Commercial finance and development
Development land
Legal work to buy land for development, covering planning, access and services, site investigations, Section 106 agreements, the Community Infrastructure Levy (CIL), options and overage.
This work depends on the details, so our team prepares a quote for you, usually within one working day.
Commission ground and ecology reports early and share them with your solicitor. Problems found before exchange can be priced or negotiated; problems found afterwards are yours to deal with.
Buying land to build on is different from buying an existing building. The value depends on what you can get permission to build, whether the site can be reached and connected to services, and what the ground conditions, ecology and planning obligations will cost. Many of the biggest risks sit in the title and the planning history.
Developers, house builders, investors and self-builders use this service to acquire sites, from a single plot to larger residential or commercial schemes. Your solicitor checks that the land can be developed as planned, structures the deal to suit the planning position, for example through a conditional contract or an option, and makes sure any overage or planning obligations are understood before you commit.
Every site raises different questions, so the Keyfolio team prices this work individually, usually within one working day once it has a site plan and the planning status, sent through the request form. Say whether the land already has planning permission, as that shapes the whole job.
What is involved
A development land purchase usually involves:
- Structuring the deal: an unconditional purchase, a contract conditional on planning permission, an option, or a promotion agreement (where a promoter secures planning and the land is sold on the open market), depending on how much planning risk you are prepared to take.
- Title review: boundaries, rights of way, restrictive covenants (old promises in the title limiting how the land is used), overage clauses giving a past owner a share of future value, mines and minerals, and any ransom strip (a narrow piece of land between the site and the road, owned by someone else).
- Access and services: confirming legal access to an adopted road (one maintained by the council) and connections for water, drainage, power and telecoms, or rights to lay them across neighbouring land.
- Planning: reviewing permissions, conditions and the planning history, and how any planning condition in the contract defines a satisfactory permission.
- Planning obligations: assessing any Section 106 agreement (a legal agreement with the council covering matters such as affordable housing or contributions) and any Community Infrastructure Levy (CIL), a charge some councils set per square metre of new floor space. In England, biodiversity net gain, the requirement for development to leave wildlife habitat in a better state, also needs checking.
- Site investigations: coordinating ground, contamination, flood, ecology and archaeology reports with the legal work, ideally before exchange.
- Exchange and completion: paying the price, filing the property tax return (bare land is usually taxed at the non-residential rates) and registering the land.
What the legal fee covers
- Advising on the deal structure and any conditions
- Title investigation, including covenants, rights and existing overage
- Checking legal access and rights for services
- Reviewing planning permissions, conditions and history
- Reviewing Section 106 agreements and likely CIL liability
- Ordering searches and reviewing site investigation reports with you
- Negotiating the contract, including any planning condition
- Completion, the property tax return and registration
Costs you may see on top
- Searches, including mining, flood and environmental reports
- Ground, ecology, archaeology and other site investigations
- CIL and Section 106 contributions, which can be substantial
- Property tax on the land, usually at the non-residential rates and on the price including any VAT
- VAT on the land price, where the seller has opted to tax
- Registration fees, including where you buy only part of a title
- Indemnity insurance for old covenants or uncertain rights
- Planning consultant's fees and planning application fees
What to have ready
- A site plan with the boundaries you are buying clearly marked
- The heads of terms, including any planning or overage conditions
- Planning permissions, applications or pre-application advice
- Any survey, ground investigation or ecology reports already done
- How you will fund the purchase and the development
- Your scheme proposals, such as the number of units and the layout
- Who will own the site: an individual, a company or a partnership, and who controls it
How long it takes
An unconditional purchase of a site that already has planning permission commonly takes 8 to 16 weeks, depending on the title and the investigations. A purchase conditional on planning can exchange in a similar time but may not complete for months or years, until a satisfactory permission is granted and the period for a legal challenge has passed.
Sites with access issues, several sellers, ransom strips or complicated Section 106 obligations often take longer. Commissioning site investigations early, alongside the legal work, avoids most delays.
Things to watch for
- Check legal access and services before anything else. A site without a right of way to an adopted road, or without rights for drainage, may be impossible to develop or held to ransom by a neighbour.
- Look for overage in the title. A previous owner may be entitled to a share of the increase in value from planning permission, which reduces your margin.
- Restrictive covenants can prevent building even where planning permission is granted. Indemnity insurance or an application to release them may be possible, but needs considering before exchange.
- Make sure any planning condition in your contract defines a satisfactory permission, including acceptable conditions and Section 106 terms. Otherwise you could be bound to buy with a permission that does not work commercially.
- Budget for CIL and Section 106 costs from the start. CIL is due when development starts, so it affects cash flow as well as viability.
Questions people ask
Should I buy land with or without planning permission?
Land with planning permission costs more, but the main planning risk has gone. Buying without permission usually means a lower price but more risk, so many buyers use a conditional contract, an option or a promotion agreement, under which the purchase only goes ahead if a satisfactory permission is obtained. The right choice depends on your appetite for risk, your funding and the seller's position. The option agreement page explains one alternative.
What is the difference between Section 106 and CIL?
A Section 106 agreement is a site specific legal agreement with the council, tied to the land, covering items such as affordable housing, local infrastructure or payments towards schools and roads. The Community Infrastructure Levy is a set charge per square metre of new floor space, applied by councils that have adopted it. A scheme can be subject to both, and both bind future owners, so they need checking when you buy.
What site investigations will I need?
That depends on the site, but common reports cover ground conditions and contamination, flood risk, ecology and protected species, trees, archaeology and utility capacity. Your solicitor does not carry these out, but considers how the results affect the title, the contract and your planning strategy. It is usually wise to have the key reports before exchange, or to make the contract conditional on satisfactory results.
Can the seller keep a share of future profits?
Yes, through overage, which gives the seller a share of any increase in value, for example if you obtain a better planning permission than expected. Overage is common on development land and needs careful negotiation, including what triggers a payment and how it is calculated. The overage agreement page explains more.
Who does the work
Your matter is handled by a law firm regulated by the Solicitors Regulation Authority, the Council for Licensed Conveyancers or CILEx Regulation, or in Northern Ireland by a solicitor regulated by the Law Society of Northern Ireland. At the moment the law firms on our panel act for property in England and Wales, so for property in Northern Ireland we tell you whether a firm can act for you before we pass your details to anyone. The firm confirms who will work on your file, their experience and its terms before you instruct it. How we choose our firms.