Buying Land With or Without Planning Permission: What Should a Developer Consider?

Buying a development site is one of the biggest decisions you'll make as a property developer. You might be looking at land with full planning permission, a site with outline planning permission, or an opportunity with no planning permission at all. Each can work, but the risks are very different.

After 38 years in property, one of the things I regularly see is people concentrating on what they hope to build rather than properly understanding what they're actually buying.

Buying a development site with full planning permission

Of the different situations, buying with a suitable full planning permission will normally give you the greatest planning certainty. If the permission is acceptable, the numbers work and you're prepared to build the development as approved, a major element of planning risk has already been dealt with.

But don't confuse lower planning risk with no risk.

One mistake I'd particularly warn against is buying a site with planning permission and assuming you'll be able to make changes afterwards. You might look at an approved scheme and think you'll just move a window, alter the materials, change an elevation, adjust the layout or modify the access once you own it.

Don't base the purchase on that assumption. What appears to be a small change to you may still need planning approval. Depending on the change and the permission, it could require a non-material amendment, a variation of condition or potentially a new planning application.

If the development only works financially after you've changed the approved scheme, establish the planning position before buying. The safest appraisal is the one based on what you actually have permission to build, not what you hope you can change later.

What should you check when buying with planning?

I would want to see the actual decision notice and approved drawings, understand the planning conditions and check that the scheme in your appraisal matches the permission you're buying. Are there pre-commencement conditions? Are there Section 106 obligations or other requirements? Are there technical matters still to resolve? Does the approved layout genuinely work commercially?

Planning permission doesn't automatically make something a good development. The permission and the appraisal have to work together.

Is outline planning permission much better than a pre-app?

Generally, yes — outline planning permission provides substantially greater planning certainty than positive pre-application advice, because a planning permission has actually been granted.

Outline permission can establish the principle of development while some or all of the detailed matters are dealt with later through reserved matters. Depending on the permission, those matters can include appearance, landscaping, layout, scale and access.

That doesn't mean an outline permission is the same as having a fully detailed scheme ready to build. You still need to understand exactly what has been approved and what remains to be determined.

A positive planning pre-application can also be extremely useful, particularly before you commit significant money to a site. But a pre-app is advice, not planning permission, and it generally doesn't bind the council to approve a subsequent application.

Buying land without planning permission

Buying a site with no planning permission can create opportunity because obtaining permission may significantly increase its value. But somebody has to carry the planning risk.

If that's you, you need to understand what you're risking before you complete the purchase.

I would want to investigate planning policy and allocations, previous applications, access and highways, trees, ecology, drainage and flooding, neighbouring uses, utilities, ground conditions, legal title and restrictive covenants, together with any other site-specific constraints.

Then I would bring those findings back into the development appraisal. If you're assuming ten units, what happens if the site ultimately supports seven? If abnormal costs are higher than expected, does the deal still work? If planning takes longer, what does that do to finance and holding costs?

A useful companion to this article is my guide to assessing a property development site before you buy.

Should you buy subject to planning permission?

Buying a site without planning doesn't necessarily mean you have to complete the purchase first and then take all of the planning risk yourself.

One option can be a conditional purchase, where completion is conditional upon obtaining an agreed form of satisfactory planning permission. That can allow you to pursue planning while reducing the risk of owning a site on which you cannot achieve the development you expected.

But the words subject to planning don't solve everything. The detail of the agreement matters.

What constitutes satisfactory planning permission? How long do you have to obtain it? What happens if permission is refused? Are you required to appeal? What if permission is granted with conditions that make the development unviable? Is there a minimum number of units, floor area or another agreed development parameter?

The appropriate solicitor should structure the legal agreement, with planning and other professional advice where required. From a developer's perspective, the important question is simple: who is carrying the planning risk?

Conditional or unconditional purchase?

An unconditional purchase isn't automatically wrong. Sometimes an experienced developer deliberately takes planning risk because the purchase price and potential uplift justify it.

Equally, paying more for a site with a strong planning position may be entirely sensible because you're buying greater certainty.

The decision isn't simply about which route appears safest. It's about understanding the risk you're taking, the price you're paying and whether the potential return properly rewards you for that risk.

Full planning, outline planning or no planning — which is better?

There isn't one answer for every development. Full planning can substantially reduce planning uncertainty, although some of the planning gain may already be reflected in the land price. Outline planning can establish the principle of development while leaving important details to be resolved. Buying without planning can offer more opportunity to create value, but it exposes you to greater planning risk — particularly if you buy unconditionally.

What matters is understanding exactly what you're buying before you become committed to it.

Bring your mentor in before you buy

If you're considering property development mentoring, don't wait until you've bought the site before involving me.

I'd much rather look at the opportunity with you before you commit. We can examine the planning position, challenge the assumptions behind the appraisal, consider what you're actually being given permission to build and identify the questions that need answering by the appropriate members of your professional team.

With full planning permission, we can examine whether the approved scheme genuinely works. With outline permission, we can establish what's fixed and what still needs approval. With only pre-application advice, we can consider how much confidence it really gives us. With no planning permission, we can consider whether you should take the planning risk yourself or try to structure the purchase conditionally.

Sometimes that means proceeding. Sometimes it means renegotiating the price or changing the purchase structure. And occasionally, the most valuable advice I can give someone I'm mentoring is: don't buy it.