THERE was a time, not long ago, when it seemed almost impossible to gain consent for housing developments in rural villages.

It was deemed to be “unsustainable” development and the development plans of the day largely restricted any development to major settlements. This is not currently the case and there is now a surge of new housing creation in many rural villages as well as market towns.

If you have the opportunity to gain planning consent on a greenfield site or on a range of traditional agricultural buildings, there are potentially a number of different routes to realising capital, most exercising the “Risk v. Return” equation.

Maximising the return on a small site is relatively straightforward. There are not too many planning options and securing the consent is the main objective.

Once gained, the site can simply be sold or built out yourself if you happen to be a dab hand with a trowel. Capital Gains Tax, running at up to 28 per cent, is a consideration but there are likely to be steps that you can take to reduce the liability.

On larger sites, the stakes are higher and there are more variables to consider. At the planning stage, there needs to be a balance between maximising the return and maximising the chances of gaining planning consent.

In depth consultation with the residents will be required and the final housing density may well be less than that initially proposed.

Seeking planning consent on such a site is unlikely to be quick or cheap. A failed application can land the applicant with a large bill for professional fees and nothing to show for it.

The risk involved, despite the potential rewards, can be off putting to some. Any rights affecting the land or restrictive covenants on the site also need to be investigated and may need releasing.

An alternative approach is to sell an option to a development company and allow it to take the risk of seeking consent.

The land is then purchased on consent of planning at a pre-agreed pricing mechanism, which will reflect the developer’s risk. A similar approach is to enter into a Promotion Agreement. There is unlikely to be an up-front payment, but the onus is on the promoter to sell the land on once planning consent is obtained.

The proceeds will then be split on a pre-agreed ratio between the owner and promoter, so that it encourages both parties to work towards maximising the end value.

These approaches may sound simple, but there are many considerations to be taken into account when drafting the initial option or promotion agreement. While the money side is obviously important, including timing of payments, the owner may also need or want to retain some control over other aspects, such as access, height, materials, design, density and to protect any residual adjoining land etc.

As in so many issues involving large sums of money, it is important to seek professional advice early in the process. It may be a once-in-a-lifetime opportunity, so it would be a pity not to make the most of it!

l Tom Wills is head of agriculture and estates at Newcastle law firm Sintons.