Renewed house-building activity has highlighted confusion over the ownership of mineral rights, according to Savills.

When land is sold the transaction does not necessarily include the minerals, leading to separate owners above and below ground explains Jan Trefusis of Savills South West Rural team.

“As land is promoted through the planning system, owners of the mineral rights may try to benefit from the rise in land value. However, claimants often seek a financial settlement without understanding the true strength or weakness of their position. If a relatively modest sum is being demanded, a developer may agree a one off payment to avoid the cost and delays of a legal dispute.”

In other cases where the mineral reserves are commercially viable, the mineral owner should have the opportunity to extract them before surface development takes place. In other situations both parties can work together to promote the development of the land and share the uplift.

The scenario is further complicated because there is no single definition of ‘minerals’ that can be applied across the board – sand may, for example, be classed as a mineral or it may simply be deemed to be a ‘soil of the district’. Much depends on the wording of the original deed and the intention of the original parties when ownership was first separated, however long ago that may be.

If a developer is unable to demonstrate that the underground substances are simply soil not minerals, they may be able to secure an insurance policy to cover any claim against the title; however, these can mean hefty premiums. As an alternative, many developers are negotiating directly with the owners of mineral rights on a ‘ransom strip’ basis.

For more information on historical land rights see the full feature, Know Your Rights, along with further topical advice in the latest edition of Savills rural publication Aspects of Land. To view please go to www.savills.co.uk/promotions/aspects-of-land-summer-2015.aspx