3 ways to ensure a development site is your type on paper
For registered providers (RPs) looking to expand their portfolios, there are three main criteria that must be checked before contracts are exchanged.
- Can the site be sold?
At an early stage, the seller should offer proof of ownership of the site, or a right to acquire it. The ideal scenario would be that the site is registered at the Land Registry and the title register confirms all relevant information, such as:
- Rights and restrictions
- Class of title
If the seller is not the owner, they must be able to provide evidence that they are entitled to transfer the site. Should there be any red flags (such as poor class of title, charges or adverse rights) clarification must be gained from the seller.
- Can the site be accessed?
Access to infrastructure is a vital part of any development site, particularly when it comes to roads and sewerage. If the seller’s land does not adjoin public infrastructure this will mean that express rights will need to be granted to the RP. Should these rights be over a third party’s land they must also be evidenced and checked to prove that they are sufficient and capable of being utilized by the RP.
Maintenance liabilities and costs for private accesses and drains are another consideration for RPs. Relevant authorities should also be contacted before taking on any liability to identify whether the site is to be adopted. If adoption is unlikely, it may be wise to bring a management company on board.
- Can the site be used as proposed?
Future use – RPs need to check the type of planning permission that is in place. Ideally, it should be full planning permissions, but outline planning consent can also be acceptable if it is conditional upon suitable planning being gained. Section 106 agreement costs and Community Infrastructure Levy (CIL) liability must also be assessed.
If the site has no planning permission, RPs should find out the stage the planning process is at.
Current use – Some sites can be open to members of the public. If this is the case, RPs should research whether the land is Common Land or has a public right of way over it, as either could seriously hinder or even stop development.
Past use – Certain past uses can lead to contamination of a site, leaving RPs with potential liability for clean-up. If a site is thought to be contaminated, surveys must be carried out prior to the exchange of contracts and any issues found reflected in the price.
Failing to complete these checks can cause future issues for RPs, whether that be not being able to sell units or having to take on additional statutory liabilities. To avoid this and increase the chances of maximising their returns, RPs should seek legal advice early on in the process.
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