If you’re just starting in property development, one of the biggest challenges is often finding and securing the land for your next project. How can you spot the best opportunities and snap them up before another eagle-eyed property pro beats you to it?
For anyone new to buying land, the process can be a little daunting and even searching for available plots may seem complicated. Once you know where and how to look, it’s actually pretty easy.
How to Find Suitable Land for Sale in the UK
Set Out Your Specifications
The first step in the process of finding the perfect plot of land for your new development is to know exactly what you’re looking for. What size of land do you need ideally? What is your preferred location? Do you have a clear idea of the project you plan to carry out? If you struggle to find what you’re looking for, you may need to make compromises, but having a clear set of specifications will help you and anyone you enlist to help, such as estate agents, to hone your search and find what you want fast.
Take a Walk Around Your Target Area
Sometimes, the simplest solutions are the most effective ones. If you know roughly where you want to build, take a walk around and note any sites of interest. Not only could you find a real gem before it hits the market, but this will also help you to solidify your wish list of specifications.
Find Out If the Land You Want Is Available
Head to the local planning authority’s website to find out if the land is available. If you have no luck there, it’s worth paying the small fee to do a quick search on the Land Registry website.
Use a “plot finder” website such as PlotBrowser or PlotSearch to find land vendors. If you want to speed up the process and target land that already has planning permission, contact your local planning office or search the Land Bank Partnership’s website.
Set up notifications on any websites you decide to use to receive alerts as soon as a suitable piece of land becomes available.
Don’t Discount Brownfield Sites
Brownfield sites are not just old factory and warehouse sites; they also include housing, offices and retail premises that the council has flagged as suitable for future development. Search the Brownfield Land Registry to see if anything that suits your needs is available.
Research the Land’s Planning History
This is one of the most crucial steps in the process of searching for and buying land. If you fail to do this, you could be stuck with a piece of land you can’t get permission to build on.
Contact the local planning department and check the Planning Register to find out if there are any outstanding applications for planning permission. If the land already has permission to build, snap it up! Cutting out the planning application process can save considerable time and money.
Hire the Right Professionals
The most successful property developers understand the value of building the right partnerships to ensure they always have access to the skills, knowledge, and resources needed to complete projects on time and on budget. An estate agent with experience in property development can help you find the best opportunities and take some of the research work off your plate. It’s also worth considering working with a development agent. These professionals specialise in development sites and they may be able to find pieces of land that you might otherwise miss out on.
Search for Public Land
If the government or local council wants to sell a piece of land they are legally obligated to advertise it. Check the local council’s website to find out if any suitable pieces of public land are available that suit your needs.
Buy at Auction
Many private landowners sell via auction houses. Start getting into the routine of going to local auctions and you could bag a bargain. However, be aware that there is likely to be competition from other developers and you should always view a piece of land before committing to buy it.
What Type of Land Do You Need?
You need to understand the different types of land, what they offer, and their limitations before deciding on making a purchase.
Agricultural or farmland is designed to produce natural resources and for livestock to graze on. Demand for arable land typically outstrips supply, so competition is often fierce. Grazing and equestrian land are also popular amongst private buyers and developers. This type of land is typically found in rural areas and is rarely developed into another type of land.
This type of land is best suited for open industrial storage, car parking, stowing commercial vehicles or for large storage containers. Demand for logistics and industrial land has soared in response to the coronavirus pandemic. According to research by estate agent Savills, demand for this type of property in the Midlands in January 2021 was 223% higher than the same month in 2020.
This is abandoned or underutilised land that has the potential to be developed. It is typically land previously used for industrial purposes and is most often found in urban areas. In recent years, brownfield sites have become increasingly popular with developers as they are highly versatile and can be used for residential or commercial buildings. New land to the market attracts a lot of interest.
Greenbelt land is undeveloped land currently used for agriculture or left in its natural state, for example, an unfenced open field. The national shortage of homes has driven interest in this type of land. Eagle-eyed developers will snap up an unclaimed piece of greenbelt land as soon as it becomes available.
Land that has been previously used for industrial purposes or waste disposal can develop high contamination levels. According to the Environment Agency, there are around 300,000 hectares of contaminated land in the UK. A variety of things can cause contamination, for example, heavy metals, oils and tars, chemical substances, gases, asbestos and radioactive substances. Land is legally defined as “contaminated” where substances are causing or could cause significant harm to people, property or protected species, where there is substantial water pollution or where radioactivity could result in harm to people. Developers can build on contaminated land, but it must meet specific conditions set out by the local authority. This usually involves taking steps to reduce the level of contamination.
Developers usually refer to the above five types of land, but this lesser-known term is important to be aware of. Strategic land has the potential to be valuable now or in the future. It may be close to a developed area or one that is set to undergo major development soon. If there is easy access to motorways or popular amenities, strategic land can be a savvy investment. Sometimes a developer will develop a piece of land to link two areas together.
Once you understand the difference between these types of land, you will be in a much better position to identify the ideal opportunity for your next project.
How to Find Cheap Land
Land that is relatively low cost but has the potential to develop and turn a decent return on investment is the holy grail for property developers.
The best way to be the first to find out about these golden opportunities is to build relationships with local estate agents in the land and acquisition department, make yourself known with council members and establish a reputation for knowing your stuff and being easy to work with.
In the world of property development, who you know — and who knows and respects you — is key to securing the best pieces of land.
While it may be tempting to buy in more affordable locations, remember that properties in these areas are unlikely to rise in price as fast as more prestigious locations, so you may not get the best return on investment.
Auctions can be a great place to pick up cheap land. However, buying land unseen is a risky business, so proceed with caution!
Financing the Purchase of Land in the UK
If you don’t have the cash to pay for land outright, you’ll probably want to apply for a land mortgage. This is similar to a standard mortgage for buying a property, but it is not quite as straightforward to secure because there is no building to use as collateral for the loan.
To apply for a land mortgage, you will need to:
- Organise a professional survey.
- Inform the lender about boundaries and any other important information.
- Contact the local planning department to check if there are any developments planned nearby that could affect the property’s value or your plans.
- Outline the purpose of the land to the lender; this will impact the lender’s level of risk which will, in turn, affect the amount of deposit required and the interest rate.
If the lender approves your application, there will be a minimum of 30% deposit to pay. You may be required to pay a much bigger deposit if the size and type of the land or the level of risk to the lender warrant it. For example, a piece of land with a building on it is likely to be perceived as lower risk than a completely undeveloped piece of land because there is some tangible collateral. It’s also worth noting that not all mortgage lenders offer land mortgages, so your choice may be limited.
Stamp Duty Land Tax When Buying Land
There will be stamp duty land tax to pay on any land you buy, just as there is when purchasing a residential property over a certain price. The rates differ from those applied when buying a property for private use though.
For residential land, tax rates range from 0% for land valued up to £125,000 and 12% for land priced at £1,500,000 or above. For non-residential land, taxes vary from 0% for land priced up to £150,000 to 5% for land over a minimum price of £250,000.
First-time buyers are exempt from paying stamp duty on their first purchase of property or land on the first £300,000 of the purchase price.
Questions to Ask Before Buying Land
If you’re new to buying land, deciding what you need and knowing what information to ask for from the landowner is not always straightforward.
- What is the purpose of the land?
- What is my maximum budget?
- What specifications am I willing to compromise on or pay more for?
- What location(s) am I interested in?
- What is the local market for the type of development I’m planning?
- Who do I need to help me find and secure land?
- How much time do I have to do the necessary research?
- Ideally, when do I want to start building?
Ask the landowner:
- Has planning permission been granted and if so, what type, detailed or outline consent?
- Are there any outstanding planning permission applications on the land?
- Has planning permission been refused previously?
- Are there septic tanks or wells on the land?
- Are there any issues with the land?
- Are you selling via an estate agent or independently?
- What access rights come with the land?
- Is the ground in good condition?
- Are you aware of any development plans on the neighbouring properties/land?
- What is the guide price for the land?
- Why do you want to sell?
- Is the land connected to electricity, sewerage and water supplies?
Once you have bought and developed a piece of land, you’ll need to market and sell your properties as quickly as possible to deliver the best return on investment.
HBB Solutions has been working with property developers since 2011. We can help you attract more buyers and keep your development plans on track with our part-exchange and guaranteed purchase services. Stand out from the competition and grow your business by partnering with us today.