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Local Authorities and Promotion Agreements, the perfect marriage?

Political parties of all colours agree that more homes need to be delivered, and that this is imperative for our long-term economic and social stability. In line with this, the Government has set itself ambitious targets for housing development in this Parliament.

Of course, inextricably linked to the delivery of more homes is the release of suitable land on which to build them. In line with this, there has been strong encouragement from Central Government for major land owners – such as local authorities – to release land more quickly. However, the complex disposal process and the controversial nature of housing development on publicly owned land has often been a barrier.

Nevertheless, Section 123 of the Local Government Act 1972 places a statutory duty on local authorities to achieve best value for their land disposals. It obligates a local authority to dispose of land it holds in any manner it wishes, provided it is not for a consideration ‘less than the best that can reasonably be obtained.’

Given local authorities’ reduced appetite for risk, land is often sold on the open market ‘subject to planning.’ However, authorities could dramatically increase the value they gain from their assets if they undertake pre-sale ‘value enhancements’. The most obvious of these is obtaining outline planning consent for a site.

This, however, is where the risk element often turns local authorities off. The notion of putting up taxpayers’ money to support a planning application, Local Plan promotions or even appeals can be enough to send even the most ambitious Council running for the hills, despite the lucrative gains that can be made by selling a site with permission already granted.

The good news, you will be pleased to hear, is that Richborough Estates is offering a solution. Through a mechanism known as a Promotion Agreement we work alongside local authorities to help them navigate this uncertain, complex and often expensive process

There are three key tenets: the first, and perhaps most important, is that the financial risk of the planning process is taken by us and not the taxpayer; the second is that we operate in close partnership with the local authority which retains control of the process, from the consultation strategy to the marketing plan and finally, we achieve a true open market price through a competitive tender process.

Of course, the key benefit is that we can bring our extensive experience of delivering planning applications and securing best value in the most efficient time frame.

Efficiency and the delivery of best value was evident during our promotion of Council land in Codsall. Staffordshire County Council contracted us to promote an 18.9 acre Greenfield site in South Staffordshire, which had already been identified in its emerging Site Allocations Plan. Centred around a historic village centre and close to a Conservation Area the site was in a sustainable but sensitive location. As a way of promoting best value for the taxpayer, Staffordshire felt that entering into a Promotion Agreement with us was the most effective way of achieving consent and value.

Following an extensive planning process, permission for 180 residential units, including 40% affordable housing, was granted.

In this case, Staffordshire County Council will achieve the maximum value for the site – in line with the requirements of the Local Government Act. Furthermore, the Council was involved in the planning process and was able to input into the proposal, all at minimal financial risk to the tax payer.

Promotion Agreements are increasingly being recognised as a viable option for local authority Estates Departments over traditional Options or subject to planning arrangements. The same arrangements can also be exploited by other major landowners, such as charities and trusts.

It is certainly a method worth exploring and one that we’d be happy to discuss in more detail.