Buying land

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Discussion

TotalControl

Original Poster:

7,751 posts

158 months

Saturday 24th October
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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?

Equus

9,700 posts

61 months

Saturday 24th October
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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.


Escort3500

7,248 posts

105 months

Saturday 24th October
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If you have no experience of how to obtain pp, get advice from a planning consultant.

Equus on here is one; there may be others.

ETA you just beat me to it biggrin

bristolbaron

2,509 posts

172 months

Saturday 24th October
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/endthread


guindilias

4,280 posts

80 months

Saturday 24th October
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Blueg33 I think as well, has been known to buy a small paddock and build a caravan/mobile home on it. Never over £10k, has horses, builds and leaves. Likewise Equus - he doesn't even have a house, he lives in a tent near Glastonbury and practices from there by mind control.

blueg33

24,786 posts

184 months

Sunday 25th October
quotequote all
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.

bennno

6,698 posts

229 months

Sunday 25th October
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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.

Little Lofty

2,431 posts

111 months

Sunday 25th October
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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.

Equus

9,700 posts

61 months

Sunday 25th October
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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?

Little Lofty

2,431 posts

111 months

Sunday 25th October
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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?
My mate dealt with 90% of it, but by all accounts it was like talking to a brick wall, he made multiple complaints and all he got was ‘we are understaffed’ He would answer questions only to be sent more six weeks later, and so it went on.

Wilmslowboy

3,008 posts

166 months

Sunday 25th October
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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.




bimsb6

7,059 posts

181 months

Sunday 25th October
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[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!

Equus

9,700 posts

61 months

Sunday 25th October
quotequote all
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.

Wilmslowboy

3,008 posts

166 months

Sunday 25th October
quotequote all
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.
No really, makes a lot of sense, the buyer gets to buy the land at a low price (paying nothing for the potential that it could get planning) , and if it does the seller get to share some of the upside.

I would suggest this is the best and lowest risk option for both parties.


bimsb6

7,059 posts

181 months

Sunday 25th October
quotequote all
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.
No really, makes a lot of sense, the buyer gets to buy the land at a low price (paying nothing for the potential that it could get planning) , and if it does the seller get to share some of the upside.

I would suggest this is the best and lowest risk option for both parties.
So would you be happy buying anything else like that? Maybe your home ?

PositronicRay

20,094 posts

143 months

Sunday 25th October
quotequote all
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.
No really, makes a lot of sense, the buyer gets to buy the land at a low price (paying nothing for the potential that it could get planning) , and if it does the seller get to share some of the upside.

I would suggest this is the best and lowest risk option for both parties.
So would you be happy buying anything else like that? Maybe your home ?
It's a business proposition.

Hereward

2,745 posts

190 months

Sunday 25th October
quotequote all
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.
No really, makes a lot of sense, the buyer gets to buy the land at a low price (paying nothing for the potential that it could get planning) , and if it does the seller get to share some of the upside.

I would suggest this is the best and lowest risk option for both parties.
Makes no sense. If the Seller thinks a plot may have development value he should seek to extract that value himself, not ride on the coat-tails of someone else years down the line.

blueg33

24,786 posts

184 months

Sunday 25th October
quotequote all
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.
No really, makes a lot of sense, the buyer gets to buy the land at a low price (paying nothing for the potential that it could get planning) , and if it does the seller get to share some of the upside.

I would suggest this is the best and lowest risk option for both parties.
So would you be happy buying anything else like that? Maybe your home ?
It's a business proposition.
Land owners tend to be well advised. An overage is something I hate, but a necessary evil sometimes. Think of it as a joint venture with shared returns.

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

Original Poster:

7,751 posts

158 months

Sunday 25th October
quotequote all
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?

Condi

10,695 posts

131 months

Sunday 25th October
quotequote all
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.