Buying an existing building involves a lot of red tape, becoming even more complicated when you decide to buy land to develop on instead. Here’s why…
Many people who have bought land for development will tell you they wish they’d looked into it more before they made their decision. The issues faced by first time land buyers, such as buying land insurance and checking for a restrictive covenant on a property, can easily mount up.
In this post, we’re going to make buying land for development a lot easier for you by giving you 5 key things to consider before you start the process.
What do you need to know before you buy land for development?
There are lots of issues you need to have an idea of up front before you go down the long road to buying land for development. Here are the main five you need to consider.
1. Learn the distinction between different types of land
There are two different types of plots you’ll come across when you’re searching for land to buy, they’re known as Greenfield and Brownfield.
Greenfield sites are land that has not been developed before and tend to be more natural. These sites are notoriously difficult to find, and gaining planning permission for them, especially if they’re in cities, can be quite difficult.
Brownfield sites, on the other hand, have already been developed in the past and usually take the form of disused or derelict land. These sites require more upfront cost than greenfield sites because they have to be cleared, but they’re easier to secure permission for.
2. Research the market before you buy
Depending on the location and quality of the land you’re buying, the price per acre can vary from £5,000 to £15,000. It takes a while to develop a feel for the market and what is reasonable to pay for a piece of land. The value of land is usually determined by:
- Neighbouring developments
- Condition of the site
- Available services (such as whether water, gas or electricity is connected or not)
- Attached planning permissions
Not all land is publicly advertised, so you might need to go off the web if the land you’re looking at isn’t what you want. You could always go to a land auction if you’re prepared to move quickly or find homeowners who are happy to sell some unused land.
3. Find out what planning permission you’ll need
Sometimes you get lucky and the plot of land you’re buying for development is sold with planning permission already in place. However, this permission is usually ‘outline’ planning permission, which means you’ll have to clear the final details with the planning authorities.
You also have to be wary of restrictive covenants and other legal restrictions that affect your freedom of manoeuvre. Restrictive covenants restrict a landowner from performing an activity on its land to benefit neighbouring land. For example, they can limit the use of land for residential purposes, prevent the development of your land or the construction of additions to existing buildings on your land.
Before you buy a plot of land for development, make sure you check for these restrictions and acquire a full list of planning permissions allowed on it.
4. Get the land surveyed
Stepping through government red tape is an annoying part of developing on a plot of land. However, what’s worse is buying land that has issues you were unaware of before you made the purchase.
You might not think an empty plot of land needs a thorough check before you buy it but it’s always a good idea to have a chartered surveyor give it a once over. Surveyors usually look out for:
- Soil quality
- Flood risks
- Existing structures
- Nearby power lines
Land surveyors will also check for legal hurdles and help you define the boundaries of your plot. This way, you know where to build and whether your development will encroach upon your neighbours.
5. Find the right land insurance
The final issue you need to consider before you decide to buy a plot of land for development is land insurance. Land insurance is designed to protect the landowner from the financial ramifications of their property being damaged or someone being injured on their land and making a claim.
At the very least it’s recommended that you buy public liability insurance which protects you against property damage or someone making a claim if they’re injured on your plot of land. There are other types of insurance you can organise through your broker, including:
- Insurance to protect public access to your land
- Insurance for legal expenses
- Insurance to protect you against damage to walls, fences, gates, and street lighting
- Employer’s liability insurance to protect employees working on your land
Almost any kind of land can be protected by insurance, including woodland, vacant plots, brownfield development sites, and pasture. It’s important that you look into the type of insurance the plot of land you’re planning to buy will need.
Are these the only things you need to consider?
In this post, we’ve covered the 5 main things you should consider when buying a plot of land for development, but it’s by no means an exhaustive list.
There are other issues to consider, such as stamp duty, land tax, access rights, what you want to build on the land and if the dimensions of the land are right for your design. Looking into why the owner is selling the land in the first place is also a must before you decide to buy.
Even if you cover all of these issues, more things could always crop up, so you need to be prepared for a lengthy process. Be sure to get in touch with a solicitor, and other experts, to help you get it right.