the immediate neighbours do not have the funds then some land can become very difficult to sell at any price.
Initial pricing can also be key. A greedy guide price together with unnecessary clawback clauses can kill a sale before it starts, even for a larger serviced block. By the time the pricing is adjusted to a more realistic level, the property will be tainted. The market will assume that there is something wrong with the property.
Frankly, unless interest rates rise, the supply of land will remain limited. We should begin to see more certainty with the new Environmental Land Management scheme and I suspect that much of the oil price spike will dissipate. There will continue to be strong demand from those with the funds and I suspect that the 2022 market will be very similar to 2021. For those looking to exit the industry, the prices and the tax regime will remain favourable. Meanwhile, for those with the funds to buy, there will continue to be good opportunities.
For further information or to discuss your land or farms, please contact David.
We are thrilled to announce that Hugo Bryan joined Robinson & Hall as Assistant Development Surveyor in July 2021.
He studied at Harper Adams University gaining a degree in Rural Property Management. During his placement year Hugo worked for Pilkington Farms Partnership and Fisher German.
He then worked for Harvard Knight and Harvard Knight Construction as Land and Planning Manager, working within the development and construction team. This involved liaising with clients, agents, landowners, architects, planners and councils to develop and construct large scale development opportunities across multiple sectors, particularly in the hospitality and care sector.
Hugo says “I enjoy the rollercoaster of the development game and the excitement gathered when a large deal successfully comes together.”
Hugo looks forward to working within the Land Sales and Strategic Development team on developing his skills, whilst studying towards his APC submission.
Outside of Robinson & Hall Hugo enjoys nice food, wine making, travelling, skiing and sailing.