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Published 5 octubre 2021
And, with the advent of the garden villages programme, the same process is being carried out by an increasing number of local authorities – some of whom are looking for a ‘silver bullet’ to address their housing supply challenges.
Redlining an area on a map is just the first small step to assembling a site which might accommodate hundreds or thousands of homes.
As a firm which has specialised for many years in the planning process for large-scale residential development, we often get involved when a site has been identified to give views on how the enabling process can move forward. The initial requirement is to identify if there may be any constraints on the development vision. As the creation of new infrastructure is pivotal to garden village development, this process often focuses heavily on any title issues which could constrain the delivery of that infrastructure as well as the comprehensive development.
Whilst this preliminary due diligence is being carried out, the Land Registry is being interrogated to identify the mosaic of ownerships that the potential development site encompasses.
Of course, these activities are only the preliminaries to the gaining control of land which enables a development. It is at this stage that a strategy needs to be formulated based on what has been discovered so far. This starts shaping the scope of development, but also - to borrow from Donald Rumsfeld – has to be able to responds to the ‘unknown unknowns’ that will be encountered along the way. So flexibility must be factored into everything you do during site assembly and the eventual draw-down of land during construction.
We are regularly involved in the drafting of heads of terms agreements with landowners. It’s important for us to be involved at an early stage to understand the wider vision so that we can help with structuring agreements. These need to accommodate the inclusion of third-party land for comprehensive development and infrastructure delivery; value and cost equalisation; collaboration arrangements; drawdown; unit sales; and long-term management. These agreements must be sufficiently agile to respond to changes of situation during what will be an inevitably extended planning process.
Single ownership of a site for the scale of development that garden villages require is rare so the next step is to engage with multiple owners.
Having identified all landowners at the outset, our role is then to produce documentation which meets the financial requirements of all parties. This involves facilitating extensive consultation between landowners; their legal advisers; and the scheme’s developers. In this respect, it is essential to be experienced in structuring agreements to enable a fair solution to the sharing of value and costs which also responds to the parties’ differing tax situations and developer delivery aspirations.
We can do this because we have an understanding of the tax implications for landowners, the delivery process; financial and drawdown constraints; and the requirements to achieve the desired return on capital.
Our role often involves working alongside valuers and surveyors to address the financial complexities of these large-scale projects. It’s a part of the process that has to bring together financial modelling with the drafting of legal documents. If you get this right at the early stages of the development you can ensure that land drawdown matches the delivery of infrastructure and avoids pitfalls such as making sure that the developer is not double paying.
During this period, developers cannot have overly substantial amounts of ‘money out’ – funds committed to land control ahead of gaining planning consent - as this would constitute an untenable level of risk. Conversely, developers have to ensure that the owners with whom they’re engaging are also on board with the scheme.
It’s understandable that someone whose land is perhaps currently in agricultural use and now might become a housing development could become financially excited. The temptation for a potential seller to do some simple maths around the potential value of their land is almost irresistible.
However, it is our job to explain how, in the first instance, an option on their land will be taken and what would then trigger an eventual draw-down - and payment for – that land. The time between effectively controlling the required land for a garden village scheme and obtaining a planning permission can be several years so managing expectations becomes an ongoing conversation.
A sustained commitment to communication throughout this process is essential. It’s important to be clear about what development goes where and what the timing is for delivery.
As a garden village project progresses, it will embrace an increasing number of stakeholders and partners. Identifying where you need to collaborate can be a powerful solution to unlocking a development. Partnership with local authorities - whether they are landowners or purely the relevant planning power - is, of course, essential.
Whereas local authorities may be ultimately able to wield the ‘big stick’ of Compulsory Purchase powers or an Appropriation of Land for a different use, developers need to rely primarily on collaboration and compensation. We have been instructed by local authorities as a delivery partner and have first-hand knowledge of how positive collaboration is central to moving development forward.
With so many moving parts and variables involved in garden village schemes, the ability to instil collaboration into the process becomes vital. Whilst goodwill and clear communication amongst all the stakeholders is a good place to start, it is a defined and structured Collaboration Agreement which can keep a project progressing when it encounters one of those ‘unknown unknowns’.
Anything that brings focus to the land control process should be explored and Collaboration Agreements come firmly under that heading. They can also have an application following grant of planning consent when parcels of land may be being sold down to other developers and there needs to be control over design forms and the configuration of development etc.
When you get to the end of a garden village project there are inevitably things that – in hindsight - you might have done differently. But that’s perhaps more a fact of life rather than something specific to large-scale residential development.
However, land control is at the heart of any scheme and assembling a team which has experience of the strategies and techniques required for its successful delivery are essential when starting out on the road to creating developments of this type.
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