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Residential Development

If you are about to purchase a property for residential development, you should be thinking about your obligations before, during and after development, and your options for managing and selling the development once completed, from day one.

If you are about to purchase a property for residential development, you should be thinking about your obligations before, during and after development, and your options for managing and selling the development once completed, from day one.

It is one thing to own a property for your own use but it is quite a different proposition to acquire land and then develop it whether for your own use or someone else’s. In particular, property development takes time.  Buying the land in question will take a minimum of 6 – 8 weeks.  Obtaining the necessary approvals will also take time.  The government’s target for planning decisions is 13 weeks.  According to a 2015 report compiled by the British Property Federation and GL Hearn, a property consultancy, many of England’s biggest cities are taking an average of 32 weeks to approve planning applications.  Add to that the build time and any time required to market the property and it can easily be a year to 18 months from when you offer to buy the land in question until the time it is sold or let. You should always aim to take legal advice as early in the process as you can to avoid any pitfalls further down the line.

Purchasing property for Residential Development

Although the properties you are developing may be used as houses, you are buying the land for a commercial purpose and are therefore in fact buying Commercial Property.  You may not want to buy the property until you can be certain that you will get the planning permission you require so you may wish to buy the property conditionally or under an Option Agreement.  Similarly if you are borrowing any money and particularly if you are getting a mortgage, you should note that one lawyer cannot act for both you as the buyer and your lender so there will almost inevitably be three firms of solicitors involved, two of which you will have to pay for!

Our dedicated team of solicitors, based in Witney, Oxfordshire, would be happy to answer your questions.

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Your obligations as a developer

As the developer, you will have obligations to comply with as to the standard of property that you are producing.  Obviously you will have to comply with building regulations and health and safety rules but you will also have to meet planning conditions, uphold environmental standards and keep any neighbours happy as well.  The more complicated the type of property you are developing, the more obligations you will have comply with.

A mixed use property is subject to the rules relating to both commercial and residential leases and, depending on the percentages of each type you develop, you may find that you are required to sell the freehold to the residential leasehold occupiers if they are eligible.

Your options once the development is complete

Once built, the property will either have to be sold to an occupier (if it is a house) or leased to an occupier (if it is a flat).  In the latter case, it is usual to transfer the landlord’s interest where possible to a property manager owned by the tenants as there is little value in the landlord’s interest.  If you grant a Lease to an Occupier for which you are charging a premium and for which a mortgage may be needed, then the lease needs to be in a form that is acceptable to a mortgage lender.  This is a form of lease which clearly sets out the obligations of both parties.  A lease which is not in this form may not be easy to sell on the open as it will not be acceptable to your lender as security.

For more information on residential development...

Please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 for a free discussion or email natalie.hopkins@everymanlegal.com

When you sell the newly developed residential property, you will have to go through a similar process to when you bought it.  This time of course you will be the seller and if you are selling the property in stages, you may find yourself having to provide the same information over and over again to different buyers.  We would always advise you to have a pack of standard documents ready to use to minimise the time and work necessary to resell the property. A good solicitor will be able to advise you as to what you should include.

The process of development can give rise to a number of problems.  Property Disputes are not rare but can be more easily resolved if you know what you are required to do and can demonstrate that you have done so.

We had a very tight deadline which needed to be met and this was done in a professional manner. I was very pleased with the service from start to finish.