Structure of development

There are a number of ways in which the local authority (LA) and developer (D) could jointly procure the development of land owned by the LA. The structure will largely depend on each party’s contribution to the development and each party’s objective in the development. D’s commercial objectives will broadly be to extract development profit or to receive an ongoing income or a blend of both. The LA’s objective will be to extract best value for the public benefit out of the development either in terms of financial value, public amenity, or both.

This in turn will inform the kind of ownership structure at the end of the development, for example:

1. •

   a developer intending to extract development profit only may favour a clean break at the end of the development and therefore structure the development documentation in a way that they receive a development profit but have no ongoing ownership or interest in the land, requiring for example that the LA grant long leases to ultimate occupiers or dispose of parts of the freehold to ultimate owners at the completion date

2. •

   on the other hand, if D intends to receive a capital payment and ongoing ground rent or rack rental income going forward as part or all of its return, then it will look either to take a long lease of the property