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When local authorities are looking to take regeneration schemes to market, we always advise that preparation is key. The more work an authority can do upfront to make the scheme “oven ready” the greater confidence the market will have in its deliverability. Given the turbulent economic times we are living in, it is more important than ever that schemes are packaged in a way which makes them as attractive to the market as possible. I thought it might be worth a reminder of some of the practical steps that we, as lawyers, can take to help with this.
Due Diligence
It is crucial that we carry out early due diligence on site(s) to identify issues and, where possible, take steps to resolve those issues which can include:
obtaining a title indemnity insurance quotation. This is often appropriate when dealing with historic title issues or those where the benefitting parties cannot be clearly identified
seeking a release from the party with the benefit. If indemnity insurance is not available (as approaching the party with the benefit will usually render insurance unavailable) and the benefitting party is clear then negotiations should take place to ascertain whether the third party would be willing to release or vary the matter at issue
appropriating the site for a planning purpose which will trigger the protection of s.203 Housing and Planning Act 2016. This allows the Council, or any party deriving title under them, to lawfully interfere with third party rights, restrictive covenants and contractual restrictions relating to the site, providing the development is delivered in accordance with a planning permission. Parties who have their rights interfered with will be entitled to compensation (so this must be factored into the viability) and negotiations should have taken place before taking steps to appropriate.
We recommend providing high level reports on title (on a non-reliance basis) with the marketing documents which highlight any impediments to the proposed development (including any identified by the utility and ground investigation search results) and any action being taken so there is a clear picture of the constraints and, if relevant, when such constraints will be dealt with.
Documentation
The documentation should clearly address all the commercial terms but it is important that it is otherwise as market facing as possible to generate the maximum interest. If the scheme is being marketed via a procurement process then it is critical that the documents do not contain any redlines that may be “rowed back on” later (for example a minimum financial return). If those terms are later softened, we will need to consider whether the change is one which makes the original procurement unsafe so this should be avoided wherever possible.
Rebecca Pendlebury
Partner at Bevan Brittan
03701945085
07789394359
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