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!

If they are resubmitting planning then it's going to be another 8+ weeks until the council make a decision on that. The £12.5k fees don't sound right either, not for a small scheme like that.

You need to get it back on the market ASAP.

the developers have been too, for investing £12.5K

I very much doubt they've paid anything like that! OP was told by the EA that the developers costs were around that...

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!

This is not a case of the developers being naive. This is a case of the EA making up numbers to guilt trip the OP.

Tell the EA it goes back on e market until you have a Proceedable offer

Don’t be wushu washy it sound unsure

Be firm

They haven’t kept to the original stipulation in that PP hasn’t been agreed and the mooted time scale has passed

In addition they state they will be paying AP and they aren’t

Check your paperwork but you could also move agents if you feel this one isn’t being independent and/or not working in your best interests (and it sounds like they want this one to work for more than just to get you a sale tbh)

Be strong

The other option is to say now that the whole thing has been delayed you want asking Price not 5% under and an agreement to complete with 3 weeks or you pull out

You hold the cards here OP

The buyers age being canny in not purchasing until the get PP
Normally they would have to take a risk and buy then apply for PP

They should really have offered OVER AP if they were expecting to try and get PP first

You think if they don’t get PP they won’t pull out? Of course they will and you will be left with no buyer at all

Your buyer as a developer is only interested if they get PP, which has already been refused.

One option is to find out the ground for refusal, you could probably get this direct from the planning department online. If it's a minor technicality the buyer will accept your ultimatum on the basis that they will ultimately secure PP.

If it's more fundamental, there's a good chance they will give up and walk away anyway.

I don't think you have anything to lose by putting the pressure on. You might find another buyer who will take your house as it is.

Oh, and ex EA here. The EA will definitely be hoping for the instruction for the developed property, and the developer may well have promised it.

I would instruct your own solicitor
Ideally you should have had a contract conditional on planning with timescales and a small non refundable deposit
This whole deal seems to have been negotiated to the advantage of the developers

There is a huge assumption going on here that there are queues of people wanting the OP’s property. That’s not the case for most property at the moment.

You could well find there isn’t another buyer who can proceed quicker than the developer. If they will pay the asking price (I assume you did get several valuations snd know what it’s realistically worth) why not try and understand what they need to do to get pp? If you cannot afford to get pp yourself, then you are stuck with these buyers or possibly waiting a long time to get another one.

By the way, developers know all agents. It’s their business to do that. You couldn’t sell on line but a local agent knows developers. They all do.

By all means try another one, but don’t expect a magic buyer to appear when there has been one interested party since it was put on the market.

Developer is a CF
If they want to wait to commit to buy until planning has been granted then they pay the higher price of what it's worth with planning
For example if the offer now is 500k and with planning it is worth 750k, then they pay 500k now or 750k as that is the value at the time they want to exchange

Bubblesbuddy - we have no idea what the EA did to market the property. It may be that there has been no decent attempt to find a buyer, as it sounds like the developer was their first port of call.

Also, the housing market obviously differs depending on where you live, and there are areas (outside the SE), where properties are still selling quickly.

I think it is relevant to know whether the Developpers are legally committed to the deal,as if not ,and PP is granted ,then the seller can sell with the PP,as the PP attaches to the property,not the person who applies for it

It's pretty clear that they aren't legally committed, as no contracts have been exchanged. All the OP has is emails from the agent, and that doesn't constitute any kind of binding contract on the developer.

OK,I thought there was room for doubt,seems very strange that the developpers would spend a lot of money on plans etc on this basis

I don't think they have. The OP has no proof that £12.5k has been spent, this is just what the agent claims.

Applying for PP itself doesn't cost much (a few hundred), and they probably have an architect on payroll or some other arrangement, so the marginal cost to the developed of drawing up plans is low.

If they can persuade the seller to take the property off the market (which they have), spending a few hundred or a couple of thousand on the application is a lot cheaper than buying a property (or spending thousands on an option over it), and PP then being declined.

Normally, when a property comes to the market, a decent EA will discuss the options with the vendor. A neighbour of mine got PP to develop her bungalow prior to selling because we are in a notoriously difficult area, AONB and green Belt and lots of restrictions. This made sense because buyers knew what they could do with the property.

Turning a property into flats in a less regulated area is not very contentious or difficult. It is common in London. However, this possibility should have been discussed with the OP.

The other problem is, the OP says she needs the money. So has she got the funds for PP? If a great deal of change is needed for the building to be flats, then it may well cost an individual in excess of £10,000 to submit the plans and all the relevant documents that will be required. Very many small developers do not have an in house architect. As if! There are more documents needed than purely drawings too. Usually traffic surveys/designs for increaed road use, and parking needs must be included as well as landscaping. Often councils ask for additional info at a very early stage and some of this might have to come from consultants.

The asking price should have reflected the possiblity that a developer would want it. However, if you do no work yourself for PP, you rarely benefit from any uplift in price. This should have been explained so the OP could have made choices.

No, we do not know how it wad marketed. But the OP should! By asking. Who did the EA have on their books who was looking? The big mistake is not doing any homework before putting the property on the market or agreeing to the sale. So value, with and without PP, sold prices locally and price for a quick or speculativve sale should have been discussed. Then a stragegy agreed. It would have been better to speak to several agents too. However, most people who want to sell, don't bother with PP as it costs and its stressful. They often want the buyer to do it. They should, after they pay for it.

So do you genuinely believe a small developer would have spent £12.5k without having any security, such as an option on the property?

TBH it all seems odd,neither side seem to have done the things I would normally expect ,and the OP seems very vague as to exactly what position she is in
She should tale legal advice on options and act in accordance with it

“OK,I thought there was room for doubt,seems very strange that the developpers would spend a lot of money on plans etc on this basis”

My employers have been selling a site that would need to be developed. 0.5 acre. The would be buyers have spent hundreds of thousands getting PP before agreeing to exchange contracts .

Scroll down this page for a list of studies and assessments that need to be done, plus ball park costs for consultants including architects.

“For a small-scale or domestic project with a construction budget of around £200,000, expect fees for all consultants to be in the region of £10,000 to reach planning application stage.”

origami warrior gives good advice.

It is quite unusual for a developer to spend to get planning before they even have an option agreement in place to ensure you are contracually committed. The planning attaches to the property not the developer.

Have you had independent advice on what the property would be worth with planning? I think you should take more steps to ensure you aren't being taken advantage of

You have no duty towards them, it doesn't matter that they have spent money. That's their risk. Do what is right for you but I suggest you switch conveyancer and also ask an independent agent to advise on value and the terms of sale.

@CampingItUp they surely at least ensured they had an option agreement first though?

I still don’t understand why a developer would spend £’s on getting planning permission on a property that they don’t actually own!🤷‍♀️

I can assure everyone now. No option agreement is in place. The agent has simply had us agree to take the property off the market and shown it as ‘under offer’ online.
From what I can see, the buyers have so far not re-issued any attempt to re-submit a amended planning application, however I am assured by the agent that they are in the process of doing so.

There has been no direct contact between ourselves and the buyers, just a few informal emails between us and the agent. And a official offer letter, which makes no mention of PP.

I can only assume the buyers are taking a punt on our property because it is big and going relatively cheap. But I am now much more clued up thanks to other posters on here about option agreements. I just didn’t think at the time.

@MrsElijahMikaelson1 because its cheaper than buying a property, and using up your available funds and/or paying interest on those funds. In addition if denied planning permisson and having to sell the property again you have a LONG time where your funds are unavailable and have wasted money on stamp duty. He developers usually have a limit of funds available at any ine time and try to make the most of al of it. That's why a cash buyer can often get a significant discount from a developer when buying a flat or house off plan. It gives the developer more available funds to work with.

We have had no other independent advice on values since it first went on the market over a year ago with a online agent. They vastly overvalued the property at the time, and consequently it sat on the market for months with hardly any viewings. The new agent only managed to get us the one viewing, with this developer.

The property sits on a plot of land exactly the same size as some very nice houses on the street, but they’ve already been developed and have certain intact period features our property seems to lack due to various bits of shoddy workmanship over the years.

The downturn has probably not helped.

Oh dear the new agent didn't 'only manage to get one viewing' with a mate of theirs who happens to be a developer.

They'll have engineered it that way to let their developer friends get first dibs and to make you more inclined to accept a low offer.

Agents are great at putting people off seeing houses that they want to let businesses associates buy. They get significant kickbacks for doing this