Considering selling part of your garden for development?
With the rising cost of land and spiraling house prices, many people are considering selling part of their garden as a building plot to generate capital. Claire Gummow, Chartered Legal Executive at Penderlaw Solicitors, discusses the considerations and implications which ought to be taken into account before such a plot is put on the market, or gifted to a family member.
1.Check your title deeds – beware of any covenants
The first thing to do when considering selling part of your garden is to check your title deeds to find out whether there are any restrictions on the use of your garden and property. It is possible that there may be a covenant which prohibits the garden and property being used for anything other than a single private dwelling, or prevents anything else being built in the garden, apart from sheds/greenhouses etc. You could also potentially discover that a covenant requires the land attached to the property to only be used as a garden. It should be also pointed out that a covenant on a title is independent to any planning permission and its potential conditions, so planning permission may have been granted, but issues may still arise if there is a covenant stipulating that the land cannot be built on. These issues highlight the importance of thoroughly checking deeds before applying for planning.
2.Check with your mortgage lender
If you have a mortgage, your lender’s consent would be needed to sell off part of the property, as you would be selling part of their security. Your lender may require a formal valuation to be carried out which will incur fees to be paid. An additional property could also adversely affect the value of the retained part and may potentially have an impact on its amenity such as access. A lender will normally always charge an administrative fee to consent to any Transfer of Part – the term used for the process of selling off part of a property and registering a new title with the Land Registry.
3. Think about access
As well as the financial side of things, is important not to overlook practical considerations such as access. It may sound obvious, but how will any property built on the plot you have sold be accessed? Will there be a shared access between your property and the new build? What sort of boundary marker will there be? If there is to be a fence or hedge of some kind, it is worth considering specifying at this point what type of fence /hedge is permitted, along with a maximum height, if required, within the transfer document at this stage.
4. Planning permission & impact on your existing property
Considering what is actually going to be built on the land is especially important if you plan to remain in the existing property. You may want to have some control over what is to be built, for example you may want to stipulate the maximum size, height of the new building, as well as specifying the style and/or type of building, and its proximity to your existing property. A document called a Transfer Deed will be drawn up for the developer, but it is a good idea to have at least thought about all these aspects from the start of the process. A transfer deed is a legally binding document that transfers ownership of land and/or property and specifies within it, terms under which the transfer is made e.g., how the land is to be used and what can be built on it. As mentioned earlier, if only part of the property or land is to be transferred, a Transfer of Part will be used, so that a new – and separate – registration is made for the new title with a publicly obtainable Land Registry title plan. Should an aspect be missed/not included at this stage, it could be costly to amend at a later date.
5. Tax implications of the sale of the land
Selling off part of your garden could mean that you may be liable for Capital Gains Tax, although it is possible, subject to certain terms and conditions, that can claim Private Residence Relief (PRR). To obtain PRR on an area larger than 0.5 hectares you would need to show that the land was required for the use and enjoyment of the house. Land that has been used exclusively for business purposes is also ineligible for PRR.
Get in touch
If you are considering selling part of your garden for development, our friendly and experienced team at Penderlaw Solicitors would be delighted to hear from you. In line with our transparent pricing policy, we will provide you with a clear fee estimate following an initial discussion. Further information about our pricing is available here. You can email us firstname.lastname@example.org or call us on 01872 241408.