Land and S106 Negotiations

Land and S106 Negotiations

Strategic land is predominantly dealt with through two forms of agreement being the promotion or option agreement. Promotion agreements are popular with land promoters as it ensures their interests are aligned with those of the landowner in achieving best value for the site, given the site will be offered to the open market with the benefit of planning permission at the appropriate time. The promoter takes on the full risk of promoting the site and only when the site achieves a planning permission, is it then sold in the open market.

The promoter will seek a return on his costs and a percentage of market value, being representative of the risk taken in the promotion.

Option agreements are similar but provide the housebuilder with the option to acquire the site if a satisfactory planning permission is obtained following the valuation process. The option agreement is more complex than the promotion, as a series of notices have to be served by the housebuilder before the purchase price is determined. There is usually a complex negotiation process involved to determine the purchase price, as all development, infrastructure and Section 106 costs have to be determined as part of the market value calculation of the land.

The obligations and timescales within either a promotion or option are critical to ensure clients have the opportunity of maximising their commercial terms in a reasonable period of time.

Once heads of terms are agreed, we will continue to work with clients and their legal team to ensure these are accurately reflected in the drafting of the agreement.

Even when deals are signed, we will continue to monitor progress of the promotion to ensure all obligations are adhered to. The timing of submitting outline/reserved matters applications, updating the promotion strategy, ensuring reports are issued in a timely manner, monitoring costs and assessing the application material are all important roles that we undertake.

In addition to land agreements, we also negotiate Section 106 Agreements for either landowners or developers. The Section 106 is a legally binding document that secures contributions from the development for either the Local Authority or the County Council to assist in delivering important infrastructure to support the development. Such contributions will fund education, public open space, transport, highways, community facilities, affordable housing etc. On large schemes, these costs can be significant and could be the difference between making the site financially viable or not.

Payments will be linked to development triggers or timescales and therefore a full understanding of the viability and cashflow will be important to ensure the payments can be made without compromising the viability of the overall scheme.

All landowners have to sign up to the Section 106 Agreement, but the promotion or option will ensure that ultimately, the housebuilder will be liable for the costs which will have been accounted for in determining the market value.

Local Authorities will often use the District Valuer to negotiate Section 106 Agreements on their behalf, which can add delay to the process so negotiation is essential to ensure planning permission is issued in a timely manner, thus allowing land to then be sold under the promotion or acquired under the option to realise its value.

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"The drive and determination of the Hawksmoor team has been evident and has been key in bringing our successful long-term development forward. We are pleased with the work that Hawksmoor have carried out on our behalf and look forward to our future collaboration"

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Place of Registration - England
Registered Address - Hawksmoor Property Services Limited, Elford Park Farm, Brickhouse Lane, Elford, Tamworth, Staffordshire, England, B79 9DF.
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