Buying land to build a house

Are you considering building your own home in the UK? Buying land is the first step in this process, and it requires careful planning and research.

In this article, we will provide you with valuable insights and practical steps to help you navigate land acquisition for self-build projects.

Can you buy land to build a house in the UK?

Yes, anyone can buy land in the UK, regardless of citizenship. However, obtaining planning permission to build a house is a separate matter and can be more challenging.

It’s essential to thoroughly research the land you intend to purchase and ensure that it has the necessary planning permissions or the potential to obtain them.

Is it cheaper to build your own home or buy property?

It’s cheaper to buy land and build your own home than to purchase a ready-made property from a developer. However, there are many caveats to this.

Some of the factors that can affect the cost of building a home include:

• Size of the home
• Location of the home
• Type of materials used
• Complexity of the project
• Cost of labour

Finding land for your self-build project

Online resources: Start your search for land online through reputable land sale portals and websites specialising in self-build plots. Platforms like Rightmove offer a wide selection of buildable plots, including vacant and demolition properties.

Local estate agents: Contact estate agents in your chosen area. They often have knowledge of plots that are not yet publicly listed and can provide valuable insights into the local market.

Local council: Contact your local council’s planning department. They publish details of planning applications, which can provide valuable insights into potential plots for sale.

How much is it to buy land in the UK?

In general, an acre of land in the UK costs around £300,000 in the North while exceeding £1 million in the South.

• Farmland in the UK costs between £12,000 and £15,000 per acre.
• Land with planning permission for residential development can cost up to 10 times more than land without planning permission.

Other factors that can affect the price of land include the size of the plot, the proximity to amenities, and the availability of planning permission.

Stephen Clark, from specialist bridging broker Finbri, comments, “In the last two decades, residential land costs have surged eightfold, driven by a shortage of available land for sale and a demand for new homes. The escalation in prices isn’t just limited to prime locations, making bridging loans for land a strategic choice for market opportunities in both commercial and residential development.”

How much is stamp duty when buying land?

Yes, stamp duty is a tax that is levied on land purchases in the UK. This tax, paid to HMRC, depends on the property transaction value. For instance, transactions up to £250,000 incur a 0% tax rate, while SDLT rates can reach 12% based on the value.

These rates are for non-residential properties and are subject to change, so they must be checked at the time of the purchase.

What are the fees when buying land?

Site surveyor: A professional site surveyor produces a report detailing the land’s condition, highlighting potential risks. Costs typically range from £300 – £1,000 per day, varying by the surveyor. Contaminated land surveys may incur higher costs due to additional investigation.

Legal fees: Using a solicitor when purchasing land is essential for guidance and support, including contract drafting. Costs vary, with fixed-rate services generally being more cost-effective, depending on the purchase’s value and complexity.

How can you pay for the land?

Once you’ve identified the ideal plot of land, securing financing is essential. The process mirrors that of buying a house. Engage a solicitor to conduct legal checks and draft the sales contract.

Upon mutual agreement, pay a deposit (typically 10% of the purchase price). The final payment occurs after legal checks are complete and the contract is exchanged.

There are three key finance methods that can be used to purchase land, these include:

• Land bridging loan: A short-term loan for land purchase, development, and subsequent sale. Suited for experienced developers, it offers 50%-70% LTV with terms spanning 1-24 months.

• Development finance: Tailored for land development costs, including planning, surveys, and construction. Available mainly to experienced developers, it offers 65%-100% LTGDV depending on provided security.

• Personal savings: A straightforward option, using personal savings incurs no additional costs or interest repayment. It’s a common and cost-effective choice for land purchase.

Planning permission

Planning permission is essential when buying land to build a house. Without planning permission, you will not be able to legally build a house on the land.

Planning permission types

Detailed Planning Permission (DPP): This is the quickest and easiest route, but it comes with the highest cost. It guarantees your request for planning permission will be accepted.

Outline Planning Permission (OPP): This means you have planning permission in theory, but you still need to apply for full planning permission before you build.

Green belt and protected areas

Green belt land can be difficult to acquire planning permission for, but it’s not impossible.

Many areas have additional protections like AONBs, SSIs, and listed buildings that can affect planning permission.

Other factors affecting planning permission

• Location: Land in desirable areas is more likely to have planning permission restrictions.
• Type of development: The type of development you want to build will also affect your chances of getting planning permission.
• Environmental impact: You need to consider the ecological impact of your build and the impact on neighbours.
• Covenants and restrictions: Restrictions, covenants, and easements on the land can affect what you can build and where. These restrictions may be imposed by the local authority or by previous landowners.

Final thoughts

Buying land to build a house in the UK requires careful planning, research, and collaboration with professionals. Thoroughly evaluate the land, obtain the necessary permissions, and work with qualified experts to ensure a successful self-build project.