Covid and Brexit travel difficulties have sparked a renaissance in the UK domestic holiday market, and the holiday and home parks sector has boomed in recent years. Nick Dyson, partner, head of commercial real estate and head of the specialist holiday and home parks team at Blacks Solicitors, discusses what it is like working with this sector, and the areas of interest in a parks transaction.

Over the past couple of years we have seen a significant increase in the number of people choosing to go on a staycation, which has caused more individuals to consider investing in the booming UK holiday and home parks sector. This has, of course, led to more park operators and potential investors seeking legal advice.

The growth of parks businesses

Parks across the UK have seen a 65 per cent increase in investment in the past five years, and New Street Consulting Group says the long-term rise in staycations has been one of the major factors behind investment by private equity firms.

This has created opportunities in the sector, and park owners have been working with legal advisers to ensure developments are carried out effectively and correctly to minimise risk and guarantee the continued satisfaction of their occupiers and visitors.

Effective and correct legal advice ensures a successful future for a parks businesses, as there are various different areas of law that can impact the efficacy of an expansion or sale of a parks business.

Property law

The main value of a holiday park is usually the property or land that is being purchased. It is therefore key to check that the title plans match the boundaries on the ground, and the site has the correct planning permission and licence for the current use.

Park operators sometimes, over time, add additional units to the park without securing formal consent. As part of the due diligence in a purchase, enquiries can be raised to address this and to seek to minimise any enforcement difficulties later down the line.

Any third-party providing funding for the purchase of the park should understand the valuation and operating model of how parks work, and the process involved in making a profit. A lack of understanding can lead to confusion or conflict, which can damage relationships between the main purchaser and third-party investor.

Litigation and regulations

It is important to confirm that written licence agreements are in place with the occupiers on site and obtain copies as soon as possible. It is not uncommon for informal arrangements to develop over time, particularly on holiday parks, and the rights and responsibilities of each party should be considered in terms of the transfer of land.

Parks often have site rules in place which complement the licence agreement. A purchaser will want to know what these rules are and whether they have been implemented appropriately and enforced consistently.

As part of the due diligence process, it is important to seek information on previous and existing disputes with occupiers on the site and assess risk for a park operator.

Corporate law

It is important to consider the most effective tax and accounting strategies when it comes to structuring the transaction, and accountants should be involved closely to advise on the advantages and disadvantages of the different structures.

Whilst a share purchase will ordinarily be a more tax efficient method, it will result in providing a larger suite of warranties and a tax indemnity in respect of the company’s tax affairs to the buyer. An asset purchase may be more attractive for buyers who do not want to inherit the liabilities of another entity.

We have found over the transactions we have handled that the most common issue with park businesses is a failure to adhere to the terms of the Site Licence or other applicable permits, consents, regulations or legislations associated with planning. As such, having robust contractual protection in place to avoid these potential liabilities is crucial.

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