Buying a plot of land with potential planning permission

Pythagorous

Hi guys

I'm looking for some advice as to what my options are with regard to a property I am interested in purchasing.

Basically the sale only works for me if I can demolish the current house and build a replacement. A planning professional has advised me that its probable, but definitely not guaranteed, as there are quite a few intricacies involved.

Hence it makes sense, at least in my head, to make an offer subject to planning permission being obtained. I would envisage that I pay the planning fee.

So my question is, is this common and how might this be structured? The additional complication is that we need to sell our own house (not looking to move unless this particular house/site can work out).

Appreciate any thoughts.

davidmcn

Is your conditional offer likely to be sufficiently attractive to the sellers, assuming there are other potential buyers who either aren't planning to develop or are willing to take a chance on getting planning? They won't necessarily be keen to be tied up in a contract for months waiting for you to (possibly not) get planning permission.

Pythagorous

Thanks, yes, that gets to the crux of the issue. Answer is, I'm not sure. Will speak to the EA. I may have to increase the offer to entice the vendor sufficiently given the uncertainty and drawn out timescale. Assuming vendor does go for it, what might the 'deal'/contract look like?

Another issue is that the vendor may pull out if I was to get the PP, thinking that it'll be much easier to get a sale at a higher price once the pp viability has been proven.

Ozzuk

There is nothing to stop you applying for planning permission and trying to get it done before deal goes through. Risky though. If I was the vendor then I'd certainly want a sizeable uplift in purchase price - if you are funding via a mortgage this could be an issue. Actually, I'd want some kind of penalty payment agreement should PP not be forthcoming. How long has house been on market? That could factor into vendors decision making process.

Pythagorous

Ozzuk wrote: »

There is nothing to stop you applying for planning permission and trying to get it done before deal goes through. Risky though. If I was the vendor then I'd certainly want a sizeable uplift in purchase price - if you are funding via a mortgage this could be an issue. Actually, I'd want some kind of penalty payment agreement should PP not be forthcoming. How long has house been on market? That could factor into vendors decision making process.

Thanks for your thoughts. It has only been on a couple of weeks. Can you elaborate more on the penalty you mention. What do you think a suitable agreement might look like?

eddddy

Pythagorous wrote: »

Thanks, yes, that gets to the crux of the issue. Answer is, I'm not sure. Will speak to the EA. I may have to increase the offer to entice him given the uncertainty and drawn out timescale. Assuming vendor does go for it, what might the 'deal'/contract look like?

It could be an 'option to purchase' or a 'conditional contract'. A specialist property solicitor will be able to draw one up.

Obviously you will need cash or development finance for this project.

You will probably end up a few thousand out of pocket, if you don't ultimately get planning consent.

And once you give the seller the idea that his property is more valuable as a building plot, they may start talking to other developers, and pushing up the price.

(TBH - I think it may be a very steep learning curve for you)

eddddy

Pythagorous wrote: »

Another issue is that the vendor may pull out if I was to get the PP, thinking that it'll be much easier to get a sale at a higher price once the pp viability has been proven.

That's why you would use an 'Option to Purchase' or 'Conditional Contract' - to stop the seller changing their mind about selling to you.

Pythagorous

eddddy wrote: »

It could be an 'option to purchase' or a 'conditional contract'. A specialist property solicitor will be able to draw one up.

Obviously you will need cash or development finance for this project.

You will probably end up a few thousand out of pocket, if you don't ultimately get planning consent.

And once you give the seller the idea that his property is more valuable as a building plot, they may start talking to other developers, and pushing up the price.

(TBH - I think it may be a very steep learning curve for you)

Thank you. The EA has already marketed it as such (development potential). Apparently the vendor just isn't bothered with the hassle of trying to get planning. And the askign price is probably quite close to what it might be with planning already in place.

Pythagorous

eddddy wrote: »

That's why you would use an 'Option to Purchase' or 'Conditional Contract' - to stop the seller changing their mind about selling to you.

TY (again!). And this could still work, given i also still need to sell my own house?

eddddy

Pythagorous wrote: »

TY (again!). And this could still work, given i also still need to sell my own house?

I guess so.

If you went for an Option to Purchase, then I guess you could back out if you can't get planning consent or if you can't sell your current house.

But if the seller is the type of person who doesn't want the hassle of getting planning consent, I don't know if they'd want the hassle of negotiating and getting legal advice on an Option.


(And don't forget to budget for a caravan to live in on a muddy building site, whilst the new house is being built!)

Pythagorous

Thank you Eddddy, you've been very helpful.