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‘Zone warning’ for rural landowners

Rural landowners looking to sell property for development are being advised to seek advice over whether their land is already ‘zoned’ before signing any agreements.

Andrew Holden, head of the Rural team at Napthens, reports that his team is seeing an increase in landowners being approached by developers looking to build on land.

However, the owners are too often quickly signing up without properly looking into the opportunity.

Now Andrew has advised that anyone approached with such an offer should appoint an independent expert to look into the opportunity – particularly whether the land in question is ‘zoned’ for development.

Land zoning describes what usage the local authority has allowed of any land in its area.

An area of land may be in a zone designated in the local plan for development, or may be in the greenbelt and this can impact on the likelihood of planning being granted, and hence on the value of the land.

However, land can be promoted for development with the local council, to try and change the designation.   There are also for example more immediate opportunities, such as a number of ‘garden villages’ which are planned, including land at Balerigg, near Lancaster.

Andrew Holden said: “It’s very important to look at the details of the zone your land is in before making a decision on plans to develop it.

“It may be that a piece of land is already earmarked for property development, or if it’s not then it could be in an area highlighted by a local plan as one where such a development is desirable.

“As with any opportunity, landowners should fully investigate the situation before proceeding – whether they are looking to approach a developer or have been approached by one.”

The issue of land designations can also have unwanted side effects for those who do not want to develop their land.

“We have had recent cases where the land is designated for development on the death of the current farmer, and the next generation have no intention to sell for development.

Normally the land would benefit from Agricultural Property Relief (APR) and be exempt from Inheritance Tax (IHT). This is not the case in relation to the ‘hope value’ attributed to the development potential which is not subject to APR and could lead to an IHT bill. There are ways to avoid this but advanced planning is required.”

For advice on this issue contact Andrew or a member of the Rural team.

Andrew Holden, Rural Solicitor for Cumbria and Lancashire