Why Land Development Agreements are becoming so popular in today's market

Posted by Khurram Saeed on Jan 7, 2019 3:56:00 PM

A Land Development Agreement in essence allows the Landowner to put the land in the deal, have the security of staying on title and share in the development upside in a tax effective manner whilst the developer takes the risk in developing their land.

Land development agreements have been around for a long time. Big companies like Lend Lease and Stockland carry out LDAs all the time – however you have to own a large parcel of land to enter into an LDA with the large operators.

What Resi Ventures has done is to bring the benefits of the LDA model to the smaller land owner, who may only have 20-30 acres.

At times we can amalgamate other landowners where necessary or preferable to create a large estate that helps all parties

Like we did with our cornerstone development called Monument, where we had to pay to bring forward sewage, water and other services so it made sense to amalgamate about a 100 acres to amortise the upfront costs.

Under an LDA the Landowner gets to maximise their return from what’s usually their biggest asset.

They get to go on a development journey with us and share the upside. Their returns are tied to the end lot prices, and as those prices rise, so do their returns.

The key to a successful LDA is selecting a reputable developer with a strong balance sheet who has a track record of delivering successful projects for their partners.

We say “no two LDAs are the same”, because we structure these according to the specific needs of Landowners, however the core structure is basically as follows.

1 - Resi Ventures funds the entire development and shares the development profits with the Landowner as the project rolls out.

2 – We pay all holding costs such as Council Rates and Land Tax as well as developer contributions to Council, Melbourne Water and other external authorities.

3 –We fund all project related costs including planning permits, sales and marketing, paying all external consultants, carrying out detailed engineering design, all the way to construction of roads and other civil works to create the end lots.

Put simply, we basically take the project from raw land to a thriving estate, and share the upside along the way with the Landowner.

If you would like us to undertake a free independent assessment of your land to determine its true market value then please contact us on 1300 031 260.

 

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