Firstly a ransom strip needs to be explained. This is where a strip of land is sometimes no more than 150mm wide sometimes is retained by the previous owner of the land or adjoining land between your land and the access or highway. Sometimes the ransom strip can be between twp parcels of land also. It is called a ransom strip because some people have been known to charge thousands to buy it. A ransom strips purpose is to prevent the development of land as the landowner will not be able to access the Highway or another parcel of land but the real reason is to extract money from anyone needing it for development.
Most ransom strips are retained because owners know that their strip will be needed sooner or later for possible development and therefore people want to benefit from it. Some examples are perhaps someone asking to purchase land for use as an allotment so it is bought cheaply. Further on down the line it might be needed for potential development. Another example is retaining a strip of land alongside a highway that might only just be wide enough for pedestrian traffic. It is important therefore that when you looking at any building plots for sale that interest you check that the land is accessible for your needs.
Another common occurrence is when a developer of an estate builds on the edge of a village. They put in all the sewers, roads and infrastructure but beyond the estate are fields that are outside the settlement boundary. Knowing that these fields may be developed on in the future, the developer retains a strip of land between the fields and the estate and the highway. Therefore if the boundary is put back to include the fields which another developer purchases, they will have to negotiate with the original developer who paid for all the infrastructure in the first place.
You can avoid being caught out by checking with Land Registry, if you discover any building plots for sale or land for sale that interests you. Unregistered land does prove to be more complicated. It is essential that ransom strips get discovered before any land is purchased. You can try to negotiate a release if it does go to court, which cases have in the past, then it is generally held that the value of a ransom is one third of the uplift in the value of the land if the ransom is released.
Remember granted planning permission allows you do develop on the land, but it does not mean that you definitely can. Planning permission is worthless if there is a legal or physical complication attached to the land. Realistically if you buy any building plots for sale and discover a complication to the land, even though it may have planning permission, the land is worth only a few thousand pounds in reality. If the ransom is released then it can be developed on and the value will increase greatly. An example of how it works is if the uplift in value is £148,000, the value of the ransom strip will be £49,333.
Sometimes owners of the ransom strips are unknown or it may be a development company that has gone into administration. This is good news but you will still have to take out an indemnity policy, like an insurance in case the owner appears in the future. If the insurers find the owners then the indemnity policy will not be granted. If they feel that they may re-surface, the premium will be higher.
Other forms of ransom are:-
Covenants: Ransoms do not just have to strips of land, sometimes it is in the form of a covenant on the land, which can be just as restrictive. It is often a legal agreement that is tied to the land and not to the owners. Usually it prohibits any land for sale or building plots for sale being developed on, or they ask for a payment in the event of any development.
Easements: An easement can grant another party permanent rights over the land despite the ownership, an example is a right of way. Also a wayleave allows services to run on or under land and is a temporary right, but it is subject to payment. Therefore an easement can be seen as a permanent wayleave.
Therefore it is essential when looking at any building plots for sale or land for sale that the correct checks are taken to ensure that you are completely aware of any of the conditions mentioned above.