When is a Plot Not Really a Plot?

Here’s a question. What turns part of somebody’s garden or the corner of a field into a building plot? The answer is simple: planning permission. Without planning permission – either the actuality or the certainty of it – a piece of land remains just that: a slice of a garden or a chunk of a field. What’s worse, it might appear to have planning permission but this can, in fact, prove to be completely useless to you, the potential self-builder. Here’s what to look out for before you buy.

Never buy land without planning permission: Agree to buy it, but don’t pay for it until and unless planning permission is obtained. Either buy the land subject to receipt of satisfactory planning permission by exchanging contracts on that basis – and only completing when and if planning is obtained – or else take out a legal option that allows you to buy the land once you have consent. This legal option, which can either state the agreed price for the land or leave it until a later date to be decided by valuation or arbitration, may involve some payment of money which may be deducted from the eventual price paid or, in some cases, may be non-returnable. It will almost certainly be time limited.

Assessing Plots: Do not assume that just because land once had planning permission, it will get it again In many cases, if planning permission has recently expired, it’s a pretty good bet that it will be relatively easy to reinstate it. But it is not a certainty. Planning policies can change on either a national or local level. If you are offered land where the planning permission has either expired or is about to expire, only buy it, or agree to buy it, subject to receipt of satisfactory planning permission.

Always check the planning history: The documentation and files at the local planning office are in the public domain and, as such, they are open for your inspection. Check whether the land has consent and/or a planning history — this will help you decide whether it is worthwhile pursuing your purchase or whether you can think in terms of some improvement on what has gone before. In particular, if there is a Design & Access Statement relevant to the consent, study this carefully as it will form a link between an outline consent and any subsequent application for Approval of Reserved Matters (detailed planning permission).

If land already has planning permission then its value is established as at least relevant to that consent. Yet there may be room for some improvement that will increase the value of the land. If you think that that’s possible, play your cards close to your chest and only make the subsequent application once you have tied up your legal purchase of the land. Otherwise you might find that your vendor wants a share of your foresight.

Check for planning conditions: All planning permissions are issued subject to a whole string of conditions — the first and most important of which will relate to their timing and duration. It’s absolutely vital that the self-builder checks that the land that is purportedly being offered with the benefit of planning permission actually still has it. The situation regarding duration of consents is not the same in the various parts of the UK. Prior to August 2005, planning permissions in England and Wales lasted for five years. An outline planning permission – which gave consent in principle – would last for this five years from the date of its granting. But, and this is most important, it would also require that application for Approval of Reserved Matters (detailed planning permission) was made within three years. If, therefore, no such application has been made, then although the five years may not have yet expired, the consent will no longer be valid. If, however, an application for Approval of Reserved Matters had subsequently been approved, then the consent will still be valid so long as work is commenced within two years of the granting of the last Approval of Reserved Matters. All of which means that there may be consents out there, where, if the last Approval of Reserved Matters was or is granted before 2010, will last until 2012. By the way, full five-year planning permissions, that were granted before August 2005, will last until 2010.

This system of five-year consents is adhered to in Scotland and Northern Ireland. However, in England and Wales all planning permissions issued since August 2005 have a standard (although it can be varied) three-year duration. That means that where there is a full planning permission, work must be commenced within that period in order to perpetuate the consent.

An outline consent will require that Approval of Reserved Matters is granted within the three-year period. Thus, if you are purchasing a plot that was one of the first to be granted consent on this three-year basis, it is possible, if no Approval of Reserved Matters has been given, that it has already expired.

The message must be to check all dates and timings and to confirm for definite that there is a viable consent.

There might be other conditions: Once again, many estate agents, even if they go further than simply listing the reference number and date of a permission, are content to limit the detail to the front page. That’s not good enough. It is important to read all of the planning conditions to see whether they have either been discharged or are capable of being discharged. Some planning permissions may contain conditions that require the consent or action of third parties. Some may require a legal agreement to be enacted with those third parties that is binding upon them or their successors in title. In some cases, with things like visibility splays, where a neighbour agrees to maintain an area of their land free from any obstruction, a payment may be required. The self-builder should, therefore, ascertain that the agreement of those neighbours has been obtained and that the money will come out of the vendor’s pocket rather than their own.

Don’t be a landbanking sucker: Landbanking is where companies buy up agricultural land on the edge of existing developments, parcel them up and sell them to self-builders as potential building plots. Some landbanking companies still succeed in this despite the plots offering nothing more than hope value. It’s a timely reminder that you should only ever buy land that has planning permission.

Hidden charges may make a plot more expensive

Local charges – potentially £10,000s – need to be investigated first.

Ever since the introduction of the first planning laws in July 1948, there have been moves to claw back some of the gains that are given by the granting of planning permission. Most have failed but the new breed looks set to remain. Many local authorities, but not all, have been using an instrument available to them known as a Section 106 Agreement to require a payment to be made towards local infrastructure costs — ostensibly to compensate them for the resulting increased requirements for schools, recreational facilities etc. The Agreement is binding upon the owners of the land and/or their successors in title, and the figures may vary from £3,000 to £30,000 for a single dwelling.

The usual format is for the planning consent to contain a condition requiring the preparation of a Section 106 Agreement and the payment of the money prior to any commencement of work.

Some local authorities have taken the matter one step further in requiring that the Section 106 Agreement is put in place at the application stage and that a collateral agreement is entered into by the principal lenders. If this is not forthcoming then the money has to be lodged with the authority at the time of application.

The Government in England and Wales sought to regularise this concept of payment by introducing what is tantamount to roof tax, which will be known as the Community Infrastructure Levy (CIL). It had planned to introduce a scale of charges but has now indicated that this will be delayed until at least the winter of 2009.

Presumably, if the credit crunch and its eventual hangover persists, it may prove politically inexpedient to do so even at this delayed date. In the meantime, as the CIL was to be discretionary, many local authorities (over 50%) have indicated that they do not intend to implement it and are intending to retain the concept of Section 106 Agreements.

Additionally, the national Government could, if it judges it politically acceptable to do so, introduce a Planning Gain Supplement, which would be a direct tax on the uplift in value created by the granting of planning permission.

All of which means that it’s important for any self-builder buying land to ascertain whether a charge is applicable, whether it has been paid already or whether it needs to be part of their calculations on the price they should pay for the land.

Further reading:

• Beware the Great Land Scam
• The Essential Plothunter's Checklist
• Read About Other Self-builders' Plot Finding Experiences in Plotfinder Challenge

How to Find and Buy a Building Plot - This book gives a step-by-step guide to acquiring the right land, with the right permissions at the right price.