Farmland is potential gold mine for landowners when sold for housing development3rd March 2014

Housing development for farmland is being flagged up by property consultancy Mather Jamie as a significant way for landowners to release capital value.

However, Robert Cole, a Director at Mather Jamie says that farmers and landowners with land sitting adjacent to existing residential areas should choose with care their approach to getting planning permission as the process can be extremely costly, requiring numerous and expensive supporting documents relating to archaeology, environment, protected species, as well as the application itself.

The answer to this pricey procedure which, with the possibility of an appeal process, can cost tens and even hundreds of thousands of pounds are Option Agreements and Planning Promotion Agreements.

Robert Cole said: "Option Agreements and Planning Promotion Agreements are where a house builder or specialist promoter carries the cost of funding the planning application in consideration for the right to buy the site at a discount from market value, or in the case of a promoter, a share of the land sale receipts.

"Other key terms to these agreements include long-stop date, deposit payment, obligations on the developer, and landowners should take professional advice in seeking the right terms."

There is now a presumption in favour of sustainable development, as the adoption of the National Planning Policy Framework (NPPF) by Local Planning Authorities (LPAs) is now a mandatory requirement. The NPPF has changed the focus on how to approve, rather than refuse, planning applications.

“Following the release of the NPPF, LPAs are charged with pursuing the adoption of their own independent Core Strategies, which will sit alongside the NPPF and are intended in part to guide the release of development land in the relevant administrative area for a number of years to come, said Mr Cole.

“Each LPAs Core Strategy must be approved by the Planning Inspectorate through a process involving several stages, including public consultation. The lengthy process, combined with a reluctant attitude of some LPAs towards the allocation of sufficient land, means that few have in place an adopted Core Strategy.”

“Therefore LPAs are relying on the provisions within the NPPF when determining applications, which generally takes a positive rather than negative view on the allocation of development land.”

"LPAs are obligated under the NPPF to demonstrate a regular supply of land that is suitable, available and deliverable for housing development.

"The amount of land allocated must be sufficient to fulfil housing requirements for the next five years, with a buffer over the five-year deliverable supply based on the historic performance of the LPA.

"Land with the potential for development is appraised in a Strategic Housing Land Availability Assessment (SHLAA).

"It is possible to make representations for land which may be suitable for development and this is often a good first step to take in getting a site on the radar with an LPA.

 “The transitional period which many LPAs find themselves in, combined with a lack of five-year land supply, has led to a significant number of planning applications being awarded consent, either in the first instance by the LPA or later on appeal through the increasingly busy Planning Inspectorate.

“It is interesting to note that currently around 50 per cent of planning appeals are successful, as LPAs find themselves lacking genuine planning reasons to refuse development in sustainable locations."