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Purchasing Land

The government has plans to make more plots of land available on a ‘build now, pay later’ basis. Depending on how things pan out this could be a major stimulation for self build as there would be less of a financial burden during the period of building to completion. Recently the government in conjunction with the building industry has launched The Self Build Portal to promote self build in the UK and it has a page on finding building land

The Direct Government website has good coverage on purchasing land and property including finding local solicitors. Of course you do not have to use a solicitor; you can use a licenced conveyancer or, if you are feeling particularly enterprising you can do it yourself, though this is not for the faint hearted.

Purchasing land

Assuming you have found a plot of land which you are interested in and a survey indicates that it is OK then there are several ways that a vendor might use to sell the land.

Informal auction

This is the normal method except in Scotland. It may involve an estate agent or it may be done directly between the vendor and the potential purchasers. Now that a lot of people use plotfinder websites to advertise on the internet it is possible to sidestep the fees charged by estate agents.

If you find something you like it may be to your advantage to ask around and find out how long the land has been up for sale at the present price. If the vendor has been struggling to sell it then they may accept a lower offer.

Because of the way the law works, either party can change their mind right up to the point of exchanging contracts, no matter what verbal agreements they may have made (this is unlike normal contract law where verbal agreements are usually binding). A solicitor or licensed conveyancer is normally employed to carry out the conveyancing (although you can do some or all of it yourself).

Public auction

When land or houses are sold at public auction the prices are sometimes a little lower because it is basically a cash sale (with a set percentage payable immediately – usually 10% and auctioneers fees, typically of £200). This rules out a lot of people who would have to arrange mortgages beforehand. It is very fast and direct with no chance of protracted haggling or gazumping.

Informal tender

All the offers are made in sealed envelopes. The vendor can then choose which one to accept based on information supplied by the purchasers about such things as when they wanted to complete or what their financial circumstances might be etc. After opening of the envelopes and acceptance of a tender the two parties can still negotiate or back out. Only a very small percentage of land is sold in this way.

Formal tender

This is the method traditionally used in Scotland. All the offers are made in sealed envelopes. All envelopes are opened at a stated time and the vendor can then choose which one to accept based on information supplied by the purchasers about such things as when they wanted to complete or whether they were in a chain. The acceptance of an offer constitutes a legally binding agreement.

Both of the above tender methods tend to work in the vendor’s favour in a strong selling market because each bidder has to submit their best offer because they have no way of delaying or negotiating if they suspect that there are no other strong bidders.

With the formal tender method, in a strong seller’s market, there is an even bigger incentive for the bidder to bid high because not only do they not want to lose the purchase to some other bidder by a very small margin but they cannot bid on a second plot until they know the outcome on the first one (otherwise they might end up buying two plots because each one would be binding).

Finance and legal

Whichever method is used, you will need to have finance approved and available; not only the mortgage itself but also any deposits necessary. See the section on finance. You will also need to have a solicitor or licensed conveyancer to do the conveyancing.

You may have to pay Stamp Duty Land Tax and you will also need to pay for local authority searches and Land Registry fees which may be around £200 each.

Public liability insurance

As soon as you become the owner of land or property you potentially become liable to claims from the public for accident, injury or death on the property. If there is any risk at all to the public, even if they are trespassing it makes sense to get cover.

legal documents

Net Lawman has various contracts available including ‘Options to Buy’ under the Property section.

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