Mortgage on property with planning permission

se2020

I have seen a property for sale with a large garden. The property has recently been granted planning permission to have a house built in the garden.
No work has been started and it is for sale as it is. The existing house is fully habitable and in good condition. 

Would this be a problem to get a normal residential mortgage on?

davidmcn

No, it wouldn't.

MWT

Is there an 'overage' clause or any covenants related to the planning permission?

Similarly is the price you plan to offer in line with the value of the house alone or does it reflect the value of the planning permission as well?

se2020

I think the only reason the planning permission has been applied for is to increase the value of the sale.
It is a deceased estate sale, main house is currently unoccupied, 3 children, all live miles away. One of them has a architects business so it was easy enough for them to submit the plans I suppose. Agents say they have no funds or interest in building themselves and will only consider selling as a whole.

No coverage clauses in the planning, permitted development rights are removed.
If the second house was built then some arrangements over access, parking, mantainance etc would need to be arranged for it to be sold.


I am not sure if a valuation would come back as acceptable for a regular residential mortgage as presumably they would not want to take the value of the building plot part into account if I only plan to use it as a residential garden?
If I did want to actually build the 2nd house would that be acceptable to the lender for a residential mortgage?

Mickey666

Assuming there's an intention to build on the land then it's almost like buying two things - the existing house with a smaller garden and an adjacent building plot already with planning consent.   Would the existing house/smaller garden alone be valued enough for mortgage purposes?

If there is no intention to build a second house then, assuming work does not start within three years (typical condition of consent) then the planning consent would lapse, thus reducing the potential price of the plot.  Would this be likely to affect the mortgage conditions?

I would guess that much will depend on the LTV.

Thrugelmir

se2020 said:

No coverage clauses in the planning, permitted development rights are removed.

Overage clause will be inserted in the sales contract. Worth asking the EA to confirm the position.  

se2020

I think the value has been put into the sale now it has planning rather than them expecting more if planning is granted in the future. 

It's more a question of if I can get a normal residential mortgage on the place.
My plan would be to do some minor part of the work (just enough to activate the planning)
Then use it as a regular house with a big garden for a few years, then sell on still with the planning down the line

davidmcn

se2020 said:

If I did want to actually build the 2nd house would that be acceptable to the lender for a residential mortgage?

If you mean that your intention from day one is to build the new house, that's taking out of scope of standard residential mortgages. If you mean doing it at a later date, you would need to apply then, nobody's going to promise anything now.

Thrugelmir

se2020 said:

I think the value has been put into the sale now it has planning rather than them expecting more if planning is granted in the future. 

That would deter a lot of potential buyers. Some people maybe perfectly happy to retain the garden. I'd be surprised if it had. As would make obtaining a mortgage problematic. 

MWT

As long as they don't slip an overage clause into the contract the only real risk is the valuation.

What sort of LTV are you looking for do you think?

se2020

A 20% deposit would be ideal