Help! Sold property to developer who wants planning permission first

[Louisa1962]

Please someone help me. Me and my family are in a bit of a mess (understatement).

I signed up with a local agent back in May after my online agent went bust. He soon found us a buyer in the shape of a local property developer, who has a number of properties in their portfolio.

They made a low end offer, which after great consideration we accepted- mostly because they were cash buyers and willing to move quickly. The only stipulation was that they wanted to convert our family home into flats, and therefore would proceed once they had gained planning permission to convert the property. They also wanted the property to be taken off the market. I was assured by the agent they had dealt with them before and were decent/reliable applicants. So we agreed.

After waiting 8 weeks for the usual planning process, plus a further 3 for architects to write up plans, the council refused planning permission on the conversion. The agent hasn’t been easy to get hold of, but when I last spoke to them on Friday they told me the buyers were making amendments to plans and will re-submit them to council.

However, in the meantime we have found a property to buy we love, and are not in the best financial position ourselves. What do I do now? Do I wait for the buyers to secure planning, which could still take many weeks? Or do I tell the agent I have waited around long enough and want the buyers to exchange and complete ASAP regardless of planning?

I haven’t been able to sleep worrying. I don’t want to lose buyers, I don’t have many other option if I do. But at the same time, I can’t wait around on a planning promise which could take many more weeks and still fail.

Any advice welcome! Thanks!

I know we’ve been foolish with this. I hold my hands up. Just haven’t had much experience with selling/buying and sort of fell into the trap of believing the agents bluster. I personally feel such an idiot. And backed into a corner.

The buyers have got the architect to amend the PP and are submitting changes next week. According to the agent. I have found the details online and gone through them all, I am up to date with the planning situation.

Finances are the main reason we didn’t seek PP ourselves. We aren’t in the best financial position after a tough few years. I am guessing the agent could smell blood when he came to value the property and took us down this route for good reason. Easy prey.

The only offer information I have from the agent is a email stating this,

“I have worked incredibly hard to secure an offer from some developers that work in the local area. Effectively, they can move quickly and have been financially qualified – just to confirm they would want to develop the property into flats and to do so they would need planning permission.

With planning, it can take a number of weeks to get agreed at a considerable cost to the buyers – I am sure planning will be agreed however but they would want some security before submitting i.e. the property being shown as under offer online.

The plan would be to submit the planning (providing the offer is accepted) and begin the legal process.

Please see below from the buyers:

We would pay asking price if planning were to be approved.
We would submit planning now if this is agreed and concurrently get the solicitors to carry out due diligence with a view to exchanging as soon as planning is granted which would be approx. 8 weeks.

Please can you let me know your thoughts and feel free to call if you would like to discuss as it may be slightly confusing.”

The key bit being “8 weeks”, which has come and gone. I appreciate they’re still pursuing the application and haven’t walked away, but as others have rightly said, no guarantees are in place this won’t fail again.

You've got a potential get out in the buyer's offer - they say their solicitors will concurrently (with the planning process) carry out due diligence. Has your solicitor been contacted by theirs? Have you completed the Law Society forms provided by your solicitor? You have instructed a solicitor I take it?

This doesn't need to be a drama, just say you're no longer happy with the offer and you'd like to put the house back on the market.

You're entitled to pull out for any reason, but in this case you can let the EA know that it's because the developers aren't ready to proceed.

Your contract with the estate agent almost certainly only required you to pay them if you actually sell your house.

We have instructed a conveyancer to deal with the legal process. We have completed the paperwork and returned this to the conveyancer, who then contacted the buyers solicitor with the contract pack awaiting any enquiries. This was 7 weeks ago, and since then the process has been stuck in that same position. The other side have returned no enquiries presumably because they’re awaiting either additional funds or the planning process to conclude.

If they are serious and convinced they will get pp then they will buy now. It's not your problem if they hit problems tbh. I'd be tempted to stick it back on the market

There's no need to sack the agent as your buyer may well still come through but absolutely get the property back on the market ASAP. The agent works for you NOT the developer (although chances are this is a long term client and they will benefit from selling your property to this developer as it's future big business guaranteed) and you need to tell the agent your situation has changed now you've found a property to buy and need a buyer who can proceed NOW - if that ends up being the developer then great but you can't keep waiting for them. If they won't get it back on the market then sack them and find someone who will.

Is the conveyancer independent of the EA? Does the contract allow for any share of the development profit?

have you signed a contract?

Your property will be worth much more with the PP -

The conveyancer was recommended by the agent but is independent. I’m assuming the EA and developers probably have some sort of deal between them on the side, hence the connection between the two.

I have signed no contract with the developer other than a email agreeing to the asking price sent via the EA. I have filled in identification documents and property detail forms and that contract has been sent to their solicitor. But nothing else official.

If PP is granted, is it worth me rocking the boat now and potentially them losing interest and withdrawing the application?

The conveyancer was recommended by the agent but is independe

Oh god they saw you coming. You do know the agent will be getting backhanders off both conveyancer and developer?

Seriously, you've lost the house you wanted. Take it off the market on Monday and offer to another agent.

They won’t lose interest if they want it!
You can put it back on the market and they can still end up buying it.

In the e mail about the offer it does say ‘asking price’ if they get PP. is the asking price more than the offer price?

The estate agent has not acted in good faith and is probably in cahoots with the developer taking advantage of your naivety. There have probably been plenty of non-developer buyers who could gave made you a decent proceedable offer, who the estate agent hasn't put your way as it would disadvantage his mate.

With planning permission the property is worth much more than without, precisely because of this delay, uncertainty and hassle. Therefore if planning permission is granted you have no obligation at all to proceed with the lower price. The property is worth more, your price can go up. You are not obliged to sell until contracts are exchanged and even then you can pull out with penalties to pay. Don't be bullied.

Do not set your heart on any property. Nothing is certain. Wouldn't you feel foolish if you shot yourself in the foot allowing yourself to be taken advantage of for the sake of making a sale with this developer, and you then get gazzumped and couldn't buy this other place and have to start hunting again?

All those saying the property will be worth more with pp - the isn't necessarily true.

It will be worth more to the developer, yes. But having pp to turn the house into flats won't make it worth more if a buyer comes forward who wants to live in it as a house.

OP - your EA is guilt tripping you, but none of it is your problem. The arrangement has so far given the developer security (taking your house off the market), but given you none (you have no contract with the developer yet).

If the developer is prepared to pay asking price when the house has pp, why were you pressured to accept a lower offer before? It's bullshit.

“It will be worth more to the developer, yes. But having pp to turn the house into flats won't make it worth more if a buyer comes forward who wants to live in it as a house.”

True.

Actually, the developer has offered 5% less than asking price. Not only that, but with the additional stipulation of taking it off the market AND seeking PP as a requirement.

As everyone has said, the buyer has only spent money on architects and planning applications. The EA suggested they have invested £12.5k, not sure where that figure comes from?

Should I give the agent a ultimatum tomorrow morning? Exchange and completion by a specific agreed date signed by solicitors, or it goes back on the market with immediate effect?

I would simply istruct the EA to put it back on the market until you have a proceeable offer.

If the developer decides to make a non-contingent, proceedable offer and exchange contracts on that basis - great! If not, you haven't lost anything and at least you might get another buyer who can proceed.

Right now you have nothing. No contract, no committed buyer and your house isn't being advertised.

I'd also instruct your own solicitor, and give the one they recommended notice that you no longer wish to use them.

Architects and planning consultant fees would easily add up to £12,000k.

But that’s their business and their risk. And they have not stuck to the timetable agreed when you accepted the offer.

And don't give them a date to do it - you've been dancing to their tune and at their convenience for far too long. Just say "put it back on the market until we have a buyer who is in a position to commit without any conditions"

Seriously go to another EA. Your one is shoddy as best, dodgy at worst. You've no guarantee he'll actively market your house even if you give him an ultimatum and he agrees.

There's nothing to stop the developer continuing with the planning application even if you change EA.

Architects and planning consultant fees would easily add up to £12,000k

Alternatively if it's a medium sized developer they'd be employing an architect FT anyway so the cost would be very low.

You do know if the Developer can't secure planning they will walk away without a backwards glance. Just put it back on the market - tell the EA you will still sell to the developer once they are proceedable but they currently aren't. Oh - and use a different EA. One that will actively try to sell for you.

While you have been a little naive, the developers have been too, for investing £12.5K in getting PP on a property they don't have a formal (contracted) option on!

The way it usually works if you would give them an 'option', legally comitting to sell to them for a defined price in the event they get planning permission. In return for the option, they would pay you a non-refundable sum, e.g. £10K. This would reimburse you in the event they didn't get planning, so didn't proceed.

So you can play them at their own game - wait til they get planning permission, set your new asking price (adjusted in light of PP), and if they don't accept your new terms, go to another agent who will use their developer contacts to get you a new buyer at the higher price.