Buying a house then building a new one in the Garden

BV88

Good morning,

Myself and my wife are in the process of buying a bungalow originally with the intention to undertake a large extension. The property has the possibility to section-off a separate driveway with street access and a plot that would still be a rather generous 8,000 square feet for a new house to be built. There is no current planning however the neighbours to the rear and five doors across have both built into the rear gardens and the new house would not be within about 20 meters of any other properties besides the existing bungalow. If we did not get planning we would revert to our original idea so it would not be the end of the world if it did not work out.

We are considering building a new house on the site which we will then move into, keeping the existing bungalow for rental income. I was hoping for some advice from this forum about timings and financing. My current plan is to put down the largest possible deposit we can using our savings (about 50%) then aggressively pay down the remaining mortgage which I should be able to do in about 3 years, we are paying 475,000 for the bungalow. Once the mortgage is paid off entirely we will then spilt the deeds, remortgage on the existing bungalow with the new smaller plot and use the cash to build the new house, where we will have a budget of 350,000 for the build. Once the new house is built and we can move in we would get a mortgage on the new property to clear the financing on the bungalow.

I have the following questions:

- Does the above plan seem reasonable/achievable and would you foresee any major pitfalls?
- Does anyone have an idea of how I can expedite the new build? For example would the mortgage company allow me split the deeds when I reach a certain LTV then remortgage, then take out a second self-build mortgage for example.

We are happy to take it slow and clear the current mortgage if necessary however we want the new home to enjoy with our young family and would regret missing out on 2 or 3 years at this stage in our lives. Assuming in the above plan it will take us 4.5 years (3 years to pay off the mortgage and 1.5 for the build), I am looking for a way if possible to get that to around 2.5 years (1 year for planning/saving and 1.5 for the build). For what it is worth we are not anywhere near our budget on the existing property, we could lend up to 900,000 for a residential mortgage according to the bank (however we have no intention of going anywhere near that number which I think is insane!). Our joint, after tax net income is currently about 12,000 per month, however that is likely to reduce to about 8,000 - 10,000 per month in 3 to 5 years.

It is not an option for us to find another property as this location is very close to existing family in a fairly rural location where suitable property coming to market is incredibly rare. 

Many thanks 

[Deleted User]

BV88 said:

Good morning,

Myself and my wife are in the process of buying a bungalow originally with the intention to undertake a large extension. The property has the possibility to section-off a separate driveway with street access and a plot that would still be a rather generous 8,000 square feet for a new house to be built. There is no current planning however the neighbours to the rear and five doors across have both built into the rear gardens and the new house would not be within about 20 meters of any other properties besides the existing bungalow. If we did not get planning we would revert to our original idea so it would not be the end of the world if it did not work out.

We are considering building a new house on the site which we will then move into, keeping the existing bungalow for rental income. I was hoping for some advice from this forum about timings and financing. My current plan is to put down the largest possible deposit we can using our savings (about 50%) then aggressively pay down the remaining mortgage which I should be able to do in about 3 years, we are paying 475,000 for the bungalow. Once the mortgage is paid off entirely we will then spilt the deeds, remortgage on the existing bungalow with the new smaller plot and use the cash to build the new house, where we will have a budget of 350,000 for the build. Once the new house is built and we can move in we would get a mortgage on the new property to clear the financing on the bungalow.

I have the following questions:

- Does the above plan seem reasonable/achievable and would you foresee any major pitfalls?
- Does anyone have an idea of how I can expedite the new build? For example would the mortgage company allow me split the deeds when I reach a certain LTV then remortgage, then take out a second self-build mortgage for example.

We are happy to take it slow and clear the current mortgage if necessary however we want the new home to enjoy with our young family and would regret missing out on 2 or 3 years at this stage in our lives. Assuming in the above plan it will take us 4.5 years (3 years to pay off the mortgage and 1.5 for the build), I am looking for a way if possible to get that to around 2.5 years (1 year for planning/saving and 1.5 for the build). For what it is worth we are not anywhere near our budget on the existing property, we could lend up to 900,000 for a residential mortgage according to the bank (however we have no intention of going anywhere near that number which I think is insane!). Our joint, after tax net income is currently about 12,000 per month, however that is likely to reduce to about 8,000 - 10,000 per month in 3 to 5 years.

It is not an option for us to find another property as this location is very close to existing family in a fairly rural location where suitable property coming to market is incredibly rare. 

Many thanks 

Instead of a ‘normal’ mortgage and trying to pay it down fast have you looked at getting some kind of development finance to allow you to build the new house straight away? 

macman

You are making a big assumption to think that because neighbouring houses have done this, you will also be able to get PP for yours. Planning regs and requirements change constantly, and of course, if you apply, the first people to object will be the neighbours who have already built theirs and taken their profit...

BV88

Lover_of_Lycra said:

BV88 said:

Good morning,

Myself and my wife are in the process of buying a bungalow originally with the intention to undertake a large extension. The property has the possibility to section-off a separate driveway with street access and a plot that would still be a rather generous 8,000 square feet for a new house to be built. There is no current planning however the neighbours to the rear and five doors across have both built into the rear gardens and the new house would not be within about 20 meters of any other properties besides the existing bungalow. If we did not get planning we would revert to our original idea so it would not be the end of the world if it did not work out.

We are considering building a new house on the site which we will then move into, keeping the existing bungalow for rental income. I was hoping for some advice from this forum about timings and financing. My current plan is to put down the largest possible deposit we can using our savings (about 50%) then aggressively pay down the remaining mortgage which I should be able to do in about 3 years, we are paying 475,000 for the bungalow. Once the mortgage is paid off entirely we will then spilt the deeds, remortgage on the existing bungalow with the new smaller plot and use the cash to build the new house, where we will have a budget of 350,000 for the build. Once the new house is built and we can move in we would get a mortgage on the new property to clear the financing on the bungalow.

I have the following questions:

- Does the above plan seem reasonable/achievable and would you foresee any major pitfalls?
- Does anyone have an idea of how I can expedite the new build? For example would the mortgage company allow me split the deeds when I reach a certain LTV then remortgage, then take out a second self-build mortgage for example.

We are happy to take it slow and clear the current mortgage if necessary however we want the new home to enjoy with our young family and would regret missing out on 2 or 3 years at this stage in our lives. Assuming in the above plan it will take us 4.5 years (3 years to pay off the mortgage and 1.5 for the build), I am looking for a way if possible to get that to around 2.5 years (1 year for planning/saving and 1.5 for the build). For what it is worth we are not anywhere near our budget on the existing property, we could lend up to 900,000 for a residential mortgage according to the bank (however we have no intention of going anywhere near that number which I think is insane!). Our joint, after tax net income is currently about 12,000 per month, however that is likely to reduce to about 8,000 - 10,000 per month in 3 to 5 years.

It is not an option for us to find another property as this location is very close to existing family in a fairly rural location where suitable property coming to market is incredibly rare. 

Many thanks 

Instead of a ‘normal’ mortgage and trying to pay it down fast have you looked at getting some kind of development finance to allow you to build the new house straight away? 

No I have not looked into that, do you have any suggestions of where to begin a search for such an option?

Thanks

BV88

macman said:

You are making a big assumption to think that because neighbouring houses have done this, you will also be able to get PP for yours. Planning regs and requirements change constantly, and of course, if you apply, the first people to object will be the neighbours who have already built theirs and taken their profit...

Yes I am aware I am making an assumption and as I mentioned our plans to buy the property would not change if we did not get PP. I have spoken to two local planners that I know and according to them they are very confident that planning for some form of house would be approved. So for now I am proceeding on the basis that I will get planning and if I do not it is not a major problem and I will revert to my original plan.

Section62

BV88 said:

I have spoken to two local planners that I know and according to them they are very confident that planning for some form of house would be approved.

Do these people actually work for the local planning authority, or are they planning consultants (who might have an interest in getting a commission from you)?

As a generalisation, LPA's are not keen on additional dwellings in back gardens as it raises all kinds of privacy issues.  More so if the existing dwellings are bungalows and your proposal is for a house.  There's also the whole issue of 'beds in sheds' and dwellings being squeezed onto land without the necessary infrastructure being provided.

That's not to say you definitely won't get planning consent, just that to be "very confident" I'd expect either the characteristics of the plot are particularly special (which doesn't come across in your posts), or that the LPA is either especially lax or desperate for new dwellings to be built anywhere they can get them.

Creation of a new access/driveway can be particularly problematic in some areas - sightlines and the safety of pedestrians are given more priority now than they were in the past.

BV88 said:

So for now I am proceeding on the basis that I will get planning and if I do not it is not a major problem and I will revert to my original plan.

Have you checked to see if your original plan is likely to get consent?  Nationally there has been a shortage of bungalows and similar properties suitable for downsizers.  Some LPA's are resisting excessive extension of bungalows in areas popular with downsizers and older people.

Jeepers_Creepers

BV88, as long as you are prepared to go with either option, you should be fine.

If a precedent has been set with additional homes being built in nearby gardens, then that will make it more likely that you will also succeed. But of course each case is different.

Sect62 points out that there may be a shortage of bungalows, in which case that might help your cause in having a new house built rather than extend the current bung.

No idea how to finance this, but what I would suggest is try and find a good local architect, a smallish one-personish outfit with a good reputation and manner, and who focus on one-of builds and extensions. They will likely be very familiar with local planning requirements, and have a good feeling for what's achievable.

BV88

Section62 said:

BV88 said:

I have spoken to two local planners that I know and according to them they are very confident that planning for some form of house would be approved.

Do these people actually work for the local planning authority, or are they planning consultants (who might have an interest in getting a commission from you)?

As a generalisation, LPA's are not keen on additional dwellings in back gardens as it raises all kinds of privacy issues.  More so if the existing dwellings are bungalows and your proposal is for a house.  There's also the whole issue of 'beds in sheds' and dwellings being squeezed onto land without the necessary infrastructure being provided.

That's not to say you definitely won't get planning consent, just that to be "very confident" I'd expect either the characteristics of the plot are particularly special (which doesn't come across in your posts), or that the LPA is either especially lax or desperate for new dwellings to be built anywhere they can get them.

Creation of a new access/driveway can be particularly problematic in some areas - sightlines and the safety of pedestrians are given more priority now than they were in the past.

BV88 said:

So for now I am proceeding on the basis that I will get planning and if I do not it is not a major problem and I will revert to my original plan.

Have you checked to see if your original plan is likely to get consent?  Nationally there has been a shortage of bungalows and similar properties suitable for downsizers.  Some LPA's are resisting excessive extension of bungalows in areas popular with downsizers and older people.

Thanks for the response. One is a planning consultant the other is on the local council planning committee. I should have been clearer in my post, my intention is to build a bungalow style dwelling with bedrooms in the loft. This is precisely what the other builds have done, the most recent was built in 2019.

The plot is un-usual for the area in that the distance between 'our' street and the street behind is over 180 meters whereas the average for the rest of the town is about 60 meters, leading to unusually long gardens. I would say about 40% of those extra long gardens have now been built on with new dwellings. There is 80 meters from the back of the existing bungalow to the rear garden boundary, hardly a bed in a shed type situation. Maybe there is 5 or 6 properties left that could do what we are proposing so it is not like it will create an endemic of house building in back gardens in the area. 

There will be no need to create new driveway access to the new build, the existing driveway already runs parallel  to the bungalow and leads to the rear of the property, the current owners park their car at the back of the house. It will be a case of dropping the curb and making the existing front garden the driveway for the existing bungalow, again as the other houses have done. 

eddddy

Is the property you're buying being sold through an EA?

If so, the EA must have been very dopey not to spot any development potential. Even more surprising if the sellers got 2 or 3 or 4 EAs to do market appraisals, and none of them spotted any development potential.

That's assuming that the sellers didn't suss it out themselves. Is there any planning history of rejected planning applications?

BV88

eddddy said:

Is the property you're buying being sold through an EA?

If so, the EA must have been very dopey not to spot any development potential. Even more surprising if the sellers got 2 or 3 or 4 EAs to do market appraisals, and none of them spotted any development potential.

That's assuming that the sellers didn't suss it out themselves. Is there any planning history of rejected planning applications?

They were well aware of the development possibility, it was even listed in the description both on extending or new build, with the obvious caveats that it is subject to PP. We were up against a number of other buyers including developers, the sellers went with us because we said there was absolutely no pressure to close as we have alternative accommodation we live in which irrespective of this purchase we will be keeping until at least August 2022 (related to my work). Our grandparents also live about 150 yards away and regularly speak to the sellers, so we shamelessly dropped that in our offer letter. We have been outbid on two properties in our town, one of which we offered 15% over ask. I was ready to use every trick in the book to secure this one.

The sellers are an elderly couple moving to another part of the country to be with family and are very nervous/find the process a bit overwhelming. Therefore our offer put them at ease. We are also paying probably not far off what the property would have been worth if it had planning permission, maybe they could have scraped out an extra 25k. There is a ceiling in the area for bungalows and we are paying far more than the average cost of a bungalow for this one, precisely because of the garden. Once we pay the purchase price and new build costs I can't imagine there would be much profit left if you were to sell immediately. But I am looking for our family home to keep for decades. 

user1977

BV88 said:

Section62 said:

BV88 said:

I have spoken to two local planners that I know and according to them they are very confident that planning for some form of house would be approved.

Do these people actually work for the local planning authority, or are they planning consultants (who might have an interest in getting a commission from you)?

As a generalisation, LPA's are not keen on additional dwellings in back gardens as it raises all kinds of privacy issues.  More so if the existing dwellings are bungalows and your proposal is for a house.  There's also the whole issue of 'beds in sheds' and dwellings being squeezed onto land without the necessary infrastructure being provided.

That's not to say you definitely won't get planning consent, just that to be "very confident" I'd expect either the characteristics of the plot are particularly special (which doesn't come across in your posts), or that the LPA is either especially lax or desperate for new dwellings to be built anywhere they can get them.

Creation of a new access/driveway can be particularly problematic in some areas - sightlines and the safety of pedestrians are given more priority now than they were in the past.

BV88 said:

So for now I am proceeding on the basis that I will get planning and if I do not it is not a major problem and I will revert to my original plan.

Have you checked to see if your original plan is likely to get consent?  Nationally there has been a shortage of bungalows and similar properties suitable for downsizers.  Some LPA's are resisting excessive extension of bungalows in areas popular with downsizers and older people.

I would say about 40% of those extra long gardens have now been built on with new dwellings.

How recently were they built? If in modern times, the planning papers on the council website should give you an idea of the relevant considerations to any such application. And generally, the council website is likely to have their policies covering such things - planners tend to be averse to squeezing new houses into back gardens.