Land for the development of new houses is in short supply and this makes building plots a rare commodity especially when you are searching for just one unit. The UK has rigid planning controls which are designed to restrict development of any kind in the countryside and this means there is a much greater focus on our existing towns and villages in terms of replacing old units and building up densities.
The different types of plots
Frequently, land for development comes from replacement dwelling opportunities within the development boundary of an existing settlement or conurbation which may be a straight forward residential to residential swap, or may involve a change of use from a commercial or industrial planning category to residential, for example, a redundant petrol station making way for new housing. These types of sites will be classed as ‘brownfield’ development, and, given our national land-for-development shortages, are often championed as the best way to build capacity.
Many self-builders will buy an existing house which is perhaps tired, in a poor state of repair or undersized for the plot, and with the express intention of complete demolition and replacement. Sometimes this might also produce an additional ‘spare’ plot which can be sold as such to cross subsidise the new house construction costs.
‘Backland development and infilling’ are terms used to describe new consents either behind or in between existing residential units with the consent usually being secured by the owners themselves. These garden plots are also known as brownfield development as it is the residential gardens of the existing houses which are being built upon, again building up local capacity.
Greenfield development is where a new consent is approved for a dwelling outside of an existing residential development zone on agricultural land or amenity spaces. Justification for securing a consent is much harder in these instances but there are many examples of single plots coming to market this way.
The different types of planning permission
What ties all of these different types of plot together is an unequivocal planning permission to build either a single dwelling or multiple residential units. Planning comes principally in two types;
First, is Outline Consent (OPP), where the permission to build a dwelling has been agreed in principle but where a number of design details have yet to be finalised. This will last for three years during which, and certainly by the expiration of the third year, a ‘reserved matters’ application must be approved to agree those final design details. Reserved matters will then extend your planning consent for another two year period during which your project must start or the permission renewed via yet another application.
The second alternative would be a Detailed Consent (DPP) where the application contains sufficient design details for a full approval to be granted (usually with a few conditions) which will last for three years. No reserved matters application is necessary but the project must start (or be renewed) within the term otherwise it will become a lapsed consent. There is no certainty that a lapsed consent will be subsequently renewed as planning policy is constantly changing and, what seemed like a good idea at the time, may not be in favour when you try to build a case around an expired permission.
Different mortgage products & loans
Some lenders are happy to lend on land and others have products which start once land has already been secured. The mortgage listings in the magazine set out the current preferences with the majority of lenders prepared to support land acquisition at between 75 and 90% of land value but do note that some will only do so where there is an extant DPP.
Bridging finance, as opposed to a self-build mortgage, may also be available from certain lenders for those who are seeking a short term loan to acquire a site before releasing equity in their existing property or other assets.
Special areas of focus for your land purchase
When residential consent is granted to help build local capacity, by definition, there will need to be a sub-division of one parcel of land from another which makes the process slightly more complex than buying an existing house. Your lender will be concerned about value, and value is assured by a robust consent and the ability for a non-complicated conveyance. Special areas of focus should include:
- The consent duration. If your planning permission (be it OLP, DPP or reserved matters) is due to expire within six months or less, your lender may not consider this is sufficient time for you to be able to mobilise your project. In these circumstances you might want to consider buying your plot subject to a satisfactory consent renewal.
- Restrictive covenants. Sometimes, as land is sold, the outgoing vendor may impose a restrictive covenant on the (subsequent) purchaser(s) concerning an additional approval process before any development can occur. Usually this involves a fee or a more significant negotiated sum to release the terms of the covenant. Many restrictive covenants are so old now that they are largely unenforceable but, where, they exist, insurance can often be taken out to cover any latent claims which may be enough to satisfy your lender. More commonly today, developers who secure master plan consents, may sell parcels of land with what is known as ‘overage rates’, where additional premiums will have to be paid by the purchaser in the event of improving the value of the consent.
- Access. Some plots may only ever be accessible over someone else’s land and in these cases you have to ensure that there is no restriction on what type of traffic you may take over that land, i.e. lorries of a certain size/weight, or indeed for what purpose. If, as is sometimes reported in the press, you subsequently have to negotiate your access rights with a neighbour after you have bought some land, then this ‘ransom strip’ can end up being very expensive.
- Footpaths. It can be very time consuming if a public right of way needs to be diverted and, just because something seems entirely logical to you, it does not mean you will be successful. One large national housebuilder reportedly ignored a public right of way which resulted in one of their houses having both doors removed to facilitate access until the matter was finally, and formally, resolved.
- Previous uses. The former activity on a site may well influence what you ultimately build and how you have to go about it. Some sites are levelled with inappropriate fill making construction more complex and others may have contaminants from years of engineering processes which may need to be treated or removed. Both can be expensive so it’s well worthwhile having a soil test to reveal ground conditions. Be sure to check the local maps concerning any historic mining activity in your area which should give you security that there are no shallow shafts under your site.
Your lawyer should conduct a full search as part of the conveyance which will inevitably pick up some of the above but it is worth the extra vigilance to help mitigate any unnecessary risks. After purchasing my own particular site I did discover an illegal builder’s tip just where I wanted to build, I did have to divert a footpath and I was contacted by a neighbouring land owner convinced that they had some historic claim over my land! Fortunately everything worked out fine in the end.
This article was written by Tim Doherty, and originally published for Build It Magazine. Tim is the Director and Principal Surveyor of Dobanti Chartered Surveyors, a building surveyors based in Tunbridge Wells, Kent. Get in touch for more information about Dobanti’s property and building services, or read more online now. Further articles and blog posts can be found here.