Developing Value And Protecting Your Plot In The UK

• Published date: 17 December 2021
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Charities & Non-Profits , Construction & Planning
• Law Firm: Withers LLP
• Author: Ms Veronica Carey

Charities can become 'inadvertent' landowners as a result of gifts and legacies, as well as through active investment. These gifts can be valuable if the land turns out to have development potential. However, holding land will not always enable a charity to profit from potential development. The expertise to promote land for the purpose of obtaining planning permission will usually need to be harnessed.

There are a number of ways in which charities can benefit from development value whilst minimising the costs and risks involved in obtaining planning permission. These include:

• entering into a 'promotion agreement' with a promotor, who will apply for planning permission and pay the professional fees and costs associated with doing so. Once planning permission has been obtained, the proceeds of sale will be split between the charity and promotor in pre-agreed proportions;
• granting an 'option' to a promotor, giving the promotor the option to purchase the land at a pre-agreed discount once planning permission has been granted; and
• entering into a conditional sale agreement, obliging the promotor to purchase the land at a pre-agreed price if planning permission is granted.

Threats and protections

Land will require active management whilst awaiting the outcome of the planning process, which can be lengthy. There are particular risks associated with open land, as public rights can be acquired through long use by the public. If significant numbers of local people use land for recreation for at least 20 years, an application can be made to the commons registration authority under the Commons Act 2006 to register the land as a 'town or village green'. An application, if successful, is likely to impede any development, and have a devastating impact on value.

Similarly, there is a risk that a member of the public might apply to the highway authority under the Highways Act 1980 to record public rights of way over a route crossing land, if the route has been used by the public for at least 20 years. A public right of way can be established though a shorter period of use if the applicant can show an intention on the part of the landowner to dedicate the route as a highway.

Charities can protect themselves against these risks in a number of ways. These include:

• depositing a 'statement and map' under Section 15A Commons Act 2006 with the commons registration authority and Section 31(6) Highways Act 1980 with the appropriate council to stop time running...