Hello and help

[Sjk]

 

I have an offer accepted on a plot, subject to planning permission. 

 

To complete the purchase of the land I need finance along with my deposit. The broker I have spoken to said I need planning permission and detailed costings before they will lend against it (standard I assume). Does this need to be by a qualified person? 

 

There seems to be a bit of a circle here, I have a budget which I need to stick to, so I need to get the planning through with a design I think will be on budget, then get it costed and hope it comes out on budget.

 

I then have to hope the mortgage company will accept the expected build cost. 

 

There feels like there are so many hurdles (probably more that I don't know about) which could trip up the whole process. 

 

I really don't want to be in a situation where I've got planning permission, paid all the costs, then for something to mean I can't  complete the transaction. 

 

The contract says I have to complete within 7 days of gaining planning permission. 

 

Surely there is an easy way to do this and I'm over thinking it? It's stressing me out a little, so any help will be much appreciated.  

 

Sadly I don't quite have enough to buy the land outright.

[Stones]

How short are you, a few thousand, tens of thousands, hundreds of thousands?

 

It may well be simpler to look at other finance, depending on the answer to the question above - Short term (1 to 3 years) unsecured loan, increase mortgage on current property, private banking etc

[Ferdinand]

Welcome to the adventure!

 

Where are you - law and planning policy varies hugely but geography and land designation.

 

Yes there are all those barriers, and yes it is difficult and complex. Others will come up with ways and means, but can I be Murphy sounding a warning bell about rushing.

 

Yes you may be able to do a self-build mortgage with the land as part or full deposit, but it will require a specialist provider. There are threads on here with links or search online for self-build mortgages, or in magazines or weekend newspapers. THat way you get a rain check on what your broker says and the experience to begin developing a 'knower', which will help you 'know' whether you are being played or not.

 

I think the biggest hole in your setup is that requiring completion 7 days after PP is RIDICULOUS. It will take perhaps 10 times that amount of time to arrange a mortgage, never mind the 6-8 weeks a rapid solicitor will require to get things ready to exchange, never mind complete, on the purchase. DO they have a right to pull out if you fail to complete in 7 days? Can you do all that in advance.

 

In my view you probably want an agreement that will give you 6 months to complete after getting PP and perhaps let out clauses in the purchase agreement too. In a just world you would also want some of your Expenditure back if he sells to someone else, since you will be increasing the value of the land for him.

 

There are people here who will tell how long it actually took in their case. To my jaundiced eye that agreement for 7 days might say they saw you coming, and are setting you up to fail, and save themselves the cost and hassle of PP - since once PP is granted everyone can use it on that plot. 

 

(If I am wrong on the above I will be delighted.)

 

GIven this, I think you need to review the agreement, and also make damn sure there is nothing else that will let the seller renege after you have PP or exploit your hard work and sunk costs.

 

e.g. Is there anything that says that they have a right to use reports you have done. in standard contracts with e.g. a ground testing company you may have to pay several hundred £££ to reassign a report to your seller, and if you have agreed to do that and they pull out or it falls through, then you could be a couple of thousand down as well as gifting them PP on their plot.

 

My strong suggestion is, if you have not done, is to pay somebody to audit all the arrangements you have in place, or call in a favour.

 

You will need either a Specialist Solicitor from the property dept of a local / regional firm of solicitors, or some like a member of the RICS from a local independent estate agent who has oodles of experience (I call them HOGS - Hoary Old Gits). You perhaps want the well-lunched one from the back office with the greying hair and the cynical coffee mug. £250 to save £25000 or £250000.

 

Do not be scared off, but please take care and perhaps read a book or two on plot buying if you have not.

 

Ferdinand

Edited July 23, 2017 by Ferdinand

[Triassic]

I agree with Ferdinand, 7 days after planning permission is granted is way too short. The only way you could complete within seven days is if you have cash and have done all your due diligence beforehand.

 

edit . Just a thought, you need an exclusivity clause, otherwise what's to stop the seller selling to someone else, after all the plot would be worth more to someone else after planning permission is in place.

 

 

Edited July 23, 2017 by Triassic

[Sjk]

Thanks all,

 

I'm £65k short on the land, I could sell my car for £15k meaning I have £50k to find. 

 

Thanks for the heads up, I'll have another look at the contract and go from there. If they are not willing to be reasonable then I may as well pull out now. 

 

I'd hope they would be pretty reasonable as it's the local council. The area is hampshire. 

Edited July 23, 2017 by Sjk
To add

[Jeremy Harris]

Worth bearing in mind that a plot without planning permission is worth perhaps 5% to 10% of the value of a plot with planning permission.  If someone is trying to sell a plot without planning permission you have to ask the very big question, "WHY?".

 

Anyone with sense will get planning permission before selling a plot, even if only outline, because of the massive uplift in value that it gives.  A plot without planning permission would be valued on the basis of possible use, but could be as low as agricultural land value (roughly £4k per acre) up to maybe ten times that for use a garden or paddock for horses (for some reason equestrian use land seems to attract way over agricultural land prices).

 

The value uplift from gaining planning permission creates a significant risk if looking to buy a bit of land with a conditional contract, as the contract needs to be bolted down very tightly to ensure that only you, as the person getting planning permission, can buy the land at the agreed price.

[Sjk]

Due to location and the existing structure, as well the history of the plot, planning is pretty much a certainty. 

 

So the price agreed isn't that far off what it would be with planning. So the uplift wouldn't be huge. 

[Jeremy Harris]

Planning is rarely a certainty, I'm afraid, and if it is, then the question is still the same, why hasn't the seller got PP?  There has to be a very good reason for a seller to not bother to get PP before offering a building plot for sale, and that says to me that there is a risk there somewhere, even if it's not obvious.

 

If it's not an obvious planning permission risk, then it may well be something else, like the provision of services to the site, or something adverse that impacts what may be built there (underground cables, pipes, pipelines etc, even if only nearby).  I've never once heard of a bit of land being sold as a potential building plot, at a price that is roughly the same as a building plot with PP, without there being a gotcha in there somewhere. 

[Ferdinand]

if the seller is the Council,then I am left wpondering why they would do the 7 day thing,

 

As such, they know the law and how long things take. Perhaps they are trying to force a cash sale.

 

FOI them for the full planning history, including requesting details of any crossing services etc, and go and read the complete planning file.

 

Hmmm.

Edited July 23, 2017 by Ferdinand

[Sjk]

I've got plans which show where the services are, they are all within a few meters of the plot. So fingers crossed it wouldn't be too expensive although I'm ready to be shocked! 

 

The seller knows I need finance etc. 

 

Although it is a risk, I don't think the council are out to screw me in this way. They have sold off a few similar plots recently. 

[Triassic]

Why not ask them to sell at the local market value for land without PP, you could suggest a claw back clause for the difference between the current value and the value with PP, to be triggered when you come to sell. This could by years, decades down the line, but the council get their money, eventually. 

Edited July 23, 2017 by Triassic

[Jeremy Harris]

18 minutes ago, Sjk said:

I've got plans which show where the services are, they are all within a few meters of the plot. So fingers crossed it wouldn't be too expensive although I'm ready to be shocked! 

 

The seller knows I need finance etc. 

 

Although it is a risk, I don't think the council are out to screw me in this way. They have sold off a few similar plots recently. 

 

There's a water main and a main sewer within 30 metres of our plot.  I couldn't connect to either of them, because of EA rules.  The cost of getting water from another main 140 away was going to be around £24k and the cost of getting a pumped sewerage solution and connection to another sewer around 100m away was going to be around £18k all in, so just getting mains water and sewerage would have been around £42k.  There was no indication at all of these problems on the plans or the particulars of sale; had I not made full and detailed enquiries before purchase I could have been in for a nasty surprise.  As it happened, we negotiated the plot price down by a lot (around 1/3rd) to cover the additional costs that building on it would incur.

Edited July 23, 2017 by JSHarris

[Sjk]

Do you have a rural plot? This is almost city centre with houses a couple of feet to the left, right and across the road. 

 

I guess I need to do some more research. 

 

I assume you looked at alternatives?

Edited July 23, 2017 by Sjk

[Jeremy Harris]

5 minutes ago, Sjk said:

Do you have a rural plot? This is almost city centre with houses a couple of feet to the left, right and across the road. 

 

I guess I need to do some more research. 

 

I assume you looked at alternatives?

 

It's in the middle of a village, with houses behind, to the side and opposite.  We ended up drilling a borehole for water and fitting a treatment plant for sewage, that we managed to get consent for to discharge to the stream across the lane.  We had power and phone at the edge of the plot.  Power cost around £3.5k, phone around £300, the sewage treatment plant and installation was around £4k and the borehole and associated water treatment plant was around £10k.

[Ferdinand]

2 hours ago, Sjk said:

I've got plans which show where the services are, they are all within a few meters of the plot. So fingers crossed it wouldn't be too expensive although I'm ready to be shocked! 

 

The seller knows I need finance etc. 

 

Although it is a risk, I don't think the council are out to screw me in this way. They have sold off a few similar plots recently. 

 

@SjkIt was more services going elsewhere through your plot that I was warning about.

 

There's a member here with a major oil pipeline going through .. but this is more stuff they might not have told you about such as sewers and electricity going to other people. Councils sometime have form here. That is about mitigating risk as far as you can before sinking money into a potential hole of indeterminate size.

 

If they aren't out to screw you then they will relax the 7 days if asked when you have provided a reasoned justification. GIving you 4-6 months should be quicker than marching all the way back down the hill and up again.

 

If they have sold off other similar plots then I would also consider going and knocking on a few doors and having a few candid but cautious conversations about the Council's approach. If there are people still in residence who bought the plots they will enjoy telling you how well they did or may take a grim satisfaction in telling their war stories. You may need to be circumspect about the particular plot, but it should be possible to find some things out.

 

IF you find your local property professional and pay them for some advice they may well know some background; if the Council are acting aggressively the property grapevine will know - another reason for finding a HOG with deep local roots.

 

That is also about identifying unknown unknowns.

 

 

Edited July 23, 2017 by Ferdinand

[MikeSharp01]

Welcome.

 

The project will cost you around 1.3-1.5k per square meter for a straight forward build more complex = more coSt.  If you do loads yourself then you might get it down a few hundred per meter. Architects can be expensive but can offer value for money in planning terms when things get tricky. 

[Sjk]

Thanks again all. 

 

A major oil pipe, Jesus!

 

Has anyone used the Build It estimating service? Maybe it's better to just use a quantity surveyor. 

[Jeremy Harris]

15 minutes ago, Sjk said:

Thanks again all. 

 

A major oil pipe, Jesus!

 

Has anyone used the Build It estimating service? Maybe it's better to just use a quantity surveyor. 

 

Members here have had to deal with all sorts, from a major oil pipeline with a wide "no build zone" either side, to buried HV cables that have similar restrictions.  A very big problem is that plans for things like this, and services, are often very wildly inaccurate, so if there is even a hint that there may be a pipe or cable near the plot it is very wise to check exactly where it is. 

 

As an example, have a read of this post, which is far from untypical when it comes to the accuracy of plans:

 

Edited July 23, 2017 by JSHarris

[ToughButterCup]

5 hours ago, Sjk said:

[...] planning is pretty much a certainty. 

 

But not fact. 

I smell inappropriate pressure being put on you. Or perhaps understandable urgency on your part. Or both.

 

I got planning permission, the guy 25 meters away from me didn't. To all intents and purposes we're on the same plot (almost) . The difference? A simple, very humble farm track. If I were not to point it out to you, you'd miss it. Rejected at all levels, right up to Appeal.

There is some very hard-won advice earlier in this thread from people whose judgement I have come to respect and trust . 

 

7 day completion really is nonsense.

[Ferdinand]

On the pipeline, it is not that it was there, it was that the documentation said it was in the wrong place. They believed it was a known known where it was actually a known unknown.

 

Our member @AliMcLeod came off alright when the pipeline wasn't where the plans said it was, but the neighbour had to move the corner of his house inwards by nearly 4m.

 

I do not know how the neighbour identified and managed the risk of the pipeline plan being wrong, but he should have had a clause in the purchase contract for a holdover or a chargeback based on the lost value if the pipe was not as believed, or could alternatively have sat on his hands until the constraint had been properly identified by a survey. 

 

The most important thing I ever say on here (apart from about HOGs and construction cocktails, to which I need to add a Harvey Wallbanger to drink when a wall collapses), is the Risk vs Money vs Time tradeoff. 

 

When you choose not to spend adequate time now, you choose to spend more money later.

 

Your job is to find all potential risks to your build, and eventually get to the point where you are confident that the money you are offering is an appropriate number vs the initial price given the risks you have identified, and your strategies that will manage those risks and the related cost. It is a very old principle that a risk or elephant trap not identified until one further stage in the project will cost perhaps an order of magnitude more money to fix.

 

eg Has the existing building got asbestos? Is there a neighbour dispute, a covenant or a ransom strip? Do you have the right to drive out onto the road? What is past use and is the ground full of contamination (b****y expensive)? Are there trees with TPOs that will add 15k to your build costs? Are there birds, bees, bats or brown bears in the trees that will stop you removing some first? Are there any substations around - where do the wires go?

 

You need to decide how much money and time you will spend on identifying risks, and eventually - just like those 10 word slogan competitions, use your skill and judgement to make your decision.

 

You cannot negotiate the price wrt to something that you do not find until later.

 

There was one on Homes Under the Hammer recently where some romantic people bought a site of a set of former Council Garages, and after purchase found about a dozen electricity supplies crossing where they wanted to build a house. Pricey to move - like 10k+ . 

 

Tip: as well as FOI-ing the entire planning file, also FOI any material talking about the potential sale. Who knows, a Planner may have warned to Head of Assets that PP was unlikely (or likely) on the record.

 

F

 

Edited July 23, 2017 by Ferdinand

[Triassic]

1 hour ago, Sjk said:

 

 

Has anyone used the Build It estimating service? Maybe it's better to just use a quantity surveyor. 

I used an online QS. The output was very comprehensive.

[Ferdinand]

The pipeline maps from the linked post.

 

What the official drawing on the Approved Plans said:

 

Where it actually turned out to be:

 

Caveat Aedifex :-)

 

They basically lost 8-12 ft off one side of a tight plot.

 

(That's me done on this topic ... things to do).

Edited July 23, 2017 by Ferdinand

[Jeremy Harris]

On a much smaller scale, we were assured by all the utility companies that there was nothing at all under the lane in front of our house, in writing, as a part of the mandatory checking your have to do before digging across a highway.  The water company even came out on site, twice, to check, when we were arguing the toss with them about a connection and assured me there was no pipe under the lane at all, and that the nearest pipe on our side of the stream was 140m away.

 

We needed to dig across the lane to put a drain in, and what did our digger chap find running down the middle of the road?  A water pipe.  A bit of checking showed it was the supply to the cottage over the road, and ran to a nearly-new stopcock that the same water company that said there was no pipe in the road had installed a couple of years earlier.  When they were then questioned about it, they said we couldn't connect to it as it wasn't a water main, but a communication pipe.  I asked how they knew this, when they didn't even know the pipe was there, and, after a bit of digging around their local engineer told me that they had deliberately decided to call it that to try and extract £24k from me to run a new pipe up the road.  The existing cast iron pipe had been laid back in 1934 and needed urgent replacement, and they were trying to get us to pay for it.............

 

Bear in mind that we found this unknown water pipe during construction, and I'd spent several months double checking the location of everything before we bought the plot, even getting a survey done with a CAT to locate another unknown major power cable across the plot and factor in getting that moved as a part fo the work.  There is no such thing as too much checking of details before purchase, and really no substitute for carefully walking all over the plot, ideally with a surveying tape, and noting down where there are any indications at all of drains, cables, pipes etc.  Often there will be indications on the site that don't match the plans, and it's also very common for there to be errors in the actual position of boundaries, relative to where they appear on plans.  I'd go so far as to say that the majority of site plans that haven't been derived from a proper survey will be in error, often by several metres.

Edited July 23, 2017 by JSHarris