FCo Rural Estates Newsletter Spring 2022 - Flipbook - Page 9
Ownership
You will usually expect to retain the freehold where off-site works are being carried out.
For on-site works, you might have expected to sell the site as a whole to the developer
but, if there could be a value in the BNG land at the end of the maintenance period,
perhaps you should consider retaining the freehold of that land. If on-site BNG land is
transferred to a developer it is likely a management company will be created to control
the land, presumably funded by plot owners through the service charge.
Role of tenant
Do you want your tenant to provide and maintain the habitat works? If so, the tenant will
need to be paid appropriately and you may need to wrestle with the age-old Agricultural
Holdings Act 1986 (AHA) tenancy question of how a tenant can enter into a 30-year
agreement when they only have a tenancy that runs from year to year. If not, you will
need to check the tenancy terms to ensure the BNG land can be taken back. One
question may be whether the proposed works are a non-agricultural use which entitle
the landlord to possession under a resumption of part clause. Furthermore, for off-site
works where the red line of the planning permission falls elsewhere (because the main
development area is somewhere different), will there be a qualifying planning permission
under Case B of the AHA?
Nature of developer’s interest
Whether developers seek a formal interest in off-site land may depend on whether there
are any implications for the developer if the landowner fails to perform. If there are (for
example the developer can only build a set number of houses once certain works have
been done), the developer may want a lease or, at least, some step-in rights. If not,
developers should be content without a land interest.
Payment
We will need to see how the market evolves but some landowners will prefer a single
payment up front and others regular, periodic payments (which might require additional
security from the developer).
Nature of works
The BNG works need to be clearly identified. It may be better to have a detailed list of
tasks to perform in particular years rather than specifying outcomes if outside factors,
such as poor weather, could put you in breach.
Agreement length
You may want to limit the agreement to 30 years (assuming the maintenance period does
not change) so you can take all the benefits afterwards. For example, if trees have been
planted, you might take timber income.
Landowner’s permitted use of the land
To maximise revenue possibilities you will want to try to preserve the ability to enter
into a later agreement over the same land but for a different use. For example, a first
agreement to restore an area of woodland, retaining the option of selling carbon capture
in the future under a different agreement (although this may not be possible for reasons
explained in our Woodland – conditional exemption and environmental schemes article).
Rural Estates Newsletter
Spring 2022
9