Strategic land – playing the long game
With housing and planning policy changing almost daily, not to mention the General Election, it is a time of flux for developers, housing associations and those involved in housing in the UK.
This means taking longer-term views on land for development is often necessary but also can be shrewd for a business wanting to ride out short term variances in the market. Thus, Strategic Land, was born and many operators are looking at longer term positions on land whether by subject to planning deals, options or, as has been more prevalent, promotion agreements.
Promotion agreements are typically between a landowner and a third party, the promoter. The promoter agrees to obtain a planning permission for development at its cost and procure a buyer for the land (with the benefit of planning). In exchange for taking the risk of planning and sale, the promoter usually gets its costs repaid and a "cut" or percentage of the net sale proceeds.
Of course, these can be very complex with multiple landownerships, tax arrangements and third party cost arrangements and careful thought needs to go into the initial commercial deal but also the long term nature of the transaction.