Whether it’s a residential, commercial or renewable scheme, land projects can be complex and challenging – but there are definite patterns we spot in farmers and landowners who succeed. Mark Charter, Partner at Thrings, has been selected to appear as a as a specialist on a panel for Farmers Weekly to discuss the topic of Alternative Land Uses.
Here is his take on some of the ways successful landowners make the most of their opportunities.
1. They plan ahead
The saying goes that if you fail to prepare, you prepare to fail – and this is never more appropriate than in development projects. The quality of the end product in any land scheme is firmly linked to the amount of time invested in planning at the start.
This is especially true when it comes to tax planning, where taking advice before going to market with any proposed opportunity can be far more efficient than doing it later.
For example, if your land is family-owned, you may split the ownership between a wider group of family members, or transfer to a family trust, before securing planning permission, after which the land becomes ‘pregnant with gain’.
This way, tax liabilities (at the time of splitting ownership between a wider group or transferring to a family trust) are based on the value of the undeveloped land, rather than on the increased value that planning permission unlocks. We would advise taking legal and tax advice at least a year before approaching any potential developer – this builds in a delay but it is almost always time well spent.
2. They surround themselves with specialists
Successful entrepreneurs may often be in the spotlight but they don’t do it alone – their most common skill is in assembling great teams of specialists around them. Choose carefully, pick people who have a proven track record in the kind of project you are contemplating, and listen to their advice.
Most land development projects are complicated – often more than the landowner thinks at the outset – and experienced eyes will be able to spot potential pitfalls far earlier than you could acting alone.
Experts who have lived and breathed similar projects will also be able to give you an informed picture of the likelihood your scheme will secure planning permission, attract a developer and succeed financially.
They will also be able to draw on a network of professional advisors who have relevant experience and expertise, and sometimes can help you avoid the perils of the open market by putting you in touch with a select list of people with an interest in your kind of development. Success is always a team effort.
3. They are patient
Development deals can be frustrating, complicated and protracted – nothing ever moves along as fast it should. It’s well known that the planning system is under-resourced and often painfully slow, meaning that all-important permission that unlocks the value of land can come after an agonisingly long wait.
It is also often the case agreements with developers only come after long periods of negotiation. Other factors such as securing contracts, sourcing materials and suppliers, reaching Biodiversity Net Gain or other environmental offset agreements and the development of land itself can all eat into far more time than you expect.
Successful landowners understand this and, while they keep a close eye on their projects to ensure they are moving along, they are patient – knowing that rushing and cutting corners can be an expensive mistake,
4. They protect themselves
Nobody knows what life will throw at us, and this is especially relevant when land is owned in partnerships between family members, and used for an existing business such as farming.
Sadly, life may not always be as settled and predictable as it is at the point when you start your development. Poor health, family disagreements, divorce and the loss of family members are among the challenges most families face, and in business partnerships they can result in an additional layer of distress and financial worry.
They may not always be the easiest conversations to have with partners, spouses, children and other family members – but it is essential to talk about the effect of life events on the partnership’s income and assets and take advice on peace of mind measures such as succession planning and pre-nuptial and post-nuptial agreements.
5. They see the bigger picture
We’ve talked about the planning that successful entrepreneurs invest in at the start of a project. Where the best also excel is in looking at the long game – going beyond each individual scheme and thinking about how it fits into the bigger picture.
A good topical example is the issue of Biodiversity Net Gain (BNG) and environmental offsets – the requirement for every development to have a net positive effect on the local environment.
Often when dealing with landowners, developers will seek to offset the impact of a development – such as a residential scheme, commercial development or solar farm – by using another area of the land for a biodiversity or offset scheme.
This may be the right route to go down, or it may turn out to be a short-term approach that locks you into a decades-long agreement, limiting your ability to use that land for another diversification project in the meantime.
Working with your team of advisors to think past the project in hand and ahead to the next 50 years and beyond will provide you with a much clearer picture of the opportunities ahead, helping you to maximise your assets and secure prosperity for your family for decades to come.
Mark Charter is an experienced Partner in the Thrings Agriculture team with expertise in development of land projects. The team is one of the largest and most experienced in the UK, ranked in Band 1 by Chambers Guide to the Legal Profession and in the Top Tier by Legal 500.
The team has been chosen by the NFU to act for its members in more counties than any other firm. Find out more about how we can support farmers, food producers and rural communities on our Information for Farmers page.
