Planning permission means little if your Access is unclear  

Planning permission can add significant value to a development site. However, that value depends heavily on the scheme being capable of delivery, and that is something that planning permission does not establish. 

Access is a good example. A planning authority may be satisfied that a proposed access works in highways and planning terms, but that does not establish that the landowner has the private legal rights needed to use it. Equally, an existing right of way that has served a site for decades may not be sufficient for the nature or intensity of use involved in the consented development.

That distinction matters particularly on a sale. A buyer of consented development land is not simply acquiring land with planning permission attached. It is acquiring the opportunity to implement that permission. If the rights needed to do so are missing or inadequate, the problem remains with the seller, however clean the planning position may be. A clear example is where the access is established for one property but the consent provides for multiple properties.

Planning permission does not establish access rights

Access can receive considerable attention during the planning process. Highway safety, traffic movements, junction design, visibility and the effect of additional vehicle movements may all have been considered before permission is granted.

Those questions are important, but they are not the same questions that arise on title.

Planning permission does not establish that the applicant owns all of the land required to implement the scheme, or that sufficient private rights exist over land belonging to somebody else. Where a development depends on a private road, shared access or other third-party land, the existence of a physical route is only part of the picture.

The legal right to use that route has to be considered against the development now proposed.

That can be important where the existing access arrangements reflect a much less intensive historic use. A route that has served agricultural land, a yard or a small number of buildings without difficulty may be physically capable of carrying more traffic. That does not mean the legal rights associated with it necessarily extend to the use required by a larger development.

Planning can therefore change both the use and the value of a site without changing the private rights that serve it. A seller may secure a valuable consent while the access position remains exactly as it was beforehand. In our view sorting out access should be done before an improved planning consent is obtained as otherwise access can become a ransom issue.

The rights have to support the development being sold

The relevant question is not simply whether the site has access. It is whether the rights available are sufficient for the development that has been consented.

That requires the access position to be considered in the context of the scheme itself. The use proposed may involve a different character or intensity of traffic from the historic use of the land. Construction may place demands on the access that will not exist once the development is complete. Other elements of the scheme may also depend on rights over third-party land.

The issue may therefore extend beyond the principal route into the site. Depending on the development, implementation may also rely on rights connected with works, services, drainage or other infrastructure outside the site boundary.

The completed development must then be capable of operating with the rights available to it. A scheme that can be built but cannot be properly accessed, serviced or used once complete presents a different problem, but it remains a problem of deliverability.

For that reason, title and planning should be considered together when development land is being prepared for sale. The planning permission defines what is proposed. The title needs to be tested against what will actually be required to deliver it.

Why the risk remains with the seller

The problem often comes to light during the buyer’s legal due diligence. A site may have been marketed on the strength of its planning permission and a price agreed on that basis. The buyer’s solicitor then identifies a problem with the access, and the buyer or its lender requires the position to be resolved before the transaction can proceed as agreed.

That does not make the issue the buyer’s problem to solve.

The seller is marketing a development opportunity, and the price reflects the buyer’s confidence that the opportunity can be realised. If the rights needed to implement the consent are missing, informal or insufficient, the proposition being sold has changed.

The buyer is entitled to reassess it accordingly. That may affect price, introduce conditions into the transaction or, in a more serious case, cause the buyer to reconsider the acquisition altogether. If these issues are closed off first by the seller they are much easier to solve at an early stage, rather than in the middle of a transaction.

None of those outcomes is unusual. A buyer of development land is not paying for the existence of a planning permission in isolation. It is paying for a site on which that permission can be implemented.

If the legal rights serving the site do not support the development, the seller has not transferred that problem to the buyer simply because the buyer’s due diligence was the first point at which it was identified.

Why timing matters

An access issue identified before marketing and the same issue identified after heads of terms may be legally identical. Their commercial effect can be very different.

Before a sale is agreed, the seller has time to establish the extent of the rights that already exist and, where necessary, negotiate additional or amended rights. If a neighbouring owner needs to be involved, those discussions can take place without a live transaction depending on the outcome.

Once terms have been agreed with a buyer, the position changes.

The seller is working to a transaction timetable. The buyer knows the issue has to be resolved. If a third-party landowner controls the solution, they may also become aware that completion depends on their agreement.

A request to document or extend a right which might previously have been dealt with as an ordinary property matter can then acquire a very different commercial significance.

Insurance may sometimes be relevant where the issue is capable of being dealt with in that way, but it is not a substitute for a substantive right that the development actually requires. Where the solution depends on securing or altering rights over third-party land, the seller may have little alternative but to negotiate at a point when its need to reach agreement is already apparent.

The legal issue has not changed. The seller’s negotiating position has.

Making the development genuinely saleable

Not every imperfect access position needs to be resolved before a site is marketed. The important point is to understand whether it affects the development proposition being sold and, if it does, to address it while the seller retains control over the circumstances in which that happens.

Planning permission is an important part of the value of development land, but it is not evidence that the rights required to implement the consent are in place.

For a seller, understanding that position before marketing means that any material access issue can be dealt with on its own merits, rather than for the first time during a buyer’s due diligence and against the timetable of a live transaction. In our experience, a seller rarely does well in those circumstances, so always prepare for sale.