Building quality homes is only part of the story. For housebuilders to deliver a successful development, it requires planning beyond construction and sales.
Early exit strategy planning can save time, cost and reputation
With the New Homes Quality Code (NHQC) placing transparency at the centre of the buyer journey, developers are expected to be upfront about estate management and future costs. To achieve this, a clear and considered estate management structure is essential to ensure the development runs smoothly long after completion. By considering the exit strategy from the outset, housebuilders and developers can avoid unnecessary delays, protect sales momentum and enhance buyer confidence.
Getting the legal framework right early – from resident management company (RMC) structures and management agreements to land transfers – creates a smoother transition when the time comes to hand over control. It also reassures purchasers, funders and managing agents that the development has been planned with long-term quality and compliance in mind.
Common pitfalls developers face
If the managed land is not contractually tied to be transferred to the RMC from the outset, the developer may later need to serve Section 5 notices under the Landlord and Tenant Act 1987 to offer qualifying tenants a right of first refusal. This adds cost, complexity and uncertainty to what should have been a straightforward transfer.
- Poorly drafted or incomplete RMC articles
If the RMC’s articles of association are not set up correctly, developers may find that they lose control of the company too soon. This can lead to situations where residents, now in control of the RMC, refuse to accept management responsibilities or even refuse to take ownership of the land. Fixing this after the event can be complex, delay the transfer, damage relationships with homeowners and potentially leave the developer exposed.
- Late engagement with planning, BNG and management requirements
Planning agreements often dictate what must happen with open spaces, play areas or other managed land. With Biodiversity Net Gain (BNG) requirements now mandatory, developers also need to consider who will manage on-site biodiversity areas for the required duration of 30 years from substantial completion of the development.
Many traditional managing agents may not have the expertise or capacity to deliver the required habitat management, so specialist environmental management organisations may need to be engaged instead to ensure compliance. If not thought about early on, this could significantly increase service charge estimates, risking buyer complaints about hidden costs.
Access rights to on-site BNG managed areas may also have to be secured if the BNG areas are only accessible via privately owned land.
- Title restrictions causing delays
If RMC transfers are left too late, restrictions registered on the development title may create unexpected problems. In some cases, those restrictions could have been removed when the last plot sold. However, if the company benefitting from the restriction has since been dissolved, the restriction’s benefit passes to the Crown. This requires engaging with the Treasury Solicitor on behalf of the Crown to clear title leading to avoidable delay and expense.
- Managing agent complications and resident pressure
If control of the RMC has not yet passed to residents, but homeowners are dissatisfied with the managing agent, the developer may face pressure from the residents to change agents. Switching mid-development can be time consuming and costly for the developer, particularly where management agreements are already in place, but they may feel they are left with no choice to maintain goodwill.
- Inconsistent buyer communications
Leaving estate management decisions until sales are well underway risks giving buyers incomplete or contradictory information – something the NHQC specifically guards against.
Best practice for developers
Early planning can make the difference between a smooth handover and months of unnecessary delay. The key is to think about how estate management will work – legally and practically – ideally at the same time as the site layout and planning are being agreed.
- Design the exit strategy early: integrate estate management, RMC structures, BNG responsibilities and planning obligations into the development’s legal and commercial framework from the outset.
- Set up the RMC correctly: Ensure the articles of association reflect the intended timetable for handover and prevent premature loss of control.
- Embed contractual obligations: clearly document how and when managed land will transfer to the RMC. This avoids triggering statutory right of first refusal processes later and provides certainty to buyers.
- Review title matters early: identify and, where possible, remove restrictions at the point sales complete so they can be dealt with while the project is still active and to prevent later title complications.
- Review management agreements: Ensure any managing agent’s role (or specialist BNG manager’s role) aligns with the long-term obligations set out in planning agreements and the intended RMC structure.
- Communication transparently with buyers: make sure sales teams provide consistent, accurate information about management structures, service charge costs and future responsibilities to stay compliant with the NHQC.
- Seek early legal input: taking advice during the site set-up stage avoids costly restructuring or disputes at the end.
Conclusion
Under the NHQC, transparency is no longer optional – it is a regulatory expectation. For developers, that means estate management and exit strategies must be considered just as carefully as design and build quality.
By embedding a robust plan for the transfer of managed land to RMCs at the earliest stage – and aligning this with planning and BNG requirements – developers should face fewer delays, reduced legal risk and happier residents. It also shows that the business takes long-term stewardship and compliance seriously – something that sets professional developers apart in an increasingly regulated market. Failure to do so risks unnecessary legal hurdles, loss of goodwill and reputational harm that could have been avoided with foresight.
Gateley Legal’s site set-up teams have extensive experience in advising on managed land transfers and RMC structures to deliver a seamless and compliant process. This includes:
- reviewing planning obligations;
- advising on management agreements;
- ensuring existing RMC articles are fit for purpose or drafting bespoke articles;
- advising on whether a contract needs to be in place to transfer the land to the RMC;
- reviewing and advising on any title restrictions;
- dealing with land transfers.
