How should I finance this development?

[Carolina]

Hi

I am looking for some advice. I have a plot of land and about 75K in cash. No debt and an income of about 90K. I want to build a house for myself on this site but there is still room for about 3 other houses. I've spoken to the planner and he says it should be OK.

I could finance the building of one house (350K build cost) out of my own money and income but what should I do with the other sites? Should I just get the PP and sell them? Should I try to get them built myself and then sell them?

One concern I have is that I'd like the houses to be built in harmony with each other. I don't want to sell a site and find the neighbour has built something really ugly next door.

Is it possible for me to borrow enough cash to build the lot? Or is there some imaginative way to do what I want here? Maybe a partnership with a builder? I am not trying to make a load of money out of this and I want to keep risk to a minimum as I have no experience with building.

thanks

 

[rfurlong]

carolina,

you are in a very lucky position and many builder/developers would be very interested in some sort of a Joint Venture with you - including me!

bear in mind the following if you are going to develop on your own:

The local authority will impose significant development levies on any meaningful development (ie greater than 1 house).

Their may be a requirement to provide social and affordable accommodation (or significant financial contribution in lieu) on the site.

There will be significant capital contributions for utilities (is the site rural/suburban?).

There are serious tax implications which your accountant/solicitor will obviously advise you on.

You may be better off selling the entire site with FPP/or subject to planning as a developer could potentially unlock greater value if conditions re: aesthetics/density were not being imposed by you the seller. The increased return to you could allow you to buy a more suitable property nearby?

hopes this helps

RF

 

[tallpaul]

If you propose to live in one of the houses to be built on the site there is a danger of selling on to a developer in that you will lose control as to the number and type of houses that will be built beside you. You could imagine two or three detached houses, a developer could imagine two or three tall apartment blocks overlooking your garden.

My advice would be to seek PP on the site and then sell the site in individual lots with PP secured.

 

[rfurlong]

Its not as simple as that - as I alluded to previously, you will get hit with the social and affordable requirement (ie you might be required to hand over a COMPLETED house to the local authority as part of the overall site(s) disposal process) if you go down the road suggested by Tallpaul.

Just make sure you factor in ALL costs - you cant just get planning permission and sell on lot-by-lot and avoid the usual levies and constraints that developers have to deal with and make no mistake about it, you will be treated as a developer by the revenue and the local authority. This is why I suggest you either sell the site in its entirety or alternatively partner with a developer who can help you extract the maximum value from your asset.

 

[OhPinchy]

You are in a very nice position here but you will have to research this all properly to make sure it all turns out well for you.

If I was you my primary concerns would be making sure you get a good price for what you do sell, but also that the buildings around your eventual home will be to your liking. If you get the PP for 3 separate houses and sell on that basis there is nothing to stop a developer from re-applying to get PP for apartments.

If you know anyone, or even a group of people that you know and trust it might be an ideal investment for them and you if you can agree that they finance it but it must be done to your liking (hey, they’ll be making a nice few quid either way). Failing that checking out several developers and seeing if you strike a chord with and like might be the only way for you to maintain control over the other plots. I know someone who might be interested if you are in the Dublin area so PM me if you want their details.

By the way, 350k is a lot for building a house so I’m assuming it’s a beauty!