Developing Property - the pitfalls


Napoleon is supposed to have said that England is a nation of shopkeepers, but it appears that we might be becoming a nation of property developers. However, developing property can be risky, and there are many pitfalls for the unwary. Common issues include:

Buying at auction. Properties often sell at auction for less than they would on the open market, which can be attractive for developers. However, inexperienced buyers may not realise that the winner is contractually bound to buy the property when the hammer falls, and will be expected to pay a 10% deposit immediately.

Completion of the transaction, and payment of the balance of the price, will usually be four weeks after the date of the auction. If the buyer is unable to comply, they may lose their deposit.

The buyer should therefore ensure that they and their solicitor have investigated the property and arranged financing before the auction.

Planning issues. Most developers are aware of the need for planning permission. However, not all are aware that the permission is not personal to the individual making the application, and could be used by any occupier of the property.

To avoid the seller benefitting from a planning permission obtained by a prospective buyer, the buyer should first ensure that the seller is committed. However, the buyer also needs to ensure that they are not bound to purchase the property if they cannot obtain suitable planning permission.

There are various solutions, including a conditional contract, under which both parties are committed to the transaction, provided that planning permission is granted. If the permission is not granted, then both can end the contract and walk away.

Title issues. Most properties are subject to restrictive covenants or easements for the benefit of nearby land. Many are innocuous, but some can impact development proposals.

Restrictive covenants limit use of property. Common restrictive covenants which may affect development include a requirement to obtain consent before building, or a limit to the number of dwellings that can be built.

Easements are rights, such as rights of way, or rights to lay pipes or cables. Even if they are not in regular use, such rights can limit development of the affected land.

Developers should ensure that their solicitor is fully aware of their development plans, so that the suitability of the property can be considered at an early stage, and the correct advice can be given.

If you are proposing to undertake property development, contact Simon Chambers at Friday Legal to discuss your options, on 01536 218888 or For all non-contentious matters, Friday Legal Solicitors are able provide legal services on a fixed fee basis.

Posted on 09 October 2018