Buying a Property With Planning Permission

In this article we will examine what buyers need to be aware of when they are considering purchasing a property that already has planning permission granted.

How would the seller have obtained planning permission?

In order to obtain planning permission from the local authority, the seller would have had to submit a planning application. Many sellers would have instructed an architect to prepare the drawings and complete the application on the planning portal.

How long does the planning permission last?

Subject to rare exceptions, planning permission is valid for three years from the date the local authority grants it. If this time has passed and no material starts have been made on the property, the buyer may need to re-apply for planning permission should they want to complete the development.

What does the buyer need to be aware of?

• Transfer of title – Any existing planning permission will transfer with the land or property you buy. Unless the buyer intends to use the property very differently from the permission that was granted, the buyer will be able to begin building works immediately after purchase.
• Planning documents –
  • If the buyer wishes to rely on the existing planning permission, they may need to obtain a copyright licence that is capable of assignment or grant of sub-licence from the architect so that they can use their drawings.
  • The buyer may also need to obtain a reliance letter from the building inspector or any other party that prepared a report for the seller. This letter will simply state that they can rely on the contents of the report.
  • The seller will be under an obligation to provide these and a buyer will need to make sure this is included in the Sale of Contract.
• Searches – the buyer may be curious as to why works were not commenced on the property after planning permission was obtained so it is important that a full set of property searches, tailored to the requirements of the development, should be undertaken.
• Price – The property price would be higher than usual as the seller would be selling the potential of a larger property e.g. the two bedroom house now has the potential to be a three bedroom house.

What is the advantage of buying a property where planning permission has been obtained?

It might seem that there are a number of disadvantages to buying a property with planning permission granted but you might consider that the benefits outweigh them. There is an increased potential for profit for the buyer. The buyer can develop the property, without having endured the costs of the planning process, and obtain the potential benefits of the property’s increased value.

There also is less risk for the buyer as they don’t have to go through the planning process themselves. Obtaining permission is costly and lengthy and there is always a risk that the application is refused or needs to be further amended. Additionally, the buyer will have the benefit of buying a property that has already been approved for development by the local authority, so they are less likely to encounter any surprises with the property.