Qn for clever property types about land versus built property value and losing part of plot

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Hi,

This is an unusual question but here goes:

We are looking at buying a property overseas and found out that 10percent of the land does not belong to the house. Long story but assume it is nothing underhand on the part of the vendors and they did not know (specific circumstances lead me to believe this is true). The original agreed price was before they and we knew this so now we want to adjust the price (otherwise we will drop out).

The owner of the land might never try and reclaim it but I want to assume they will and allow for the uncertainty.

Assume the rebuild value is 400k and the plot is 11% smaller than thought but this is garden area and not built on. It is a medium size garden and would be fine without the 11% but it is terracing and it's nice to have it there. Agreed price is 825k. How much would you adjust it by?
Would I buy it if it was minus the 11% is a key question and the answer is yes, if we had to give the extra bit back it would be fine without it but obviously I want to pay less given we are buying less!

Any property savvy people got a view?

I would say asking for 11% off would only be reasonable if house AND garden were 11% smaller. It sounds like only garden is 11% smaller so perhaps half of 11% off, so 5.5% discount?

At least that might be a starting point for negotiations?

Depends on the area and the house. I would suggest 11% off the 425k 'non-build value', so c50k.
Is the land worth anything to anyone else? Could it be built on, for example?

This is really helpful.
It couldn't be built on from what I've been told due to restrictions as it's an environmentally sensitive area.

Yes oddsocks it only affects the garden. It might never need to be given back but I think we have to work on pricing that it does.

Unfortunately a property is worth what a byer and seller agree, there is no 'right' answer. If losing this land is ok, as you suggest, I would go in with 775k based on the calc above and see what the response is.

Thanks. Fair point.

The key is would we buy it without this chunk of land AND I think can we keep some of the difference in price back to relandscape if it did ever happen and the answer to that is probably yes.

Whether they will go lower or hold out for a buyer who isn't as bothered is a question but I am not interested unless there is a significant reduction and happy to walk away.

The value of it will depend massively on so many factors I would imagine including what it could be used for if the owner did claim it - is it technically part of an adjoining property, could it be a 'ransom strip', could it be developed on and reduce the value of your property? If you were bothered then I'd personally get some local professional advice, if not then knock something off and see what happens?

It is open land and we are told unlikely to be built on for environmental reasons. It would be an awkward plot to build on anyway although not impossible.

Be careful the other owner of the land doesn't try to sell it to you !!! That's where you need to go next in my opinion - get it sorted properly or you may have problems trying to sell it in later years yourself. Because let's face it - it's worth them trying to get money out of you if they can for what is otherwise a worthless piece of land - I would only buy the property if this was sorted - otherwise it's a time Bomb waiting to go off !!!

Our lawyer said that they could not charge retrosepctive rent at least but they could demand it back.

If we go ahead we will buy it with the knowledge that this could happen and keep a small reserve fund for relandscaping but it sounds unlikely to occur anyway. It is a small slither of land that the property would be fine without and certainly not big enough to be built on in itself.

I will only be happy proceeding with a decent price reduction though.