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Residential Development: A Legal Guide

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Do you need legal advice from an expert team that understands the complexities of residential property development?

We work with a range of businesses involved in acquiring and disposing land for residential property development, including:

  • Major national housebuilders
  • Smaller, independent developers
  • Landowners
  • Occupiers
  • Investors.

We understand that each development has its own challenges, which means our leading commercial property team provides tailored legal advice for all aspects of a residential project. Thanks to the wealth of their experience, they can anticipate any potential pitfalls and quickly mitigate against any problems.

We can advise you on a range of legal considerations, including: 

  • Strategic site acquisition
  • Land acquisition contracts
  • Compulsory purchase
  • Joint ventures
  • Environmental / conservation issues – including contaminated land
  • Lock-out/exclusivity agreements
  • Infrastructure and adoption agreements
  • Planning advice and protection, including Section 106 agreements
  • Plot sales
  • Property dispute resolution.

This is a general guide to the processes you must undergo when pursuing any residential development project – but, it is essential you hire a solicitor who has an in-depth knowledge of this area of law. Like all commercial property transactions, residential development brings about its own challenges and risks. It is a complex area of law that needs a specialist to handle.

Before you look to acquire or dispose of land, here are the necessary steps you have to complete:

Due Diligence

Completing thorough due diligence review can help to minimise – or eliminate – risks with the legal process of a residential development. It is not a quick and easy process and should be carried out at the earliest opportunity to reduce hold-ups.

Why is it important?

It is up to you to investigate the site fully – the principle of “caveat emptor” (“let the buyer beware”) – is a common law principle so you must make sure you are fully appraised of every aspect of the land you are acquiring.

What does due diligence include?

Due diligence is about identifying any potential problems when it comes to developing the land and resolving those issues.

It includes reviewing the property’s zoning and building regulations, as well as any environmental or historical constraints that may impact the project. 

Don’t underestimate the importance of actually visiting the site yourself. It helps you to identify the boundaries, helps you to visualise any possible issues created by neighbouring landowners and you may spot some concerns such as undocumented services.

Title searches

As solicitors it is essential we obtain the “title” to a property to ensure the landowner owns the site you are acquiring. This review also looks at any title restraints that might create delays to development or affect plans.

Searches 

These are desktop searches to identify any potential issues and to ensure buyers have an in-depth understanding of the plot. There are specific searches for residential developments, including: 

  • Utility searches – to establish if there are services and where they are located.
  • Local authority searches such as road proposals, proposed pipelines, environmental and pollution notices, hedgerow notices. These also establish whether or not the plot is an Asset of Community Value, Common land or a Town and village green.

Replies to enquiries

The CPSE 1 (Commercial Property Standard Enquiries) form contains important information, such as if the plot is subject to VAT on top of the purchase price or if there are any land disputes. It also establishes any planning permissions, building regulations, rights of way and utilities.

Planning permission

If the land has planning permission for residential development, this reduces the risk for the buyer – and the purchase price will be reflected in that. However, if the plot does not yet benefit from planning permission, the risks associated with this – the likelihood of obtaining it, plus costs and time – must be considered carefully.

Site Surveys

Topographical, ecological and geotechnical surveys can identify any potential constraints or risks associated with the land.

Environmental Assessment

It is important to consider the impact the development will have on the environment, taking into consideration biodiversity, wildlife, habitats, soil and water resources, and air quality. 

Under the Town and Country Planning (Environmental Impact Assessment) (England and Wales) Regulations 2017, sites deemed likely to have a significant environmental impact may require an Environmental Impact Assessment (EIA).

This will include:

  • Screening, which confirms if an EIA is required.
  • Scoping, to confirm the issues to be assessed in the EIA.
  • An environmental statement, which details the development’s likely environmental effects.
  • Consultation with stakeholders, including statutory bodies, community groups, and the public.
  • An EIA Report that includes the EIA process, conclusions and recommendations.

You may also need to complete a Strategic Environmental Assessment (SEA). While an Environmental Impact Assessment is applied to individual projects that are likely to have significant environmental effects an SEA is a tool used at the plan-making stage to assess the likely effects of the plan when judged against reasonable alternatives.

Necessary Approvals

Once you have conducted due diligence and determined that the land is suitable for residential development, you will need to obtain various approvals from the local authority. This may include obtaining:

  • Building permits
  • Environmental permits
  • Zoning permits
  • Any other approvals required for the specific project.

Sale and Purchase Agreement

This document includes the Heads of Terms and specifies any conditions, warranties and / or obligations related to the acquisition and sale. Your solicitor can assist with the closing process, including reviewing and preparing closing documents and ensuring that all necessary steps are taken to complete the transaction.

Exchange of Contracts

Once the Heads of Terms are agreed and finalised, the parties sign the Sale and Purchase Agreement. As part of this, a date is set to exchange contracts – this is the point the transaction becomes legally binding.

Completion

Upon completion, the buyer takes legal ownership of the plot and the balance is paid on the purchase price.

Post-Completion

If you are acquiring land, your legal team will apply to register the purchase with the Land Registry, thus recording your ownership rights.

Ongoing Obligations

You may have ongoing obligations to the seller due to Overage Agreements. These clawback (or uplift) agreements entitle the seller to receive additional payments if certain conditions are met in the future, such as obtaining planning permission. 

Manage the Development Project

Once you own the land, you can begin construction. It is important to follow all local building codes and regulations during construction.

Completion and Inspection

Once construction is complete, the local authority will conduct a final inspection to ensure the development meets all necessary regulations and standards. Ensuring you have been able to obtain the relevant warranties so that these can be passed onto your new buyers.

Selling on

If you decide to sell your land, you must complete a Transfer of Part of Registered Title on Form TP1 – the official Land Registry form used to transfer land from seller to buyer. This document outlines the terms and conditions of the development agreement, including the responsibilities of both parties, the completion date, and any financial obligations. It is important to ensure this Transfer is drafted correctly and your solicitor can ensure this is done.


Book a Free Consultation

If you’re looking for some legal advice on residential property development, book a free consultation with our team.