Buying sites with Outline Planning Permission

sas

I'm very curious as to how people are funding the purchase of sites with outline planning permission.

I've been told by alot of the major lenders (all of the ones I've spoken to) that they won't do a mortgage for a site unless it has full planning permission. This makes sense because a site without full planning is called a 'field' and isn't worth anything close to what a site is worth.

Is it the case that people buying these sites have large amounts of cash or equity in their homes to borrow against.

This makes it very difficult for first time buyers/anyone who purchased a home recently to actually buy a site to build on.

Any experiences anyone has will be greatly appreciated.

narommy

I was thinking about this recently (yesterday) while looking in an auctioneers window. I've no idea

Macy

I think the point about Outline PP is that at least there is no objection to some sort of dwelling on the site. It is better than just buying a field.

Never mind buying with OPP, some of the prices for sites near me with absolutely no planning permission continues to boggle my mind.

PH01

Outline PP is just as good as Full PP in that all the major steps have been passed. To go from OPP to FPP you have to submit design plans for the building. And there shouldn't be any reason why one would be refused FPP once they have OPP.
I don't see why the banks would see it differently? It maybe because the re-sale value of the site with OPP is less than that for a site that has FPP - Banks have to be mindful of mortgage default.

narommy

Actually I missed the point. Similar to Macy was looking at plots in the Naas area with no permission whatsoever. Being "sold as is". 2 acres for €300k

Absolutely mental!!!

I can't see getting money for sites with outline causing much of a problem (if you could get it for one with full permission) once you personally satisfy the conditions attached to the permission and you don't have a problem with those conditions regarding house type.

sas

Thanks for the feedback.

Still the problem remains. No full planning means no mortgage as far as the banks are concerned. This is not open to negotiation with them. There is a difference between OPP and FPP and they insist on FPP before they will loan any money against it.

I can understand the banks case. OPP is granted by the county council in the relevant area. Once you apply for full planning other bodies can get involved e.g an taigsce ( apologies if I've mispelt this). For example, a cousin of my wifes had been granted full planning provisionally and was inside the 30 day period for objections when they (an taigsce) swept in and objected. They never managed to over turn the decision and ended up letting the site go.
If they had bought that site outright with OPP they'd now have a field on their hands worth about 1/10 what they'd paid for it. Hence the banks want to avoid this sort of situation.

The vendors aren't prepared to sell the sites subject to full planning being granted so I'm stuck.

The Rooster

Did you try EBS for a loan?

sas

I hadn't gone to EBS yet but from their website it looks like they will loan money for a site based on OPP only.

That answers the question. I figured someone had to do it but handn't been able to determine who.

Thanks for the suggestion.

harto

I went through the process of buying a site last year and my experience was the
same with the majority of banks. I ended up dealing with First Active in the end
and although they don't offer the cheapest mortgage they were really the only
ones who would finance me for a site with OPP in the end. I found them good to
deal with and my contact there was up front and honest about the whole thing.
They will finance up to 80% of a site with OPP or FPP.

As she explained there is a considerable difference from the bank's point of
view between OPP and FPP. FPP is a ready to go approval to build a specific
house on the site. Since detailed plans are available the bank can get an approx
estimate of the final value of the house and gauge the risk on their investment in
the site value relative to final value. OPP is only a planning approval in
principle to build a house on the site. It might stipulate say a bungalow or dormer or
a two storey and may or may not limit the size of the house, so the final value
is more difficult to estimate. Also, everyone's idea of exactly what type of
house they want is different. So there is a risk that if you buy the site and
don't get the type of house you want because of restrictions, you will sell on
the site. At this stage you have eaten up some of the time length of the OPP by
perhaps 6-12 months. The OPP may have been up to 6 months elapsed already by the
time the original owner sells it to you. Now you are trying to sell a site which
is heading into the 2nd half of it's validity period. Although planning lasts 5
years, with OPP you have to apply for FPP within 3 years. A potential buyer may
be put off by the reducung time frame. Additionally, the site already has a
negative result against it due to the refusal of your plans, so potential buyers
could be put off. Now you are left with an expensive field for growing spuds ...
but you see where I'm coming from and why most banks don't like OPP.

First Active were prepared to take the risk, but they include conditions to make sure you have are active in applying for FPP within 1 year.

Hope this helps !

The Rooster

I think generally if you have OPP, you will get FPP, but you might not get exactly the house you want. I suppose there is a risk that Teagasc or similar could come in and object, but I'd guess that would only apply to specific cases, and would be unlikely in the vast majority of cases.

But everybody needs to cover their bases, and not take unnecessary risks. In my case I got a council planner to come out and look at the site and give his view as to whether we would get permission, before the purchase was finalised. He said he could foresee no problems with what we wanted (which was quite different to what was in the OPP). But he couldnt give anything in writing and couldnt give confirmation until he had the detailed plans. Still it did provide comfort to us.

Of course the banks will do their best to emphasise the risks, but IMO they exaggerate them. I went through EBS and had no problems at all thanks to a pragmattic approach taken by the guy I was dealing with. Irish Permo had previously said to me that they wouldnt do it. But now they've lost me paying them interest on a big loan for the next 25 years!

sas

Thanks for the the info. everyone. Spoke to my local planning office this morning and they did give me some info. on what OPP means to them. Seems reasonably risk free.

With the going rate for a 1/2 acre site with OPP now heading for 100,000 in my area this is going to get expensive!!!!!!!!!!!!!!

The Rooster

Count yourself very lucky. I paid a lot more for a lot less, and was offered €15k more again a month after buying.

the 9% stamp duty hit is also a kick in the pants! At least there's no duty on the building costs.

jd

The Rooster wrote:

. I suppose there is a risk that Teagasc or similar could come in and object,

Not Teagasc-you mean An taisce..
This si the 2nd time (at least) that someone has made that mistake..

yop

"the 9% stamp duty hit is also a kick in the pants! "

Did youi have to pay this on the site that you bought??

sas

I'm guessing from Yops post that they are unaware that sites sold with no buildings on them are subject to stamp duty in ireland.

See http://www.oasis.gov.ie/housing/buying_a_house_or_flat/stamp_duty.html#id3115529

The Rooster

yop wrote:

"the 9% stamp duty hit is also a kick in the pants! "

Did youi have to pay this on the site that you bought??

Yip, mine was over the 150k mark, so I paid about 15k in duty. Lovely feeling :mad:

yop

No way, another hidden tax!!! 4 fk sake!! sin é what can be done!!

thanks lads

daveg

We have been looking for a site over the past 2 years. We bought a site 4 weeks ago with outline planning but bought the site "subject to full planning". Seemingly this is the way most "outline" planning sites are bought. And yes Yop the stamp is a pain in the arse but as someone pointed out at least you don't have to pay stamp duty when building the house.

sas

My experiences differ greatly to those of daveg. None of the sites I have looked at in the last 18months with OPP were subject to full planning. Selling the site subject to FPP negates the reason the seller applied for OPP in the first place. I had assumed they were subject to FPP and actually had to walk away from 1 site we had an offer accepted on when it turned out it was being sold as is.

yop

Has anyone bought a site subject to planning lately??? We finally got our final planning there last week on a site subject to planning.
Anyone know the exact process that is now to happen

sas

Another cost that comes into the equation when building is the council development contribution scheme. This is very much specific to each county council. Some did not implement it. Those that did use differing rates. For example though in Laois if I start building on a site I have to pay the council 6500 Euro the day the work begins. This amount was dropped coming up to the last local elections to somewhere in the region of 4000 to 5000. It was only meant to be a temporary drop though. I don't know where it currently stands.

The doc explaining what it is for and how it works ( in Laois ) is here for those interested.

http://www.laois.ie/Shared/DocLive/SCHEME1.PDF

yop

Killer alright, we are lookin at 350 euro

The Rooster

I have to pay a levy to Fingal County Council of about 30k for "amenities in the area". Bast@rds.

Has anyone bought a site subject to planning lately??? We finally got our final planning there last week on a site subject to planning.
Anyone know the exact process that is now to happen.

1. Decide on whether to get a builder or go direct labour

2. If going with a builder your architecht will draw up very detailed plans to send out to 3-5 builders to get a quote.

3. Pick the builder you like and agree a price and timeline.

4. Builder starts building and its time for you to let him know exactly what you want re floors, doors, walls, bathroom fittings etc. etc. etc.

sas

Ouch, the Rooster you paid 15K stamp duty and then 30K to Fingal CC. Thats absolutely shocking. I was looking over figures on how I expect to fair should a site work out and was thinking I'd get stuck for around 13K all in (stamp duty + council money). I was feeling hard done by too!

yop

thanks Rooster, what I actually meant as regards the site, how exactly you go about getting it signed over, how long it takes kind of thing.