Hello, and thanks for joining us on this webinar. We're discussing today lands promotion from a landowner perspective and it's actually the second of two seminars at the same speakers. Last week we were discussing this topic from a developer point of view, this time, it is very timely, with all the hassle.
So I'm Louise Ingram, I'm a partner in the residential development team of Shakespeare Martineau and joining me today, Andrew Gore and David Pendle, who of a town planners with Marrons Planning, which is part of Shakespeare Martineau. And she's going to start us off by talking about what Islam promotion.
Actually is, effectively, what lun Promotion is, is it's a catch all term we use to describe the process involved in securing funding consent, whether that's through.
Different strategies. So, whether that's through local plan promotion, trying to argue that the site should be allocated, which tends to be a longer term strategy. Or a planning application, because the site is policy compliant, or there's a five year hows and whys shortfall. So different sort of requirements around a particular site can, can influence the way we go about London promotion. But effectively, it is a process whereby a developer will take the risk for the planning costs associated with securing of planning consent for an agreed share of the land value upon sale.
The legal framework for that is is really two stage process. So we have the planning stage, which is point at which the promoter and when we say ..., essentially talking about the same party, said the other party to the landowner. So they go out to promote the site and achieve planning permission. And then, once they've got their planning commission, then the second stage starts, which is the same process. And the important thing to remember with your permission agreement is that that promote doesn't actually buy the land.
Once the Planning Commission has been obtained, it then goes to the open market, and a third party will buy that land.
And then the, the, the, the interest of the promoter has is that they are, they will obtain a percentage of the sale proceeds will pay to them, and the remainder goes to the landowner. So, co-operation is very important throughout the process. There is very much a common interest, because both parties want to the land to be sold for as much as to achieve a good planning commission and to allow them to be sold for as much as possible, because each are obtaining a share of that. And the planning process is quite an intricate Thing, Lots of things to consider that. David, do you want to kick off?
Thanks for that Louise. It absolutely right. You know, trying to understand the planning system to demystify a little bit is part of the role of falls on our shoulders. And Andy mentioned local plans and promoting it through, through development panel, a system that we have in the UK. Or, indeed, looking for for planning application straightaway trying to understand the strategy around. That is incredibly important, not only to the work that we do and promoting the parcel of land through to the planning system. But also as you all know for you in terms of constructing promotion agreements and what that, while that may look like, so as, I say, our role is to identify the planning strategy to work out how we we, we, we are to promote the land to the planning system.
Of having done that to be in a position to communicate that, to landowners and so that they know what we're doing on their behalf and why we're doing on their behalf. And there are 2, 2 things that are really important. First to bear in mind. When we're doing that, the first one is to be proactive in terms of you know, doing as well as we can as swiftly as we can. So at the right time, and indeed, even though, no surprises.
Because ultimately, timeframes are also important to, to not only the promotion agreement, but also that strategy that where we're following. So the way we do that is, is a biosafety proactive, but also by communicating with the landowner and keeping them informed. Some, some, some of you listening, will want to be very hands-on in, in that, and that matter, and to understand it, as well as you possibly can and as deep as you possibly can, and to help us make decisions. Others will, will, will want advice from us, but ultimately, both those things. A reliance on the communication. So, for our part, as I say, breaking down the planning system, demystifying a little bit, so that we all understand where we are and why we're doing what we're doing. And what potential cases for the Prospect of Success. This is a really important matter. Let me do that by continuing to talk right way through the process.
Yeah, I think crucial to the success of the agreement in the relationship is from alonzo's perspective, protecting your interests.
Throughout the planning stage, I mean clearly we assume that if we're at this point, we'll run the planning stage. Then there is an agreed position on the the type of agreement that split, versus, you know, between London, and develop a broad understanding for the landowner, all the likely costs and time scales on the risk and the planning strategy. So we're assuming that this positional not, but things change. As soon as we break cover, we start promoting a site.
Then there's a requirement to do community engagement.
So you start to get views from members of the public, local businesses, local board members, councilors. And also, you start to engage the planning offices on the scheme, ..., so, things can and will change throughout the planning process. So, 100 unit scheme can quickly become 90 new scheme because of ecology issues, or requirement to accommodate more infrastructure on-site.
So, from a developer for the landowners perspective, you have to be flexible in that it does a very strong likelihood that the developer will be coming back to some stage. And saying, things have shifted, we're having kickback from the local authority on X, Y, and Zed, You know, maybe that we need more land because we're being asked to accommodate a primary school. Or, it may be that the land needed for, say, a school or doctor's surgery could be thrown into the deal.
Generally, not, not in the grand scheme of things, little cost to the, to the land directly, it's just additional land. But these things will crop up, so it's important that the, there is flexibility around that relationship.
Again, from from London's perspective, it's also important that a developer is supposed to take into task really, and that they are demonstrating that. They are driving the project forward, and they are challenging the local planning authority on what may be perceived as being unreasonable demands placed upon the development. You want to see your developer challenging section 106 contributions in the silicon lines, where it's appropriate to do so, because ultimately, you want the optimum development the most developed Larry and limited cost.
Clearly, there's a happy medium in, so the needs to be communication and the needs to be an ongoing dialog with flexibility around that.
It strikes me. Only what you really want your your, your hinted up certainly for me that is around it was incredibly important, has the value of the asset. You know the land is finite. You know, the assets that you've got good prospects of, of, you know, having development on it, you know that.
That's that's something that's incredibly important to the landowner as as you would expect to state the obvious. So so understanding the case for achieving that de risking it, how, you know, setting out how it works, and why it works. And, quite rightly, as you, as you said, for the landowners to be able to see that, the best case is being put forward to achieve the value that they want for that, that parcel of land. Things to bear in mind as we as we move through this process and to keep in sharp focus, and, you know, not wishing to, to, to sound like a broken record, you know, Again, it's about communication. And so, you know, recognizing our role in that we understand the town planning case, we share that.
You know, we're able to share it, and do so in a way, that other people can understand why we're, why we're trying to do what we're trying to do, and why we're involving the people we're involving, particularly when it comes to breaking coverage, as you said.
And in my mind at that point, on it, mindful that there are landowners who have different types of relationships with, with the communities where they hold land. You know, some don't take two to have a relationship, and others have a great stake in the area that they, that, they live in. You know, we need to know that, we need to know what impact that will have on, on, how we promote a parcel of land through the planning, the planning system. Because ultimately that can affect, you know, prospect for success. But also, the risks and the rewards. So, again, you know, keeping hold of that and being able to communicate it is something that we should, we should bear in mind with every piece of information. we do.
Absolutely. Take naps.
I didn't think, you know, packaging a look that up into an agreement at the outset is that this is the one that really is making sure that actually what the the agreement we put in place between the landowner and the promoter works. So that actually, all of that, sort of everything that you and Andrea said, making, that actually is possible. And so, I mean, just the considerations really from a landowner point of view is, if the timeframe, how long do you really want to Thailand for? How long? How long you've gotta have a reasonable period of time to allow the promotion to go through, but also just kind of keeping it as tight as possible so that actually, this focus on getting this through, delivering the promotion, get to the Planning Commission, getting it sold?
So really what people are comfortable with, it is very important at the outset, and the co-operation between the parties, how involved as a landowner, just do you want to be? You know, Do you want to be involved, and approve everything throughout? Do you have retained land that could be impacted upon this development? So, how involved you want to be in terms of the stages of the planning, but also whether you might actually want certain things guaranteed. Particularly as, I say, if there is retained land and does that promote to have other sites in the area oral, they potentially going to have some of the sites in the area. How much control do you want to stop. Stop doing that. To make sure that, actually, they all still pushing forward with your site, and making sure that this site, is, is at the top of their list. And you get your mission and the land. So just quickly as possible.
You need to decide where the red lines as well, so do you, do you want certainty of how many houses They're going to be on this site to maximize value, do you want a minimum value? So, minimum sale, value for the land to be sold, and you don't have to sell. If it's anything less than that do, you want to onto minimum receipt. You want to make sure that even after deductions, that actually there's a certain amount that will be paid to the landowner.
That could be quite important Lesson landowners to think of the figure in mind, that they simply won't sell the land for less than then we need to make sure that the permission agreement sets that out, so that actually, if that, if that value isn't achieved, the land isn't solved.
Also, things factor into that, making sure you've got enough to pay your tax bill. Which actually has a landowner when you sell. You may not receive all that money in that first, that first sale, because there might be faced sales, but making sure that, actually, the money you get, the sale is enough to pay your tax to potentially relocate yourselves. You know, those kinds of things are very important to make sure that you can move elsewhere in your business or move, So you may face you can live on this land is making sure that it's considered at the outset. So, this is no, you're not arguing over how much money you get when you've got a potential buyer on the hook, because you've already got Planning Commission. So, all of That's, That's very important.
And making sure that costs are absolutely for the promoter to pay, it doesn't come back on the landowner, but it is reasonable for there to be caps on those costs so that you limit what those deductions could be, and, also, and not wanting to think about when things go wrong, but disagreement might.
We may or may not be able to get permission for some reason, or may not be able to sell the land in the timeframe that's this agreed. If the agreement would fall away. But actually landowner, you'd like to have the benefit of the plans and the planning permission to make sure That you could then sell the land yourself in the future, or Try and get a different planning permission. If you've got those comments, are you able to utilize them? So just giving some consideration to what happens if, if things, do you kind of go go wrong. So not according to plan. And then also just considering there may be further, to the land you might be able to sell, you might work for tonight vigilant to make sure that if they get, if you sell to get a better planning permission, increases the value again. That you get a proportion of that, you may need to share that with the promoter because they books to being involved in getting the time, But it's just something else to factor in.
Just one last thing from me which is really to just think about where landowners Act together to promote them together. So when you got neighboring landowners, you might want to think about how you act together, so you might want to get one promoter to promote all of your land together.
And then you need to think about, do you put your land together in a land pool?
Do you entering to collaborations an equalization agreement? Those things you just need to give some consideration to, because they will have tax implications. And it is important that you get a sales tax account to, to understand the implications of that sheet. To make sure that all the right arrangements are in place when you enter into your promotion agreement, to make sure you make sure you're getting the best out of this most tax effective way for the agreement to be put in place.
Then just really some Practicalities: if there are a number of landowners acting together, who's the promoter talking to? They is one person, the spokesperson.
Do you have an agent who actually all the reports tool, or do you expect the promoter to speak to each and every landowner? And I probably shy away from that last one because it might take longer for all decisions to be made and everything, but it's something you need to think about at the outset.
Also how you make decisions to create, if that's necessary, and also being slightly pessimistic. What would happen if you have some disagreement with one of your neighbors and how will that impact on the, on the agreement? So you need to think about all of those kinda practicalities at the outset as well, if you're if you're promoting your land with, with other parties as well. So I'm Danny, we've, we've covered a lot there, but I mean, what, what do you think is key to actually making a land promotion work?
I mean, I think understanding strategy, planning strategy is absolutely paramount, because often, it will be appropriate to sort of Twin, track a promotion through a local planning process, making representations, arguing why a particular site should be allocated a local plan. And then sometimes at the same time, making a planning application which might be on the basis that he does a housing loans by shortfall on the basis that it's you can draft allocation in the plan, you want to keep it that the best way to demonstrate deliverability is to secure.
The, the planning concerned somebody spending money on it demonstrates the local planning authority that this is very likely to happen.
So thinking the right strategy and responding to, to some planning farmers. And I think also, again, just as communication is the key to making a promotion agreement work between London and develop the age. And so this is also the, the, the, the key to, negotiating the clotting system.
I think if you can deal with your requirement to rather than see your the community engagement strategy purely as a tick box exercise, you can probably get more out of it by trying to cast your. Net. It's been further rather than writing to the the most affected neighboring residents And then scratching your head. Wondering why you've got a load of opposition? It can also be a more effective approach to cast that a bit further and trying to capture the views of people who are in housing need or first time buyers and there are ways and means of doing that.
Trying to tap a good, honest dialog with the Parish Council of local members on the planning committee, I mean, generally speaking, the, the Lamb Promotion. Promotional Agreement, approach or to work on.
Most landowners because it's effectively working in the same direction is that as the developer, you're, you're both trying to secure planning consent for the most profitable, efficient, develop until the site, and then sell it to an end user or house builder developer for the most amount of money.
Justin, you know, listening to the last couple of slides from your. Both it strikes me.
A couple of common themes here, we keep on talking about communication.
Had been, rarely, though, in those last couple of slides, you know, we sort of explored what the strategy might look like and what the promotion agreement might look like.
And, of course, the answers to those questions depends upon what's happening in the local area, and what the parcel of land is like and what the expectations, and, you know, ideas of risk and reward off from the parties that are involved. So, there's many shapes and sizes of strategy and many shapes and sizes of agreement, and certainly, that, that leads me.
You know, sort of if this were a concluding remark to say, You know, thinking about the various pieces of land that I've been involved in. In my career, there are different types of scenario out there. So, you know, listening to this webinar, I hope that you, you, you would have found it interesting in the first instance, of course. But, it might possibly have led you to, to have some questions about what the answer might be for you and your parcel of land. So, without further ado, that's probably quite a nice segue into saying, I hope you enjoyed it. And thank you for listening. And if you do have those, those, those questions, and you want to explore that with us further, or just to talk generally about how, it works a bit more detail. If it's something that you think that way we could have touched on, but we haven't, and you've got a burning question, then then please, do get in touch analysis. A details are on the screen in front, has now, so it just remains for me to say Thanks for listening, and I hope you enjoyed it, and hopefully we'll hear from you soon. Thank you.