With national demand for housing showing no sign of slowing, the need for land on which to build is not slowing down either. Reports of agricultural land being sold to developers for as much as £1m an acre might make any landowner think about whether they can lose a few acres of farmland, freeing up cash for reinvesting in other areas. Clearly the first thing that makes agricultural land a potential development site is its location; most farmland is considered too remote to be suitable for building new houses on. It is for this reason that unused barns can be such boons for landowners who are looking to benefit from the high demand for housing, although many local authorities can in some cases try to turn these down as well for being too remote!
But anyone who has noticed a rash of new developments go up in their area will probably know already that all local authorities are required to meet targets for home-building, and must allocate areas suitable for development. If they fail to do so, a developer with a good legal team can argue that their proposed new housing estate is “sustainable development”, and get a rubber-stamped seal of approval from the Home Secretary. But even with the financial and legal backing of a big company behind them, developments do need to meet some very strict criteria. Being located close to local amenities such as shops, hospitals and public transport links is a key consideration and adds considerably to the chances of getting planning approval. The fact that such “greenfield” land is relatively scarce increases its value, and even land that is not currently earmarked for development in a Local Plan can be uplifted by having “hope value” due to it being somewhere that is likely to be considered for development in the near future.
Looking at an example, Townsend Chartered Surveyors are inviting informal tenders for five acres of grassland near Callington with stunning far-reaching views towards Bodmin Moor by the 22nd May. The land is located to the North of Callington on the west side of the A388 on the Launceston Road towards Kelly Bray, and therefore has many qualities that planners are looking for when assessing sites for development. Served by local bus routes, located close to shops, schools and health facilities, this therefore would be suitable for “sustainable development”. Cornwall’s Local Plan has set a requirement for 47,500 new homes; 1,000 of these are earmarked for the area in and around Callington and 504 of these have not been not been allocated at this stage. These five acres of Grade 4 grassland, located close to a town but with established farming usage, including access to mains water and a spring-fed field trough, represent a good short-term opportunity, but with an additional long-term “hope value” due to its location close to an area which is due to expand further before 2030. Tenders are invited either with no overage agreement with a guide up to £200,000, or with an overage of 33% for thirty years with a guide of over £75,000.
A landowner who sees an increase in the value of their land due to buying agricultural land and then selling it as development land will need to consider first the implications of Capital Gains Tax, and how best to mitigate against this. Reinvesting the proceeds of a sale in business assets such as more farmland, machinery, buildings etc. means that the Capital Gain can be “rolled over”, i.e. not payable until the disposal of the assets bought with the sale proceeds.
