Commercial property law advice in Wimbledon, South West London, Epsom and Surrey
What is a land transaction?
Land transactions are generally property dealings that involve land as the only or major component of the property, rather than the value deriving from a building or structure built upon the land. Often in a rural setting, examples include woodland, agricultural land, or a paddock or meadow forming part of a wider property.
Buying and selling land is often more complex than a standard sale or purchase as there are a number of different deals you could strike with the other party and additional due diligence, in each case depending on the proposed use for the property.
Whether you are looking to buy a field or a neighbour’s land to expand your garden, sell a piece of inherited woodland or are approached by a land promoter about farmland, our experienced solicitors can help make sure the process is as simple and clear as possible for you.
Types of land transactions
An unconditional contract is where the land is to be sold/purchased for a price with no conditions attached. This would be suitable if you were looking to buy or sell land where it does not require planning permission for its anticipated use and is not for personal or longer term land banking purposes.
Alternatively, you may use a conditional contract, where you enter a contract to buy/sell land, but there is some condition to satisfy before you proceed to completion of the sale/purchase, often the grant of a satisfactory planning permission.
An option is where the seller grants the buyer the right to buy the property in a set period of time. This is very common where a developer only wishes to commit in the event they obtain planning permission for a suitable development.
The transaction may involve overage too. This is an agreement where the developer or future owner are obliged to pay additional sums to the original seller in specific circumstances, such as selling the land on at a higher price, obtaining or implementing planning permission (or a better permission than the one in place when the land was purchased).
A promotion agreement involves the landowner agreeing that a promoter achieves the inclusion of the land in the local plan for development and/or obtains planning permission in return for a share of the uplift.
Finally, a joint venture is where the parties agree to work together to extract profit from the land. This is not strictly a property transaction, and would normally take the form of an agreement to work together on planning, development and/or finance of the land, with a view to either sell or rent following completion of the development.
More information on these can be found on our Property Development page.
What complexities can arise on a land transaction?
A buyer’s due diligence would usually involve an analysis of the title, carrying out searches and raising enquiries. The extent and focus of these investigations will depend on the buyer’s intentions for the land. Our Property Development page describes some of the additional considerations for developers.
Specific considerations may include:
- Checking whether there are third party or public rights of way or bridlepaths;
- Checking whether any of the land is ‘common land’ or a ‘village green’ over which the public might have access and rights to graze or take resources;
- Checking whether the land is subject to any Article 4 directions which could affect the use of the land;
- A utilities search to identify service media on or under the land;
- Highways searches at different points to determine whether the land has direct access (or rights of way) to reach the public highway or if there is a ‘ransom strip’;
- Enquiries regarding matters that affect rural property (such as hedgerow notices, park designations etc).
Where rural land in involved, you may also be dealing with agricultural or farm business tenancies, and unusual planning land use designations or environmental protections. These can have an enormous effect on the potential use and enjoyment of the land.
To use one example, certain agricultural tenancies enjoy protection for the lifetime of the tenant, and are inheritable for up to two further generations of the tenant’s family. If a field was being purchased subject to such a tenancy, this could mean it may not be vacant for many years, and the tenant may also be due compensation when the tenancy ends.
There are other types of occupation that affect land (such as grazing or cropping licences) that require specialist advice.
How can Peacock & Co help?
Negotiating a land transaction can be complicated, and seeking early and clear advice is key. There are a number of additional considerations that require a specialist to advise you properly and ensure you can achieve your goals, and our experienced lawyers are well placed to assist.
Here are some commonly asked questions we receive about buying and selling land:
This is a tenancy of land for agricultural business use which was granted prior to 1995 and carries security of tenure for the tenant. If granted between 1984 and 1995, this will be for the lifetime of the tenant, and if granted prior to 1984 this will also have rights of succession for up to two generations of close family members who worked on the land. At the end of the tenancy, the tenant is entitled to claim for compensation for ‘disturbance’ (i.e. to compensate the tenant for the loss of the land), for tenant-right matters (such as unharvested crops, fertiliser costs or any other matter where the tenant has incurred an expense to manage the land for agricultural use), and for any improvements made to the land by the tenant.
This is a type of tenancy granted since 1995 where the land is let for primarily agricultural use as a business. Tenancies originally granted for more than two years will continue until terminated by one party serving notice on the other,
There is less security than for an Agricultural Tenancy as these are terminable by either side on giving the other not less than 12 months’ notice. The rent can be reviewed every 3 years (or longer if agreed in the tenancy). At the end of the tenancy the tenant is entitled to claim compensation for any tenant improvements made to the land.
This is where a party is allowed to use the land for grazing livestock or horses in exchange for rent.
Care must be taken when drafting grazing licences so that they do not inadvertently become tenancies. Strictly speaking, a true licence allows the landowner to make use of the land and retain control over it. A licence has no security of tenure and can be terminated on notice.
This is similar to a grazing licence, but allowing a farmer to grow and harvest crops on land.
Common land is land which members of the public have rights to use for certain things. Most common land has a right to roam or access it, and some will allow you to use the land for other activities, the most common being for grazing livestock and fishing.
Village greens are parcels of land where the local population have used the land for games and recreation, and so have sporting and recreational rights attaching to them.
These rights are significant as there can be criminal consequences of not respecting common or village green land. It is a criminal offence to drive a car over common land or a village green unless authorised, as well as damaging or interrupting the use of a village green. This means that if land is designated as common land or a village green, it will limit your use of and potential development of the land.
Our commercial property lawyers provide comprehensive legal assistance across all aspects of land transactions. Contact us:
- Tel: 020 8944 5290
- Email: [email protected]