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Capturing Development Value of Land Received by Charities as Gifts in Wills

29 Jan 2026 | 5 minute read

Charities have a duty to protect their assets, including maximising any gifts of land and buildings left to them as gifts in wills. Pursuant to s.117 Charities Act 2011 (the 'Act'), where a gift of land is appropriated to (or is otherwise held for) a single charity, it must be sold in accordance with the rules set out in that section. In most cases, this will mean obtaining a report pursuant to s.119 of the Act and in line with the Charities (Dispositions of Land: Designated Advisors and Reports) Regulations 2023: The report will detail how the charity may best sell at maximum value, including how to harness any development potential attaching to the land.

Methods to maximise value

For gifts to multiple charities, there is still an obligation on personal representatives ('PRs') to achieve best value and, as such, similar valuation advice is desirable. There is no obligation on such PRs, however, to hold the land for the purposes of future development. Notwithstanding this, charities may wish to delay the sale of land to take advantage of its full development potential, for example, by holding the land via a nominee. The potential uplift in value arising from any development can also be retained in several ways, including through:

overages (building into the sale a right to an additional payment if the land is later developed);
options and rights of pre-emption (for example, giving a right to acquire land if planning permission is obtained); and
ransom strips (retaining a part of the land, such as the access, which is key to development).

Equally, in some cases, having more direct involvement in promoting the development potential of the land in question is desirable. In this article, we consider what key factors should be taken into account by charities when seeking to maximise value in this way. This forms the first of a series of articles that will explore the other mechanisms for capturing development value as referred to above. [Add hyperlinks to other articles]

Collaborating with other charities

Legacy gifts are often made to more than one charitable beneficiary. Where this is the case, charities are best advised to:

work together in appointing one of their number or a trustee to hold the land; and to
formalise the basis on which they will seek to maximise the land's value.

This could include several forms of agreement (including collaboration and promotion agreements) as well as instruction of professional advisors.

There is invariably a distinct advantage in charitable co-beneficiaries appointing a single joint set of advisors both for simplicity and to save costs.

Collaborating with other landowners

Similarly, charities may find it advantageous and/or necessary to collaborate with other landowners who may hold adjoining land or land otherwise strategically pertinent to selling their own land for the best value. These relationships should also be formalised and documented. It is generally preferable for the charities to take the lead on this, rather than relying on a third party to co-ordinate, as their interests may differ.

Timing

Acting promptly and taking professional advice on strategy at an early stage is invariably key. The promotion of land is often time sensitive, with land being earmarked, ‘allocated’, for planning potential long before a planning application is made. Having appropriate representation can be essential to securing the allocation of the land for planning purposes by local authorities. This is because the allocation of land can be a competitive process. A local authority will only allocate enough land to deliver their housing or employment requirement, and those sites may be decided at an early stage, depending on evidence of deliverability. This is often even more true for larger sites or for sites which need to be brought forward together with other third-party land.

When local authorities notify landowners of opportunities, these notifications can be missed where land is in estate administration. Again, this makes early professional advice highly desirable. Developers and promoters of land will often contact landowners, but those notifications also have the potential to be missed; they may also be made at too late a stage, making it difficult for charities to put in place all the prior agreements and preparation to ensure they are fully protected in the process. Putting all of the necessary agreements in place can take a notable period of time, and seizing the initiative can be the key to success.

Demonstrating to a local authority that land is available and deliverable at the earliest possible stage, with a development partner on board and landowners' collaboration agreement in place where necessary, can be the difference between securing an allocation for development or missing the boat.

Finding the right expert partners

Development and sale processes which ensure planning potential iscaptured tend to last years rather than months. Finding the right partner is, therefore, essential. These need to be parties you trust and can work with. This applies to both professional advisors and to parties purchasing or helping to promote the land.

Development partners will range between promotors who seek to promote the land through the planning process and then precure a sale in the open market, through to developers acquiring directly but often subject to agreements conditional on obtaining planning permission.

Selecting the right structure

If retaining the property to pursue the development opportunity, then there are a range of structures for development agreements, including conditional contracts, promotion agreements, collaboration and option agreements. These are an alternative to overage agreements imposed where you dispose of the land, which simply retain a right to an additional payment if planning is achieved by a future owner. Overages are discussed further in our second article of this series.

Which structure is preferable will also depend on the circumstances of the land, market, planning position and your key aims. Again, early professional advice is central to ensuring that charities get the best structure in order to best protect their interests.