Planning considerations for rural housing
Tom Wills examines the current opportunities for gaining planning consent for rural housing, and flags up some matters for consideration.
There was a time, not long ago, when there was more chance of Newcastle United winning a football match than anyone getting planning consent for constructing new houses in small rural villages. This seems to be no longer the case. The effects of the National Planning Policy Framework do now seem to be working their way through the system, and may soon by in evidence in a village near you.
Northumberland County Council is currently consulting on its draft Strategic Housing Land Assessment. A cursory glance at the interactive map shows that many rural villages do have sites marked for development. These are not just small, infill sites for one or two houses, but also relatively large greenfield sites earmarked for 20-30 units.
Maximising the return on a small site is relatively straightforward. There are not too many planning options and securing the consent is the main objective. Once gained, the site can simply be sold or built out yourself if you happen to be a dab hand with a trowel. Capital Gains Tax, running at up to 28%, is a consideration but there are likely to be steps that you can take to reduce the liability.
On larger sites, the stakes are higher and there are more variables to consider. At the planning stage, there needs to be a balance between maximising the return and maximising the chances of gaining planning consent. In depth consultation with the residents will be required and the final housing density may well be less than that initially proposed.
Seeking planning consent on such a site is unlikely to be quick or cheap. The risk involved, despite the potential rewards, can be off putting to some. Any rights affecting the land or restrictive covenants on the site also need to be investigated and may need releasing. An alternative approach is to sell an option to a development company and allow them to take the risk of seeking consent or to enter into a Promotion Agreement. If it is successful with obtaining planning, then it will purchase under the development option at an agreed value or in the case of promotion sell the site on and share the uplift in value.
This approach may sound simple, but there are various considerations to be taken into account when drafting the initial option or promotion agreement. While the money side is obviously important, including timing of payments, the owner may also wish to retain some control over other aspects, such as access, height, materials, design, density and protect any residual adjoining land etc.
As in so many issues involving large sums of money, it is important to seek professional advice early in the process. It may be a once-in-a-lifetime opportunity, so it would be a pity not to make the most of it!
If you would like any further information or to discuss any rural related matter, please contact Tom Wills, head of the agriculture & estates department at Sintons.