Farmers and landowners are often concerned about the prospect of tax changes if a Labour government comes to power. A perennial fear is a hike in capital gains tax – or even the introduction of a yet more punitive ‘development tax’.
With Keir Starmer’s party tipped to win the next general election, those considering selling ground for development certainly have such concerns, but they’re counterbalanced by a belief that a Labour government would kickstart the housing market in a way that brings many new opportunities.
Restrictive policies, red tape and a lack of resources in the planning system have meant housebuilding has come to a virtual standstill in some areas, but Labour has been very vocal about its intention to get more houses built. “Backing the builders not the blockers” is a phrase they’ve used.
Of course, selling any size plot for this purpose isn’t an opportunity everyone has, but in these challenging times, landowners are having to drive more value from their holdings.
For those with this in mind, an important first step is to submit their site for consideration to their local authority. At its simplest, this is a red line on a plan submitted via a form downloaded from the authority website, but providing the right information at the right time will put you in a strong position.
It’s free to do this and we don’t charge people to help, but it’s important to engage in this process as early as possible. It doesn’t commit you to subsequently make the land available, but it puts it on the local authority’s radar.
Different authorities have different approaches – some preferring a small number of large developments, others opting for a large number of smaller ones. But if you have land adjacent to a settlement boundary or a site part of which has already been developed (so there is a precedent) it’s worth engaging with the authority.
Think long term, too. Maybe you have land that’s two or even three fields away from the current settlement boundary. In 25 years – and house-builders, like farmers, think in generations – those plots might be on the very edge of the village or town.
Biodiversity
In years gone by, landowners sometimes believed it was advantageous to let a would-be building plot become overgrown or fall into disrepair because the council might be keener to see it developed.
But now, with the new Biodiversity Net Gain (BNG) regulations, it’s important to make sure it’s well maintained and farmed as you would any other piece of land. If you leave it to grow over, its biodiversity value could rise, which would result in you (or a developer) having to provide more BNG units as part of any project.
For those who do have opportunities, choosing a developer to enter into an agreement with is a key decision. Remember, ultimately this could be a 10 or 20-year relationship. It’s important to choose a reputable firm with a sound business who’s it for the long haul and has the resources to ‘promote’ your site – and take it from the point you sign the development agreement to them getting planning permission.
Sensitive task
How a developer acts also has a big influence on community relations. How they approach the often complex and usually sensitive task of seeking planning permission will affect not just their likelihood of success, but also how local residents regard you. Development agreements can also take different forms to suit your requirements which is something we regularly advise on.
One implication of recent delays in the planning system has been a relative scarcity of sites coming to the market, so landowners are in a strong negotiating position. Depending on a raft of factors, particularly location, development land is currently changing hands for £250,000 to £1.25m/acre.
For long-term development agreement, vendors should include a clause stating that if taxes on development land rise over a certain percentage, then the agreement can freeze for a set period (often between two and ten years).
Of course, the countryside needs protection against excessive and inappropriate development. But a lot of landowners are seeing the next few years as a time when development opportunities could be unlocked.
In years gone by, the prospect of a Labour government would have been a thoroughly troubling prospect for many farmers and landowners. But if Keir Starmer gets the keys to Downing Street, many will view higher capital taxes as a ‘necessary evil’ to turn the key on additional – and expedited – development opportunities.
Will Mackenzie is a director of Rural Insight Land & Development, a Leicestershire-based firm of chartered surveyors. For details, call 07471 354214 or email will.mackenzie@rild.co.uk.
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