Buying Grazing Land…How easy is it?

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loulabelle

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I currently rent 11 acres from a farmer (and am in the process of building 5 stables and a barn there also). He has informed us that in a few years he will be retiring and selling up so we have asked if he would give us first refusal on the plot we are on (its separated from the main farm by a road).
This would be ideal as we are very happy where we are and have plenty of land for our 4 horses so they aren’t short on grass. My question is how easy is it to borrow money to purchase land? We don’t currently own our property we rent but this is also something that we would like to do in the near future, would this work in or against our favour?

Thank you in advance
 
I imagine if you go the the bank and explain about the field and the horses they would probably help you out. But do you really want to borrow money?
Personally I was always told if I can't afford it, don't get it. But that's just me.
 
If it meant I could have my own land then yes I would definitely look into borrowing money as its an investment for me and my children...aslong as I could manage the repayments, I'm paying to rent the land anyway :)
 
I doubt any bank will touch it. You will need to look into land loans of which you normally need a substantial deposit upwards of 20%
 
We borrowed against our house - taking a loan for home improvements and used that money to buy land. We were in a good position with plenty of equity in our property. There must be specialist ways of borrowing for land, but I expect that the interest rates may be less favourable than for property mortgages.
I don't agree with CrazyCobLady - if we all stuck to that rule noone would ever buy a house or new car etc. There are some things you simply cannot save up for, but are worth the monthly cost of a loan. You need to examine what you pay out in livery/rent when considering purchasing and land is an investment whereas livery is money lost.
 
It is quite hard to get a loan for land as I understand it - we put my land on the mortgage as "home improvements" haha but it was only a couple of acres followed a few years later by another couple. You could be looking at a substantial amount for your land especially if he has it valued with the buildings on it and it has planning permission - I would be agreeing a price now before you put the stables up - for 11 acres without anything on round here you would be looking at up to £100k but you could plan ahead and split off 3 acres to sell on once you have bought - if you put stables on the 3 acres and got planning it could be worth a good portion of your total costs.

sorry no great ideas about borrowing though - if you have a house at that point unless you have put down big deposit you will not have the equity to borrow that kind of money against it ! Maybe a bank robbery or kindly relative ?
 
In my experience, it's not any more difficult to borrow money for land than it is to get a domestic mortgage. Land has only one way to go pricewise long term - up, thus lenders consider it good security. You can get 65-75% loan to value, depending on lender, so you do need a substantial deposit. By far the easiest to deal with is the Agricultural Mortgage Company.
 
You would need upwards of £100,000 for that round here .
Your options would be loan from the bank secured against your house.
Remortgage the house if there's enough equity in it ( probally easiest and cheapest)
I don't think an agricultal loan would be possible on a block of land going to equestrian use.
You will also need to be careful to check the planning consent position as it comes out of agricultural use.
 
There are lots of factors to take into consideration. You say you are about to erect stables and a barn. Have you applied for planning permission for these or are they all mobile units? The price of land which is deemed solely as green belt grazing by the authorities would be different to that which has planning permission for amenity use and stables. I would be wary of developing land owned by someone else, as the price the farmer may set could rocket once the structures are in place.
 
Obviously I dont know your circumstances. As stated by another forumite the Agricultural Mortgage Corporation will loan against land, but you need a good deposit, usually 25%. When I had the opportunity to purchase additional land I did not have that kind of money laying about but since the house was paid for I remortgaged the house and bought the land outright. I feel you are in something of a vulnerable position here. You first need to ascertain what agricultural land usually fetches per acre in your area. Then bear in mind that smaller parcels used for horsiculture usually attract a premium. In my area it usually realises10k an acre. Given that you are developing the land I am assuming you have applied for planning permission? Or has the farmer done it but you are erecting the buildings at your expense? If so you need the security of a written contract. Should the farmer die/ fall ill and the farm be put up for sale you would at least have the limited security of being a tennant. I would certainly not invest my money buildings on someone else's land without a formal written agreement. The same goes for any agreement as to first refusal. Sadly the gentleman's agreement or handshake holds little sway where selling such commodities as land is concerned. Again if you want to be sure to secure the land it needs to be in writing, otherwise it will no doubt go to auction. Business is business I am afraid and people naturally want to realise as much for their assets as possible leaving little room for sentiment. At least if you have an agreement in writing it would give you an opportunity to start saving the deposit required by an organisation such as the AMC. Good luck at realising your dream, it's do-able but you need to be savvy about how you go about it.
 
The land next door to my livery has 7 acres and a wooden stable block of 5 stables. It has just sold for £150k, so your 11 acres and new stables etc would cost you a lot of money. That being said, if it inst for a few years yet, you have plenty of time to start saving up for a substantial deposit if you were to go to a land mortgage type place.
 
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