Discussion
Having started a thread on here a little while ago for house flipping, unfortunately that had to be put on hold due to current situations with business and my health.
However, wanting to keep my options open, I was looking into the possibility of buying land without planning permission, what are the hurdles of purchasing and eventually getting said planning permission?
This only really came up after a friend and I were having a conversation and we both wondered about the pitfalls but didn't know anyone to ask.
Anyone here do this?
However, wanting to keep my options open, I was looking into the possibility of buying land without planning permission, what are the hurdles of purchasing and eventually getting said planning permission?
This only really came up after a friend and I were having a conversation and we both wondered about the pitfalls but didn't know anyone to ask.
Anyone here do this?
TotalControl said:
... what are the hurdles of purchasing and eventually getting said planning permission?
Considerable.Most available land stands no prospect whatsoever of gaining planning permission.
In terms of purchasing the land, probably the biggest pitfall is that any land without PP that stands the remotest chance of gaining premission will also come with some sort of uplift or overage clause on the purchase, so that if you do manage to gain Planning, you'll have to pay a large additional sum of money to the previous owner to reflect the increase in value that you've achieved.
Pitfalls =many
Chances = few
You will be unlikely to find land that has chance of planning without paying full value as if it had planning. As Equus says a landowner would look for an overage.
You could use a conditional contract or an option but you will be paying full value on completion.
Then there is the site due diligence. A long list of investigations to ensure that it’s developable and not financial suicide, these need paying for up front at risk. Then you need to pay designers, planning consultants and the application fee. At the end of all that you have a planning permission.
Then you need to get it built. Go out to tender, negotiate, consider type of construction contract, consider LAD’s.
In short it’s not necessarily a simple process. It’s why lots of developers pay their teams pretty well.
Chances = few
You will be unlikely to find land that has chance of planning without paying full value as if it had planning. As Equus says a landowner would look for an overage.
You could use a conditional contract or an option but you will be paying full value on completion.
Then there is the site due diligence. A long list of investigations to ensure that it’s developable and not financial suicide, these need paying for up front at risk. Then you need to pay designers, planning consultants and the application fee. At the end of all that you have a planning permission.
Then you need to get it built. Go out to tender, negotiate, consider type of construction contract, consider LAD’s.
In short it’s not necessarily a simple process. It’s why lots of developers pay their teams pretty well.
TotalControl said:
Having started a thread on here a little while ago for house flipping, unfortunately that had to be put on hold due to current situations with business and my health.
However, wanting to keep my options open, I was looking into the possibility of buying land without planning permission, what are the hurdles of purchasing and eventually getting said planning permission?
This only really came up after a friend and I were having a conversation and we both wondered about the pitfalls but didn't know anyone to ask.
Anyone here do this?
Most frequent option in south is to buy houses with plots capable of sub division. But these are generally priced accordingly.However, wanting to keep my options open, I was looking into the possibility of buying land without planning permission, what are the hurdles of purchasing and eventually getting said planning permission?
This only really came up after a friend and I were having a conversation and we both wondered about the pitfalls but didn't know anyone to ask.
Anyone here do this?
Me and a mate bought a plot of land about 3 years ago, it had planning for one house and we managed to get it changed and built four. Getting the change of planning wasn’t bad and it went thorough at the first meeting, getting all the conditions ticked off by the apprentice at the planning department took another year which was a real pain. The red tape and hoop jumping isn’t for me so I doubt I’d do it again, it just takes too long, I can flip a house (or two) in six months with no hassle. To make a go of it you need multiple sites at various stages of readiness, it’s just too frustrating waiting on one.
Little Lofty said:
Getting the change of planning wasn’t bad and it went thorough at the first meeting, getting all the conditions ticked off by the apprentice at the planning department took another year which was a real pain.
Are you aware that there's a process of 'deemed discharge' for planning conditions, if the LPA is unresponsive?Equus said:
Little Lofty said:
Getting the change of planning wasn’t bad and it went thorough at the first meeting, getting all the conditions ticked off by the apprentice at the planning department took another year which was a real pain.
Are you aware that there's a process of 'deemed discharge' for planning conditions, if the LPA is unresponsive?A friend of mine does this for a living.
He buys large houses, often with large gardens / land attached and out buildings, and subsequently carves into plots, gets planning and sells on.
One example he bought for £1.1 million, sold the main house in weeks for £900k, and then netted a further £1m over the next 12 months.
The second example, he has been in legal ranglings with the planners for 2 years and will be lucky to walk away from the deal at break even, but looks like he might actually be down £250k.
It is a very long game, and it's amazing how quickly fees and finance costs can eat up profits, expect to get rejected at least twice.
He now does it on a consultancy bases, maximising value for existing owners rather than risking his own money.
He buys large houses, often with large gardens / land attached and out buildings, and subsequently carves into plots, gets planning and sells on.
One example he bought for £1.1 million, sold the main house in weeks for £900k, and then netted a further £1m over the next 12 months.
The second example, he has been in legal ranglings with the planners for 2 years and will be lucky to walk away from the deal at break even, but looks like he might actually be down £250k.
It is a very long game, and it's amazing how quickly fees and finance costs can eat up profits, expect to get rejected at least twice.
He now does it on a consultancy bases, maximising value for existing owners rather than risking his own money.
[quote=blueg33
You will be unlikely to find land that has chance of planning without paying full value as if it had planning. As Equus says a landowner would look for an overage. .
[/quote]
I struggle to get my head round how this can even be “ a thing” on any thing else once you have sold the item thats it , its no longer yours but with land you can have a piece of a pie you have sold!
You will be unlikely to find land that has chance of planning without paying full value as if it had planning. As Equus says a landowner would look for an overage. .
[/quote]
I struggle to get my head round how this can even be “ a thing” on any thing else once you have sold the item thats it , its no longer yours but with land you can have a piece of a pie you have sold!
bimsb6 said:
I struggle to get my head round how this can even be “ a thing” on any thing else once you have sold the item thats it , its no longer yours but with land you can have a piece of a pie you have sold!
Yep, it stinks, to be honest - you're letting someone else make all the effort and take all the financial risk, but then expecting a slice of the profit. It's like selling a barn find classic, but then expecting a cut of the profit when it's sold after restoration.
It's standard practice in the world of land buying, unfortunately.
Equus said:
bimsb6 said:
I struggle to get my head round how this can even be “ a thing” on any thing else once you have sold the item thats it , its no longer yours but with land you can have a piece of a pie you have sold!
Yep, it stinks, to be honest - you're letting someone else make all the effort and take all the financial risk, but then expecting a slice of the profit. It's like selling a barn find classic, but then expecting a cut of the profit when it's sold after restoration.
It's standard practice in the world of land buying, unfortunately.
I would suggest this is the best and lowest risk option for both parties.
Wilmslowboy said:
Equus said:
bimsb6 said:
I struggle to get my head round how this can even be “ a thing” on any thing else once you have sold the item thats it , its no longer yours but with land you can have a piece of a pie you have sold!
Yep, it stinks, to be honest - you're letting someone else make all the effort and take all the financial risk, but then expecting a slice of the profit. It's like selling a barn find classic, but then expecting a cut of the profit when it's sold after restoration.
It's standard practice in the world of land buying, unfortunately.
I would suggest this is the best and lowest risk option for both parties.
bimsb6 said:
Wilmslowboy said:
Equus said:
bimsb6 said:
I struggle to get my head round how this can even be “ a thing” on any thing else once you have sold the item thats it , its no longer yours but with land you can have a piece of a pie you have sold!
Yep, it stinks, to be honest - you're letting someone else make all the effort and take all the financial risk, but then expecting a slice of the profit. It's like selling a barn find classic, but then expecting a cut of the profit when it's sold after restoration.
It's standard practice in the world of land buying, unfortunately.
I would suggest this is the best and lowest risk option for both parties.
Wilmslowboy said:
Equus said:
bimsb6 said:
I struggle to get my head round how this can even be “ a thing” on any thing else once you have sold the item thats it , its no longer yours but with land you can have a piece of a pie you have sold!
Yep, it stinks, to be honest - you're letting someone else make all the effort and take all the financial risk, but then expecting a slice of the profit. It's like selling a barn find classic, but then expecting a cut of the profit when it's sold after restoration.
It's standard practice in the world of land buying, unfortunately.
I would suggest this is the best and lowest risk option for both parties.
PositronicRay said:
bimsb6 said:
Wilmslowboy said:
Equus said:
bimsb6 said:
I struggle to get my head round how this can even be “ a thing” on any thing else once you have sold the item thats it , its no longer yours but with land you can have a piece of a pie you have sold!
Yep, it stinks, to be honest - you're letting someone else make all the effort and take all the financial risk, but then expecting a slice of the profit. It's like selling a barn find classic, but then expecting a cut of the profit when it's sold after restoration.
It's standard practice in the world of land buying, unfortunately.
I would suggest this is the best and lowest risk option for both parties.
They are full of pitfalls though, I have seen so many worded in a way that shafts the naive developer and solicitors will miss the points unless they are experienced in development agreements.
One nhs site I rejected had an overage that said you pay 33% of uplift in value on each disposition. It was a site for 20 apartments, the clause meant you paid the uplift on the sale of each apartment every time it’s sold for the next 25 years.
Others make you pay overage on grant of planning - but obviously at that point you haven’t realised the extra income.
But, overage allows a land owner without capital to get some benefit from development.
A conditional contract or an option are better routes for seller and buyer. A JV can be good too as it can ease developer cash flow. Having cash in land without consent isn’t all that clever if you are developing for a living.
Edited by blueg33 on Sunday 25th October 13:08
TotalControl said:
So just for arguements sake, if one was to buy land and then just sell on that land to a developer, would that mean that the previous seller gets anything or would it be between the developer and the current owner of said land?
Usually conditional for 20 years or whatever from first sale. So in your example at any point from the initial sale the first seller would get a percentage of the uplift. Depending how it's worded could either be with regards to building/planning, or could simply be whenever it was sold. If you (the first buyer) then sold onwards even without doing anything you'd have to give some of your profits back.
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