With around 90% of farm enterprises in England being family-run, according to Defra, land development is rarely a straightforward transaction. Family dynamics, unclear ownership, and emotional ties to the land often complicate matters. It’s essential to treat any potential development as a long-term project, one that demands collaboration, planning, and a proactive approach to tax and legal issues.

Start with ownership clarity

Clear ownership is a crucial starting point. Land passed down through generations can come with unresolved title issues, incomplete probate, or informal historic agreements that were never legally formalised. According to Paul Sams, Managing Partner at Dutton Gregory, resolving these issues early is vital before engaging with developers or investors.

Tenancies and informal arrangements – particularly verbal ones – can also create obstacles. These need to be identified and resolved early, especially as vacant possession is typically a requirement for developers. Failing to do so can stall projects indefinitely.

Collaborate with strategy

In many cases, working with neighbouring landowners is the most viable route to development. Equalisation agreements and Land Pooling Trusts can help share costs and profits fairly among participants and improve collective bargaining power.

However, collaboration adds complexity. Different parties may have different goals or expectations. Even with a solid legal framework, aligning everyone’s interests can be the most difficult part of the process. Early and open communication is essential.

Understand the Tax Implications

One of the most important financial questions is how the transaction will be taxed—under Capital Gains Tax (CGT) or Income Tax. Naomi Stewart, Head of Tax at Shaw Gibbs, notes that CGT is generally more favourable, but it’s not guaranteed.

If HMRC determines that the land was acquired or prepared with the primary aim of profiting from development, it may be taxed as income. Engaging with a tax adviser early helps avoid missed reliefs, such as VAT recovery, which are often only available if the correct steps are taken from the outset.

Be cautious with developer contracts that offer a share of profits, as these can shift the transaction from CGT into Income Tax territory. Such arrangements should be carefully stress-tested to assess long-term financial implications.

Renewable energy: Long-term commitment

Interest in renewable energy, particularly solar farms, is growing. However, landowners are often unprepared for the long timelines involved. According to Tom Sater, Head of RO Energy, some projects are now looking at grid connection dates well into the 2030s or 2040s.

To move forward, landowners can use short-form heads of terms to secure initial engagement with the National Grid, followed by more detailed agreements. Acting early is crucial due to the long development windows.

Additionally, access rights and maintenance requirements should not be overlooked. These can impact wider farming operations and should be considered when designating areas for development.

Watch out for hidden challenges

Section 106 agreements, which are often required by local councils to fund community infrastructure, can be a source of unexpected delay. Jacob Taylor, Strategic Land Director at RO Land, recommends planning for these obligations from the start, especially as council resources and priorities may change over time.

Personal circumstances, such as divorce or inheritance disputes, can also create complications late in the process. Where multiple family members co-own land, it’s vital to document roles, rights, and responsibilities clearly from the outset.

Plan for the long term

Development increases land value, and with it potential tax exposure. Naomi Stewart advises landowners to begin planning for these changes as early as possible, especially where land is held within corporate structures or likely to be passed to future generations.

With renewable leases potentially lasting up to 40 years, today’s decisions can have lasting consequences. Remaining involved and informed throughout the project lifecycle ensures smoother transitions and protects long-term value.

Developing agricultural land can be a valuable opportunity, but it’s rarely simple or fast. Aligning tax, legal, and strategic planning from the outset is essential. Whether your goals include profit, legacy, or sustainability, early expert advice and collaborative thinking are key to long-term success.

At Shaw Gibbs, we work with a range of specialists to guide landowners through every stage of the process. To discuss how we can support your development goals, get in touch with our team today.