Financing Land Purchase
Discussion
Hi,
Looking to purchase a plot of land, is there anyway to finance this in the same fashion as a mortgage. The land is not going to be used to build on, well, not initially anyway.
Obviously the land itself has value but my understanding is that you cannot finance land as an asset in the same fashion as a mortgage.
Thanks
Looking to purchase a plot of land, is there anyway to finance this in the same fashion as a mortgage. The land is not going to be used to build on, well, not initially anyway.
Obviously the land itself has value but my understanding is that you cannot finance land as an asset in the same fashion as a mortgage.
Thanks
Yes its quite simply an acre of grass land. Not extremely expensive but house purchase at the moment is taking up free cash. I don't intend to get planning permission for anything at this stage. Thinking of getting a couple of Shetland ponies....not for me.
Don't want to take out a 10-15 percent loan over 4 years to cover it if I am honest. Wondering if there is a similar option to a mortgage for it.
Don't want to take out a 10-15 percent loan over 4 years to cover it if I am honest. Wondering if there is a similar option to a mortgage for it.
It has largely been left to Self Invested Personal Pension (SIPP) providers to interpret the law on the type of products that can be included in a SIPP, and there has been some controversy about the interpretation of the rules, about what can, or can't be included within a SIPP. Over the past couple of years, and following my post about SIPP the other day here, SIPP providers are now a lot more stringent about what goes into them.
I don't even know if a SIPP is suitable or applies, but in principle, land may be placed into it - conditions apply and you have to pay your SIPP back, with the net result that your piece of land becomes the property, not of you, but your pension. Over the years, Zoos, a football stadium and an old airfield as well as agricultural land, stables, access routes to a quarry etc - all have been included within a SIPP and all generate income.
One SIPP provider I heard about recently wouldn't authorise the purchase of some woodland until it geerated an income. The new owner proposed simply collecting and selling firewoood - problem solved. To be honest, you'd have to find an adviser who would sit down with you and tell you who may or may not be able to help you - or do it yourself of course.
If your land does subsequently get planning permission, it can increase in value quite significantly. However, you couldn’t start building residential property on it as long as it remained an asset of your SIPP. The danger then of course, is that if the land increases in value too much, your lifetime allowance could well go pop and leave you with a hefty charge.
Another significant risk is the lack of diversification within your portfolio. I like a bit of property within some clients portfolios, especially at the moment, but if your home and/or business is also your pension, you're exposed to failure. It's just one possible option of course, and it may or may not be suitable for you, and there are risks - but take an informed opinion and seek authorised and regulated advice from someone you trust.
I don't even know if a SIPP is suitable or applies, but in principle, land may be placed into it - conditions apply and you have to pay your SIPP back, with the net result that your piece of land becomes the property, not of you, but your pension. Over the years, Zoos, a football stadium and an old airfield as well as agricultural land, stables, access routes to a quarry etc - all have been included within a SIPP and all generate income.
One SIPP provider I heard about recently wouldn't authorise the purchase of some woodland until it geerated an income. The new owner proposed simply collecting and selling firewoood - problem solved. To be honest, you'd have to find an adviser who would sit down with you and tell you who may or may not be able to help you - or do it yourself of course.
If your land does subsequently get planning permission, it can increase in value quite significantly. However, you couldn’t start building residential property on it as long as it remained an asset of your SIPP. The danger then of course, is that if the land increases in value too much, your lifetime allowance could well go pop and leave you with a hefty charge.
Another significant risk is the lack of diversification within your portfolio. I like a bit of property within some clients portfolios, especially at the moment, but if your home and/or business is also your pension, you're exposed to failure. It's just one possible option of course, and it may or may not be suitable for you, and there are risks - but take an informed opinion and seek authorised and regulated advice from someone you trust.
z4RRSchris99 said:
yes he's suggesting pension release
you won't get finance secured on a non income producing bit of land.
remortgage your house?
Ok - not really an option for me as my pension scheme does not allow such releases.you won't get finance secured on a non income producing bit of land.
remortgage your house?
I will have to wait a few months to accumulate the funds.
Ta
yammyfan said:
Ok - not really an option for me as my pension scheme does not allow such releases.
I will have to wait a few months to accumulate the funds.
Ta
Yammy,I will have to wait a few months to accumulate the funds.
Ta
Apologies, I missed your question.
I was just suggesting a possible option, that's all. In terms of income production, as mentioned, I heard of one trustee who suggested that the new land owner collect firewood and sell it, bingo - income stream! Just an example of.. 'creative thinking' - not suggesting I'd be too happy with it mind.
It isn't pension 'release' as such - far from it. From a suitable pension (SIPP etc), it's simply another authorised investment.. just as you might also invest in XYZ fund. It still has to pass muster from the trustees though, to determine suitability and not all SIPPs would engage with the idea.
Ginge R said:
Yammy,
Apologies, I missed your question.
I was just suggesting a possible option, that's all. In terms of income production, as mentioned, I heard of one trustee who suggested that the new land owner collect firewood and sell it, bingo - income stream! Just an example of.. 'creative thinking' - not suggesting I'd be too happy with it mind.
It isn't pension 'release' as such - far from it. From a suitable pension (SIPP etc), it's simply another authorised investment.. just as you might also invest in XYZ fund. It still has to pass muster from the trustees though, to determine suitability and not all SIPPs would engage with the idea.
Thanks for that. I will speak to one of the consultants at work about it and see what they say..Apologies, I missed your question.
I was just suggesting a possible option, that's all. In terms of income production, as mentioned, I heard of one trustee who suggested that the new land owner collect firewood and sell it, bingo - income stream! Just an example of.. 'creative thinking' - not suggesting I'd be too happy with it mind.
It isn't pension 'release' as such - far from it. From a suitable pension (SIPP etc), it's simply another authorised investment.. just as you might also invest in XYZ fund. It still has to pass muster from the trustees though, to determine suitability and not all SIPPs would engage with the idea.
Gassing Station | Finance | Top of Page | What's New | My Stuff