Homebuilding & Renovating
Buying land without planning permission
IPART NINE: BUYING LAND WITHOUT PLANNING PERMISSION: THE PLOT-BUYING PROCESS EXPLAINED
Could buying land without planning be a route to an affordable plot? Mark Stevenson advises on the steps you need to take to ensure you don’t pay a premium for land that can’t be developed!
After spending months trawling the internet, poring over plotfinder.net and peering over hedges to find a plot, you’d be forgiven for expecting the process of buying it to be relatively easy — but you would, of course, be wrong; the journey to prove you’ve found the perfect site for your dream home is only just beginning!
Buying land isn’t the same as buying a house, where you can easily value what you’re getting and instruct solicitors to get the deal done. When it comes to buying building land, the risks are greater and you must be certain planning permission will be granted for what you want to build. Aside from this small matter, there are also construction costs to consider, not to mention the need to make sure you’re not paying too much for the plot.
The chances of something going wrong when buying a building plot can be quite high, and therefore the land-buying process must deal with the associated risks before they become painful realities. This article sets out 10 key stages to follow when buying a building plot. Adhering to them should make sure you don’t get landed with an expensive dud or a parade of unwelcome surprises.
This guide is based on the assumption that the plot you’re looking at doesn’t come with planning consent. If planning consent is in place then a lot of things will be simpler, but there are a couple of wrinkles that you’ll need to be aware of, and there are a few things you’ll need to do differently, which we are covered in the box overleaf. For all those looking to buy without consent, read on…
1 ESTABLISH THE BUILD BUDGET
The purpose of buying a plot is to build a home. Therefore you’ve got to have enough money left over to see the project through to completion. Be honest with yourself about your budget and how far it will stretch, or you risk overcommitting by paying too much for the plot and not leaving enough to complete the build. To make sure your budget is reliable, it’s a good idea to have your plan reviewed by a specialist self-build mortgage broker.
2 APPRAISE THE PLOT – SENSE CHECK THE POTENTIAL
Before going any further, its worth sitting back and thinking about whether the plot you’ve found really is right for you. Will it support what you want to build? Can you afford to take on the whole project? Are you paying the right price for the land? Are there potential challenges which could have potential to increase the build cost and blow your budget — challenging terrain, for instance? Try to take an objective view. If you find something that can’t be overcome, now’s the time to back out. If you want to know more about plot appraisal, I’ll be covering this in detail next month.
3 IDENTIFY YOUR PROFESSIONAL TEAM
Most self-builders have never built before and will therefore need a range of professionals to help them with their project. The amount of help you’ll need will also depend on how complicated the development is. Complex architectural designs will require construction experts, and challenging plots will need engineers and surveyors to overcome the problems they’ll have. Last month, I explained who you’ll need and why, so here I’ll limit myself to observing that professionals cost money, and the more of them you need, the bigger the bill is going to be! You must therefore work out who’ll you need on your team as early as possible and make sure your budget reflects the cost involved.
4 PROVE THE PLANNING POTENTIAL
A plot’s not a plot unless you can get permission to build. You therefore need to be sure that planning isn’t an issue before going any further. Plots without planning consent are risky and must be professionally appraised by a planning consultant to make sure approval can be secured. Depending upon how sensitive a plot is from a planning point of view, it may be worth having a pre-application meeting with the local planning authority (LPA) to see what their thoughts are. It’s a good idea to prepare for this by pulling together a few plans and working out what your proposal might look like. The idea here is simply to go armed and provoke an opinion from the planning officer. Don’t get ahead of yourself. You’re dealing in possibilities rather than firm plans.
At this stage there’s no certainty you’ll get planning permission, so it’s best to keep expenses to a minimum. My advise is to try and to source a suitable existing design rather than commissioning something bespoke. The design doesn’t have to be perfect, just enough to offer a flavour and provoke an opinion. It’s worth noting that the opinion from the planning officer isn’t binding, so while a pre-app might give you a good steer, it’s not reliable enough to justify purchasing the plot at this stage.
5 WORK OUT THE PLOT VALUE
Once you’ve confirmed a plot is developable and what is likely to be approved by the planning department, you can work out how much it is worth. In simple terms, plot valuations are calculated by establishing the end value of the finished property and then subtracting the cost of development, including planning fees, build and design
costs, and the price paid for the plot in the first instance. You’ll often find that estate agents want to put a value on a plot much earlier to attract buyers, saying it’s worth what someone’s prepared to pay for it. In a sense, that’s right, but from your point of view ‘what your prepared to pay’ should be informed by a calculation of its worth based on proper investigations and valuations. I’ll be explaining how to value a plot in more detail later in this series, so stay tuned.
6 NEGOTIATE AND SECURE AN OPTION TO PURCHASE
Once you’ve established a plot value that both parties are happy with and made certain the opportunity is right for you, the next step is to secure your right to buy it by putting an option to purchase in place. An ‘option’ in this sense is a legal agreement between you and the landowner that gives you the exclusive right to buy the plot at an agreed price within a defined period of time. To be legally binding an option should have a monetary value, and needs drawn up by solicitors to make sure that all requirements are in place.
The benefit of having an option is that it protects your investment by, for example, stopping the landowner selling the land in question to a third party once you’ve increased its value by obtaining planning consent. Options are useful because they provide lots of wriggle room; if you can’t get planning permission or simply change your mind, you’re not obliged to continue with the purchase. While the solicitors are putting the option agreement in place, it’s a good idea to have them check for any legal impediments that could affect the sale. For example, you need to be certain that you’ll have unobstructed right of access and that there aren’t any restrictive covenants that could prevent development or adversely affect the plot’s value.
7 INSTRUCT YOUR PROFESSIONAL TEAM
Once your option is in place, you’re safe to spend whatever fees are necessary to develop a detailed design and secure planning consent. Don’t throw caution to the wind though. Remember that if the application fails you’ll still have to pay the fees, so make sure they’re affordable.
8 PREPARE THE PLANNING SUBMISSION
While your planning application will be prepared by a team of professionals, there’s no time for you to sit back and relax. To do their job, that team will need a design brief. Involve yourself in the design process to make sure a proposal is produced that meets your requirements. A key concern is to keep your budget at the forefront of the process so that you end up with a proposed design you can afford to build.
The planning application will need to be supported by a host of surveys and reports depending upon the plot’s sensitives and constraints.your planning consultant will be able to recommend the professionals needed to do this. Take their advice to give your project the best chance of success.
9 SECURE PLANNING PERMISSION
Once you’ve signed off the design, your planning application can be prepared and submitted to your local authority. (Find out more in guide to planning on page 114.) Strictly speaking, approval should be issued within eight weeks as long as the application is straightforward.this time only starts ticking from when the LPA accepts receipt of the application, so keep an eye out for
My advice is to take things one stage at a time so you don’t end up paying a premium for a piece of land that has no chance of being developed. You’ve been warned!
that. Theory notwithstanding, you should consider three months a good turnaround. More often than not, the planning departments are under-resourced and as a result the process can be a little bumpy. Planning officers may well request extensions of time to give themselves longer to consider the application.
Securing planning consent usually involves some careful negotiations. Amendments to your proposal may well be required to show that you have taken on board the planning officers’ comments. My advice is to be receptive. Don’t dig your heels in as you’ll be running the risk of provoking a refusal.
Hopefully, by the end of the process, approval will be granted and you’ll be able to breathe a satisfied sigh. However, if it’s refused don’t panic. Read the refusal notice and learn why the application was turned down. Look for grounds to appeal and if you have them appeal to the secretary of state within six months of the refusal notice.
10 COMPLETE THE PLOT PURCHASE
The time from identifying a plot through to securing planning permission and buying it can be anything from nine to 18 months. Obviously, you can accelerate things by cutting corners, but I’d advise against doing so, as it will significantly increase your risks. My advice is to take things one stage at a time so you don’t end up paying a premium for a piece of land that has no chance of being developed.you’ve been warned!
If and when permission is granted, give yourself a moment to celebrate.you can now commence the purchase of the plot! Sadly there is no rest for the wicked — especially if they’ve just bought property. The moment you become the owner, you’ll be liable for anything that happens on the plot. You should therefore prepare for the first day of ownership by making arrangements for insurances and securing the site boundaries.