Tell me i'm not nuts

[marthabear]

An end terrace has come up for sale across the road which has a large lawn area to the side of it. It has always struck me as wasted space and i'm now thinking that maybe there's a way that I could buy the house and build on the land.

I've never done anything like this before. Our house is worth around £50,000 more ( 4 beds rather than 2 ) so we would need to downsize and live in a cramped, dusty building site for a few months and use the spare cash for building perhaps a 3 bed house on the land. I'd then plan to sell both homes and move to somewhere lovely with the extra money made.

Am I nuts to consider this? Has anyone done anything like it?

You should look at any restrictions on building in your local area ("garden-grabbing" is frowned upon in many areas). £50,000 doesn't sound much to build a house though and, remember, you will have to pay a large proportion of any profit in taxes.

Not nuts, but a lot depends on planning permission being granted so I'd have a chat with planning first perhaps...

Definitely have a chat with planning.

In general, the government is encouraging new builds.

Lala- the house is only up for £110,000 which gives some indication of size. I spoke to a builder today who has done lots of this type of work and estimated around £ 70,000 for the new build plus £10,000 in various fees ( architect etc..). The finished new house would be worth around £145,000. I will definitely need to look into the taxes though. What tax would it be?

Misty and Bowler- I have called the local planning department who have said that there has never been any planning application for the land. For £120 I can give some details and get a good indication of a planning permission decision. But I suppose i'd need to take the plunge, sell up and move in to properly apply. I know I could apply for permission without being the owner, but the present owners would need to know and likely either keep my idea and do it themselves or bump up the price of the house considerably to reflect the building potential. Unless anyone has any ideas to deal with this.

It would involve my family of 5 living in a 2 bedroom terrace in poor condition. The builder said a small house could easily be built in 12 weeks so not too long to live like that. But I guess these things never go to plan?

I live on a new build estate and a corner plot house did this, they were a 2 bed semi and built a 2 bed detached, live in the detached one and sold the semi.

Although building your own home is cheaper than buying it you will have to come up with the funds to be able to start it. Self build mortgages are split into land cost, build cost, final LTV cost, so at most, they will lend 85% for the land (which would have already come with the house) 85% construction cost and then a final LTV of 80%

I have been subscribing to Homebuilding and Renovation for 2 years as I was planning to build an extension (done that now) Loads of information on how much stuff costs to build in great detail, plus how to keep your build costs down such as simple roof lines etc. Worth a read.

On paper our house looks like you could put a double garage on the front area but we aren't allowed to build on it at all. There is a rain water overflow thing under the garden!

You would need to contact the planning department to run the possibility by them, plus look into any similar builds. The last thing you want is to be stuck in the 2 bed with no prospect of building on the land to the side.

Sorry crossed posts with my sloooooow typing dh stop interupting me

*interrupting

Twelve weeks sounds very, very optimistic and his build price sounds very low. I'd speak to some other builders too. Unless the vendor is happy to let you apply for permission before you buy, you will probably have to live in the house while you are waiting for planning consent which, even if it is straightforward, will take 8 weeks. Presumably you will have to wait to sell the house before you can move out. Taxes will be anything between 18% CGT up to 40% income tax if (unlikely) the authorities consider you are trading rather than developing.

I'm not down on the idea, I just think you have to know what you are taking on.

Sorry, but there is no way in hell that it would take 12 weeks to do.

By all means go for it if you feel like having an exciting project and are willing to see it through, but do not go in with your eyes closed. It will take a while to get planning permission, spec and build a new house.

I would be amazed if you get it done in under a year.

xpost!

For your first development do you not think you should start with something smaller and less risky?

If you live in the houses you pay less tax, so build house, mortgage it move in, sell first house, use money for deposit on next place sell newbuild move into next house. (Or something like that)

Thanks so much for the replies.
I think the builder meant that once the building work had started it could take 12 weeks rather than including all the application process etc.. However I realise even this is still very optimistic.
Violet- my plan is to sell my house, move into the 2 bed across the road, build a 3 bed next door to it, sell the 2 bed and move into the 3 bed, then sell the 3 bed and move on IYSWIM. Is this what you meant? Does this way avoid the massive tax bill too then?

If you have the energy, it sounds like a great plan.

I wouldn't apply for planning permission unless you own the land. The vendor would be mad to sell it to you then unless they put the price up to reflect this.

Can you financially plan for moving into the two bed and either a) not get planning permission and having to move immediately because house is too small or b) you do get planning permission but decide not to go ahead and have to move immediately because the house is too small.

I didn't know about the living in the house and paying less tax. Would you have to live there for a certain period of time?

I'm sure a (large) house in our village has just been newly built within about 3 months. It seemed to go up very quickly.

Have you thought about those kit/self build houses. Don't know exactly what they're called but they're made up in a factory and erected on site in a couple of days.

Oh dear. Spanner in the works at the first hurdle. Looked around the property with the estate agent this morning and he told me that some of the adjacent land isn't owned as such as part of the property. In fact, no one can trace who owns it. It has been rough ground which the owners of the property have parked their cars on for as long as anyone can remember. It's odd as a strip of grassland on the far side of the rough ground is owned by the property. That's why the house is up for such a low price apparently.
The maddening thing is that someone WILL build on this rough ground at some point and if I could find my way through all the red tape it could be me. Unfortunately I don't have a clue [ confused ].

Oh dear. Spanner in the works at the first hurdle. Looked around the property with the estate agent this morning and he told me that some of the adjacent land isn't owned as such as part of the property. In fact, no one can trace who owns it. It has been rough ground which the owners of the property have parked their cars on for as long as anyone can remember. It's odd as a strip of grassland on the far side of the rough ground is owned by the property. That's why the house is up for such a low price apparently.
The maddening thing is that someone WILL build on this rough ground at some point and if I could find my way through all the red tape it could be me. Unfortunately I don't have a clue .

Could you put in a pre planning application?

We did exactly what you're describing. In fill build like this is often regarded as a positive thing.

You could make a nice lump sum if you're cautious with the build spend.

I would investigate more wrt the pp though.

Sorry. Didn't read your last post.

Talk to the council about the land anyway.

Well now this has got your interest going, why don't you look out for other opportunities, they are always coming up. In the meantime, do lots and lots of research so you know what is involved.

Thanks for your reply.
I spoke to the council when I returned from the viewing. They said that planning permission was still possible but I would have to show that I had tried to find the landowner with an advert in the paper or suchlike.
The estate agent had spoken as if he was certain that PP was not a possibility though and said that if all the land was owned by the present house owner, they would be asking 70K more for it!
I guess I could still plough on and apply to the council for pp in principle for £120 and see what they say. It just makes things far more complicated and also far more unlikely to be successful.

Bowler- Yes I think I will. It's just that this one was affordable for us I think and also close to our established community of friends and to the schools that my children attend . Hey ho.

A house down our street has been totally gutted back to its shell and an extension out on. So far it has taken 6 months and is still way off being finished. Mi don't believe it would just take 12 weeks to build a new house. So you need to weigh up if you could cope with living in a building site for so long.

Um, I must be wrong here, but I'm just going to say it, in case I'm not... If the current house owners don't own the land, and no-one knows who does, and it's still possible to get planning permission and building consent so long as you make a proper effort to find the owner... Then couldn't you apply for PP and build on that land without even buying the house across the road?!

Flow4- Thanks. I'm nearly certain that even if it's possible to get planning permission on this unowned land, I would also need to own the 2 strips of land either side of it that the house does own in order to fit the building on. I do think I need to push a little bit furthur with looking into pp on this land though before I give up entirely. Not much idea how...land registry commission perhaps.