Developing your own land: how a development manager helps a landowner

Many landowners are approached by agents, promoters or developers long before they have decided what they want. The first offer is rarely the only option, and the owner usually has less information than the people making the offers. A development manager works for the owner, so the decision is made on the owner’s terms.

The routes open to a landowner

• Sell now, as it is. Quick and simple, but the buyer takes the uplift that planning permission brings.
• Sell subject to planning. A developer pays for and runs the planning application, and the price is paid once consent is granted.
• A promotion or option agreement. A promoter or developer funds the planning work in return for a share of the sale proceeds or the right to buy at an agreed discount.
• Get consent yourself, then sell. You fund the planning work and keep more of the value it creates.
• A joint venture. You put in the land; a developer funds and builds; you share the profit.
• Develop it yourself. You keep the development profit and carry the cost, finance and risk.

What a development manager does for the owner

• Tests the options first. What the land could take, what each route would cost, how long it would take and what it would leave you with, set side by side.
• Builds the team. Appoints the architect, planning consultant, surveyors and engineers the site actually needs, and no more.
• Runs the planning application, including the negotiations over affordable housing and other obligations that decide what the consent is worth.
• Keeps the numbers current, so every decision is made on today’s costs and values rather than last year’s.
• Manages the exit, whether that is a sale, a joint venture or a start on site, alongside your agents and solicitors.

What it costs, and what it protects

A development manager is usually paid a monthly fee, a percentage of cost or value, or a lower fee with a success payment on consent or sale. Against that, the owner keeps control of the decision and more of the value the planning permission creates. The scope and fee should be agreed in writing before work starts.

Questions to ask before you choose a route

• What would the land be worth with planning permission, and what is it worth today?
• How long would consent take, what would it cost, and how likely is it?
• How much of the uplift does each route leave with you?
• What happens if the market moves, or planning is refused?
• How does each route affect your tax position? Your accountant should see the options.

In North London, a client owned a house with land behind it. Consent was secured for four houses on the rear land, and the advice is to sell that site separately and convert and let the house. Read the case study.