The chances are that at some stage you’ll probably have been confronted with the challenge of how to generate income or a capital receipt from a site or simply to make more effective use of a piece of land which on the face of it offers lots of potential but, which for one reason or another, has ended up being put in the box labelled ‘Too Difficult’ over the years and just gathered dust on the shelf. We’ve all seen them and can probably bring one or two to mind, however, whilst it often appears that the site may have one or more seemingly unsurmountable factors which mitigate against a straightforward delivery approach, the good news is that with a little bit of insight, an open mind, and a sprinkling of magic creative dust there is usually an answer of some sort – and sometimes one which might not be immediately apparent. The upside here, of course, is that the difficulties may have sufficiently deterred others thus leaving the way clear for you to take advantage of the chance you have identified.
In common with bringing forward any site, there will are a few areas which require consideration and action and it’s helpful to look at these in a bit more detail to try and understand the impact of each in overcoming some of the more obvious difficulties.
Planning
Even if your end game isn’t to deliver a particular project but rather to dispose of a piece of land, in one way or another the planning position will have an impact on the outcome and one which at first glance might seem problematic or sufficiently detrimental such that it will scupper your intentions. Planning legislation comes with a wide sphere of influence ranging from planning policy, often defined by a Local Plan, through location or property specific issues such as conservation areas and listed building status, on to planning conditions attaching to individual planning consents. All of these issues can, and usually do, present challenges irrespective of the scope and scale of the proposals. Whilst the prospect of securing Listed Building Consent to reconfigure a Grade 2 listed building in a conservation area, or the aim of securing a planning consent for a use which sits roundly outside of the Local Plan, might seem like too big a hurdle to clear, the reality is that by working within the boundaries of accepted convention there is often a way through such problems. Regardless of the constraints which might attach themselves to your preferred plans, our experience suggests that local planning authorities are amenable to informal conversations at a variety of levels, ranging from initial discussions with officers through to full-blown pre-application meetings with the planning committee members, all in the spirit of what is known in the National Planning Policy Framework as a ‘presumption in favour of sustainable development’. In practice, this encourages planning authorities to positively encourage opportunities which further the needs of their area and to adopt a sufficiently flexible approach in interpreting their policy framework to enable an appropriate response to prospects which might not have been foreseen previously. Although not always essential, and often dependent on the scale and nature of your plans, enlisting the support of a planning professional can prove to be money well spent in helping you achieve your aims. Remember, ‘cost is what you pay, the value is what you get’ as the saying goes!
Land
The site itself will always come with a number of areas which need unlocking in order to progress. If you are the owner or acting on behalf of the owner, then at least you’ve managed to pass Go as without securing an interest in the land you will always be at risk. If you are the owner it is worth being clear about your preferred outcomes; are you looking at disposal and a capital receipt or would it be preferable to receive an ongoing revenue stream via rental income, or is there a mechanism under which you could achieve both? The answer to this will usually depend on your circumstances and no one size fits all here, however, there are plenty of examples of how a transaction can be shaped in such a way as to meet your aspirations. If on the other hand, you have spotted a piece of land which you think offers an opportunity your aim has to be to reach a position of relative security with the landowner as quickly as possible, again through whatever structure works for both sides. Common tools such as option agreements, agreements for lease, development agreements, and building leases are well-trodden ground but sometimes it’s the more resourceful approach which will be the key to making positive progress.
Often the difficulties posed by factors under the broad heading of contamination will deter any proactive consideration of whether opportunities can be taken forward. This again is a wide field and covers not just contamination caused by historic uses but runs through issues such as flood risk, ground conditions, and the natural environment all the way to actual physical limitations posed by the presence of utility equipment like pylons or underground pipelines and conduits. Any or all of these could be a show stopper although a systematic approach to each will often reveal that there are solutions to be found. Clearly, the impact and cost of putting the necessary mitigation in place to deal with such matters need addressing and it may prove to be prohibitively expensive or troublesome so there will always be a balance to be struck here.
A thorough investigation into the legal background and status of the site is time and energy well spent early doors. A legal title audit, usually sourced through a solicitor, will highlight any site-specific issues and these can manifest themselves in a number of ways. Restrictive covenants, often dating back for a hundred years or more, rights of light or access, or seemingly complex legal charges and other limiting factors can sometimes seem simply too difficult to bother with, however, as with many of the previous themes, there is generally a way through the minefield.
Finance
Let’s assume then that you’ve managed to resolve the multitude of issues surrounding land and planning and you’re now faced with the prospect of ensuring that adequate funding is accessible to be able to deliver the project you’ve been shaping. How significant this need is will be dependent on the required outcomes and if you are simply disposing of an interest in a site then you may have less to think about, although it may be that through judicious use of your money you can add value to the land prior to disposal by sorting out some of the issues yourself thus making life easier for any subsequent purchaser. If, however, you are looking at a promoting some form of development on a site the chances are that you’ll need to put a funding package in place. Often this can be a cocktail made up from a variety of sources such as existing assets, or security derived against these assets, and conventional commercial loans where the principal determining factor for either the availability of funds or the terms upon which it can be secured is likely to be the overall risk profile attaching to the project. For public sector projects the prospect often also exists for central funding through Government bodies (revenue or capital),or via an assortment of grant regimes, each of which can bring a complex web of criteria to satisfy both before and after approval, including a clear business case (see ‘Mind your own business (case)’ blog). No one size, therefore, fits all when assembling a successful funding bid and whilst the market is always fluid the reality remains that there are significant infrastructure funds out there looking for a home.
