Min­imis­ing the risks of deal to buy gar­den build­ing plot

Yorkshire Post - Property - - FRONT PAGE -

with the plan­ning ap­pli­ca­tion to build a prop­erty of your choice and to your own spec­i­fi­ca­tion.

Es­sen­tially there are two ways to pro­ceed:

Firstly a Lock Out Agree­ment. This type of le­gal con­tract “locks” you both into the agreed deal, lock­ing out all other prospec­tive buy­ers, sub­ject to :sat­is­fac­tory ti­tle in­ves­ti­ga­tion; sat­is­fac­tory search re­sults; sat­is­fac­tory replies to en­quires; sat­is­fac­tory plan­ning ap­proval.

A non-re­fund­able de­posit will be payable by you for the ben­e­fit of this type of agree­ment. A timescale will need to be in­serted within the agree­ment, which would be im­me­di­ately re­scinded if the plan­ning ap­pli­ca­tion is re­fused or if the ti­tle and search checks are ad­verse. The de­posit paid would ei­ther be re­tained by the seller or re­funded. The for­mer is the more com­mon sce­nario.

Se­condly, a con­ven­tional con­di­tional Sale Con­tract. The con­tract would be en­tered into af­ter ti­tle check and searches but would be sub­ject to sat­is­fac­tory plan­ning ap­proval.

A ten per cent de­posit is payable on ex­change of the con­tract and it is a mat­ter for both par­ties to agree if the de­posit, or part of it, is to be re­funded if plan­ning is re­fused.

How­ever, be­fore you pro­ceed with ei­ther of the op­tions, it would be pru­dent to make your own in­ves­ti­ga­tions and do the fol­low­ing:

Ar­range a meet­ing with the plan­ning of­fi­cer of the lo­cal au­thor­ity cov­er­ing the area to dis­cuss your pro­pos­als and to as­cer­tain an ini­tial re­ac­tion sub­mit a pre-plan­ning pro­posal. in­ves­ti­gate if the util­ity ser­vices are avail­able and the costs to lay the ser­vices

Ob­tain a copy of the ti­tle to the land to con­sider any re­stric­tive covenants that may pre­vent any de­vel­op­ment – usu­ally these covenants are set out in a Sched­ule and can be eas­ily iden­ti­fied.

Dis­cuss with an Na­tional House Build­ing Coun­cil (NHBC) or Premier Guar­an­tee reg­is­tered builder, the ap­prox­i­mate cost of con­struct­ing the prop­erty and the cost of the build­ing war­ranty

Dis­cuss with a lo­cal es­tate agent the typ­i­cal re­sale value of the prop­erty.

You may find that af­ter mak­ing these el­e­men­tary in­ves­ti­ga­tions the project is ei­ther not pos­si­ble, if re­stric­tive covenants af­fect­ing the land pre­vent de­vel­op­ment, or it is not fi­nan­cially vi­able.

Fur­ther­more, you must be sure you have the avail­able fi­nances to sup­port the project. You may have the cash to buy the land.

How­ever if you need to mort­gage out the project to fi­nance the build it is most im­por­tant you have the ad­vice of a con­veyancer be­fore pro­ceed­ing.

Lend­ing in­sti­tu­tions have strict guide­lines on prop­erty they will fi­nance, es­pe­cially in the cur­rent cli­mate.

The Coun­cil of Mort­gage Lenders – www.cml.org. uk – web­site con­tains use­ful in­for­ma­tion.

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