Self-build - basic starting questions

rjenk74

Hi all, just a couple of questions before I delve into research.

My father has some land at the side of his house, most of it was there from the time he bought the house (40 years ago) and he acquired a bit more about 5 years ago form the council and its basically a big garden. He has now decide as he is cracking on that it’s too much to keep so he is going to get rid in one of two ways:

1. Sell the land as is, rough estimate for now is about 100k with planning permission, this needs to be confirmed.
2. Build a house and sell it.

We spoke to a friend who develops land and he said he feels a 4 bed detached would be the best to build and sell considering the size of the land (too small for more than one house) and for what is selling in our area at the moment. He is in the process of drawing up a basic plan which will submit to the council for planning permission. So assuming we get it the questions are as follows:

With regards to point 1, if he sold the land, is he liable for any capital gains tax, bearing in mind some of the land was acquired within the last 5 years, and if so how much, or would it be a simple 100k profit for his bank?

With regards to point 2, our friends say you can usually build a 4 need detached for about £100-120k all in, i.e. keys ready to hand over. His company would then charge a fee to run the project, and of course it’s up to my father how much if any he wants to run with himself. So if my father does this, and let’s say the land is valued at £100k, the build inc fees comes to £150k and he sells it for £300k, does he then pay tax on the £50k profit. If so who values the land as in theory he could say the land was worth more and thus the ‘proft’ is worth less so the tax bill would be less?

Lastly, my father is happy for me to join him in this investment, such that we go halves, so if the total estimate was £250k, he provides the land and £25k cash, and I need to raise the other £125k cash, and we split the profits. However I only have £10k in cash, so would need to get a mortgage. I currently own a house valued at £150k with a mortgage of £115k (paying £500 per month) and I earn £40k a year with no other debt, so would this be possible? If I need a bigger deposit I can borrow of a friend for a small return, and of course this would be for me to decide if this was appropriate (never lend of friends etc.) but forgetting the pitfalls of that I just wanted to know what’s possible in this situation

Apologies for the long post any help much appreciated

Regards
Rich