A win-win for selling family owned land with Sarah Wright
Sarah Wright spoke to TrustedLand about selling family-owned land to other family members for development.
You have an interesting perspective in that you looked to gain value from the family-owned agricultural property. What advice would you give to other landowners ‘sitting’ on unused agricultural land/barns?
If someone was to look at doing this now, I would strongly advise that they use a consultant with recent experience of agricultural PD and who knows your local council.
We had a win-win situation, which is what you should always strive to achieve. We were able to help out our parents by buying the plots, and help them financially to finish the farmhouse renovations, but yes, of course, it had to be financially viable for ourselves otherwise it wouldn't have worked. For two of the siblings that were still living at home, this has been a great way for them to get on the property ladder with a bespoke built first home, that has a good chunk of built-in equity.
Did the family consider disposing of the land prior to your involvement?
Our parents actually applied for the permitted development of the agricultural buildings at the same time that they were getting planning permission to extend the existing run-down farmhouse. Whilst we were awaiting the prior approval to come through, there was a change in circumstance for my partner and his job, and so we discussed our possible involvement with the project and my partner being project manager on the site.
Thankfully, all the siblings agreed to the proposal, and so we started to work out financially, the best way to do the conversions; which ended up being a separate self-build mortgage product on each plot as there was one plot per sibling. This meant that once the PD was agreed, all ducks were in a row ready for us to start straight away; so a quick turnaround from the word go.
What are the advantages and disadvantages of developing on family-owned land?
The pros for our parents were that they were not leaving themselves open to a site that may have been started but not finished by the developer, which would have affected the outlook from their farmhouse. The contractors we hired were sympathetic to the site and were made aware that our parents lived in the farmhouse.
The trust element is there with family, which allowed us to structure the deal so that we didn't pay the full price of the plot at the start. Instead, we staggered this as and when tranches of money came in from the self-build mortgage. This was enough for our parents to continue their renovations of the farmhouse, but it massively helped with our cash flow and kept the project moving.
The cons are family politics, and the potential for frustrations to crop up as everyone is working very closely on one site.
What considerations did the family take into account prior to deciding to develop the land/barns? What prompted development?
PD rights came into force at the same time as the inheritance, and so it was ideal timing to look at doing the developments in order to release cash for them to do the renovations.
What do you believe can be done between buyers and sellers to improve the buying process?
More clarity for sellers in the process, and for a site to be fully appraised before the final offer.
What has been your most challenging buying experience (with a property owner or closing a deal generally)?
I have been really lucky with the HMO portfolio I have built, with all sales going through as expected.