The Good, the bad & the frustrating

FAILURE : Here are some recent examples of where landowners have had a bad deal :

LARGE UK HOUSEBUILDER CHANGES THE DEAL AT LAST MINUTE : The landowner put their land out to the market to obtain competitive bids from (ideally) a land promoter so their land woudl be 'market-tested'. However, whilst three land promoters showed a lot oF interest they felt the risk was too great as the site was in the greenbelt and had other very challenging restrictions. A seemingly trusted family-owned housebuilder showed a lot of interest and it was decided that they would offer the most reliable developemnt partner for the site. All went well until the housebuilder suddenly decided that they wanted to 'Exchange' as quickly as possible and....the number of houses they wanted to build dropped by almost 20%, they were applying very high 'abnormal' and 'overhead' costs as well as other 'uncapped' costs. The landowner (rightly) decided to pull out of the deal. The conclusion being : 'If you have any site larger than around 10 acres in a good part of the UK with decent house prices, then always do a Land Promotion deal and not an Option deal if you possibly can' .

HOW TO LOSE £3M : At a site in East Anglia where the landowner had previously been paid (via a badly put together Option Agreement where neither side used a solicitor !) the sum of £600,000 for around 1.5 acres of their land which could accommodate 9 private houses (just below the threhold for affordable to be required) the same developer thought he could go back and push the landowner to sell the remaining 12 acres for just £800,000 (yes - incredible !). They argued this was the case because they had to have an 'overhead' of almost £3M in their calculations.  In actual fact the land could accommodate some 75-100 new homes and would have a real ('market-tested') value of £4M to £5M using a Land Promotion route. Amazingly, the landowner succummbed to the entreaties of the 'local' developer and did a deal at not much more than just £1M - for a site that was really worth £4M or more. Despite great advice from Landsite the landowner just could not see reality and allowed themself to be 'taken in' by the local developer. The conclusion being : 'You can lead a landowner to water but sometimes you can't get them to drink' !

SUCCESS : And here is an example of where a landowner has secured a good deal :

BE HONEST WITH LANDOWNERS FROM THE BEGINNING : A landowner in a Home County in the UK with a valuable piece of land left to her by her father had (she though sensibly) begun the process of  signing into a Land Promotion Agreemeent with a well-known land promoter. After some 7 months had gone by she called Landsite to get some advice on her deal and to out astonishment it transpired she had been lied to and misled by not just the land promoter buy by the solicitor they had recommended to her (who was doing a lot fo work for that very land promoter..!). The promoter had included very dubious terms within the agreement and worse still they puleld back fromtheir original appraoch to push for a planning application quickly to what they called a 'plan-led' approach. The term of the shole agreement was an astonishing 15 years. Landsite quickly got her out of that deal and managed to ensure she also paid no ('abortive') legal fees to the solicitor to do so, saving her a potential £15,000 in costs. We then found a trusted and honest land promoter who not only offered the right deal to her but agreed to get on with the planning application within 12 months, have a sensible 'term' to the agreeement and to keep her fully informed of what was happening.

There are many more good and bad tales of landowners, farmers and others getting eseentially 'ripped-off' by having signed into bad land deals - it is not really their fault as the slick talk from land directors, senior land managers and others with some glossy brochures or a website thrown in can be very persuasive.

We all tend to trust certain people when we meet them and abuse of that trust is very disappointing and often with land it can end in a poor financial result.

Advice to ALL landowners is get to the truth and tread very carefully. Land in the UK at the moment is very very challenging as issues in planning, legislation, politics (local and national) and the profit that many companies insist on making from land creates a real minefield.
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