Senior Living FAQs: We have had an offer accepted on a site, what do we do next?
- Are you able to buy the property in cash? If not, have you lined up funders’? What are the funders’ requirements? The funders’ requirements are normally very prescriptive and it is worth ensuring that they are on board in the initial stages. This will de-risk the transaction and prevent an exchange where there is no certainty that there will be funding available on completion.
- Have you instructed a surveyor? A surveyor will produce a report detailing the physical problems with the site. If there is a significant issue which you were not aware of at the time your offer was submitted, you could negotiate a price chip in line with the costs you will incur in dealing with this issue.
- Does the site have planning permission for senior living accommodation? If not, we would suggest that you engage a planning consultant to advise on the likelihood on obtaining planning permission and to assist with the process of securing planning permission.
- Have you instructed a solicitor? A solicitor will instruct legal searches. This will tell you, amongst other matters:
- whether there are any live planning issues (i.e. has enforcement action been served on the current owner of the site);
- whether any contamination notices have been served on the current owner of the site which might be costly to comply with;
- the risk of contamination at the site;
- whether there are any pipes / cables running beneath the site that might be tricky to move;
- whether there are any restrictive covenants affecting the site which prevent the site being used for senior living accommodation or being developed in any way (If there are, your solicitor will be able to advise on the options. Is it possible to carry out the development anyway? What are the risks? Is there a way to remove the restrictive covenant to reduce the risk of it being enforced? What if the party with the benefit of the restrictive covenant refuses to agree to allow the development to go ahead? Is it possible to ask the Court to allow the development to go ahead anyway? Is insurance available as protection?);
- whether the site adjoins a public highway and if it does not adjoin a highway, if you have unlimited access to a public highway;
- whether any third parties have rights over the site and how such rights could impinge on your development; and
- what the risk is of the site flooding.
The solicitor will also negotiate the Contract for the purchase of the site. The Seller is not contractually obliged to sell the site to you until Contract is exchanged. The solicitor will also negotiate the Transfer of the site; this is the document effecting the purchase of the site. If the Seller is only selling part of the site, this Transfer will also detail the rights that you each are to have over the other’s land.
Following purchase, the solicitor will arrange to make the necessary stamp duty land tax return to HMRC and will ensure the transfer of the site is registered at the Land Registry.
- If your solicitor has flagged that there is a moderate to high risk of contamination, then you might wish to instruct an intrusive environmental survey. This will likely be a condition of any planning permission, should you need to obtain the same.
- If you are proposing carrying out any development, have you considered whether such development might infringe a neighbours right of light? If not, we suggest you speak to a specialist rights of light surveyor.
- Are there any capital allowances? If so, have you agreed that you have the benefit of the capital allowances post purchase? If you think the capital allowances are likely to be significant, then you might want to consult a capital allowances specialist to pool these allowances. The allowances must be pooled before purchase of the site.
- Is the site being sold vacant? If the site is occupied, what is your strategy to secure vacant possession? Will this delay the development? What are the risks? Depending on the type of occupants, they may have security of tenure which will limit your ability to obtain vacant possession. There may be particular procedures and timelines to follow to obtain vacant possession. Your solicitor should be able to help you devise a strategy to obtain vacant possession to carry out the development.
- Have you considered how you are structuring the purchase? Is the site currently owned by an SPV? Could you buy the shares in the SPV (rather than purchasing the land)? This may provide a cash saving, as stamp duty is less than stamp duty land tax but this needs to be balanced against the risks of taking on the liabilities of the SPV. It may be worth taking some tax advice in relation to the legal structure of the purchase.