We have experience in all areas of land acquisition (and disposals) including contract negotiation, title examination, and all ancillary matters.
Our team have a wealth of experience acting for both Plc and regional housebuilders throughout England and we are wholly immersed in the housebuilding sector. From the unit head right through the qualified team to each paralegal: the team work exclusively in housebuilding and are true sector specialists. On a day to day basis we find ourselves dealing with immediate land acquisitions which range from niche schemes for 30 dwellings right up to major urban extensions for many thousands of new homes. As well as immediate and strategic land we have true specialists who deal with the complexities of urban and brownfield housing-led regeneration schemes and the funding arrangements which often underpin them. We find we can add value by getting involved from the outset – supporting the negotiation of heads of terms and providing an early view on title and any legal constraints.
Immediate land
Our teams are experienced in leading on immediate land acquisitions whether under conditional contracts, unconditional contracts or options. The complexity of immediate land acquisitions increased following the 2008 recession when housebuilders reacted by increasing their risk controls. This, combined with landowners’ concerns over maximising value in difficult markets, was reflected in the increasing use of overage provisions. Often, this manifests in multiple layers of overage aimed not just at increased sales values but the clawback of value where the housebuilder manages to reduce the level of planning gain through viability arguments.
Increased corporate governance, centralisation of standards and control and enhanced due diligence has also increased the likelihood of having multiple layers of conditionality to ensure all manageable risks are mitigated alongside caveated offers which may require revaluation and/or price adjustment provisions to be effected following exchange of contracts. The most common of these are price adjustment or price ratchet provisions for abnormal costs where full site investigation results are not available at exchange or there are other potential cost overruns to be taken into account when determining the final price. We are familiar with these provisions and the more favourable reappraisal viability conditions and the technical detail which often underlies them.
We also understand our clients’ financial drivers in terms of return on capital and the interrelationship this has when agreeing deferred consideration terms and security where there is deferred consideration.
Regeneration
We are experienced in regeneration schemes including Framework Agreements with local authorities and securing schemes through Homes England Delivery Partner Panel, which is now on its third iteration. Working in collaboration with local authorities, registered providers and possibly other developers is key and we bring a collaborative problem-solving approach to these major schemes.
Funding
We are specialists in grant funding from Homes England, local authorities and LEPs as well as advising on development finance facilities.
We have advised and guided our clients through the 2009 Kickstart Funding Programme and the many iterations of Help to Buy to Facility Agreements through the Home Building Fund. We understand that many regeneration schemes will require some form of funding to be viable and are experienced in negotiating those funding arrangements ensuring any clawback is kept to a minimum and works for our clients.
Get outs
We believe that it is important to preserve, where possible, an exit from fixed price conditional contracts to protect our clients’ capital. This might become important if the market falters, government legislation changes scheme viability or more detailed technical designs post-exchange reveal significant cost increases over bid appraisal estimates.
Strategic land
Strategic land is a specialist discipline within most housebuilders and we believe it should be treated as such within law firms as well. While there are significant opportunities to acquire large tracts of land on favourable terms with phased drawdown, there are also risks of wasting significant sums of money if the options are not negotiated correctly by the legal advisers.
While options at a discount to market value are still the most common vehicle for strategic land, we are finding landowners are increasingly looking to sign promotion agreements both with and without rights of pre-emption for the developer or promoter. This is often without regard to the planning inter-relationship between their land and adjoining land and the difficulties this can give in enabling the correct master planning and equalisation of values and costs. The scale of many strategic development sites means that often there are multiple landowners involved who may have different delivery aspirations. This can lead to complex negotiations being managed on multiple fronts with forms of agreement which, at a core level, need to operate seamlessly together.
As with the immediate land acquisition teams our strategic land specialists have found that the level of complexity and expertise required in relation to major strategic land projects has increased over the past 10 to 15 years. Our strategic land team are responsible for assisting in the delivery of some of the largest and most complicated urban extension and garden village schemes around the country. The size and scale of these schemes means that they inevitably encompass a number of challenges which need to be overcome such as issues with Network Rail (including the construction of new bridges over railway lines), sub-surface title complications, the relocation of major infrastructure in collaboration with our surveying colleagues in Gateley Hamer, funding and development of major infrastructure and the complications of securing drawdown.
The size and scale of major strategic schemes can often mean that housebuilders will spread the risk by collaborating with other housebuilders to deliver the scheme. We are well versed with inter-developer/ housebuilder collaboration agreements and the different ways in which these can be structured from a straight forward 50/50 share of land and costs right through to multi-party agreements where covenant strength may differ and one developer may take a lead on infrastructure.
Given the fact that the housebuilder and landowner interests cease to align once a planning permission has been obtained (particularly where the housebuilder has the option to purchase at a discount to market value) there are often significant negotiations required in tandem with the service of price notices under the strict terms of the agreement. As well as having the front-end experience of negotiating long-term option agreements, our team are experienced in the successful exercise of these agreements, looping in seamlessly with colleagues in our dispute resolution team who specialise in complex housebuilder agreements to ensure that any challenges experienced at this phase in the agreement cycle are managed to the appropriate conclusion. We have often found that clients come to us specifically where there are difficulties and challenges over exercise or where a second opinion or fresh view is needed to deal with barriers to exercise and acquisition.
