land buying finance options?

[samlf]

I have seem some equestrian land near to me for sale, it seems a reasonable price for what it is (around 4 acres, well built 3 stables with feed room and concrete area, post and rail fencing, sand school). We have been considering options for possible purchase.

I will call estate agents tomorrow, but just wondering what everyone else has done?

We don't have the money to buy outright (~100k), I only work part time and I am 21, however my parents seem interested and have a reasonable household income.

To be honest we have no idea how you would go about borrowing money to purchase the land. I don't know if there are companies who specialise in this kind of finance, whether you would have to submit business plan etc?

The idea would be to have my one horse there, and have 2/3 liveries (probably DIY or part if more profitable).

Eventually looking to build a house on there or a log cabin.

Any ideas much appreciated.

 

[*hic*]

Simplest way of buying is for your parents to extend the mortgage on their house if they have sufficient equity.

A business plan involving 2 or 3 liveries will not generate sufficient income for a business mortgage and you'd still have to raise a hefty deposit.

At that price I suspect getting planning permission is a very distant dream.

 

[OrangePepper]

It is highly unlikely that you will get planning permission to build a house on it.

You and your parents will have to get a mortgage to buy it from a specialist land mortgage company. You will have to demonstrate your ability to repay it.

If you have liveries then you will have to pay commercial rates.

 

[Polos Mum]

You'd be looking for a business loan, not easy to come by and they need a large (50%) deposit. They also have high interest rates certainly over 5%.
So you'd be borrowing £50k at say 8% so you'd need a business plan to prove you could make £300+ profit a month - might be tricky on 2 diys

might be easier to see if your parents could extend mortgage on their current home - easier and cheaper

 

[samlf]

Thanks, I understand that about planning permission so looking into something like a log cabin which we hopefully should be able to have, but to be honest living on the land is not the priority.

Sounds like consensus is that extending the mortgage would be best way forward.

Really hope I can find a way to secure it, as it would be perfect! Would I still have to pay business rates for two liveries?

 

[samlf]

bumping

 

[*hic*]

IF you have liveries you are a running a business, at that point you become liable for all sorts of increased costs and of course you need to make sure there are no restrictions on the planning preventing you from doing so.

If you want to live in a log cabin you still need to go through the same hoops as for putting up a bricks and mortar dwelling or siting a mobile home.

 

[LynH]

Rates apply to non-domestic buildings not just those used in a business. If you wish to have the stables classified as domestic and not liable for non-domestic use the stables, and an arena if there is one, need to be within the curtilege of a house and must be used by the occupier of the house. You can reasonably rent one or two stables out in the same way you can rent rooms to a lodger but you do need to prove they are primarily for domestic use. If there is no house adjacent to the stables you will have to pay rates whether it is a business or not.
It would be worth checking the planning permission which is already in place for the stables as this may state that the stables are for private use so you would not be able to use them for a business anyway.

 

[Orangehorse]

You and your parents need to go into the bank to see about having a loan, or as above extending the mortgage. Land is a good investment, the bank will keep the deeds until it is paid off!

Very good idea to check any conditions about planning permission. Many stables are given pp on the condition that it is for private use only. There should be an information pack with the estate agents selling the land, read through carefully. If not, contact the local council who gave the original pp.

 

[samlf]

I see. Well it says 'non-commercial' use, does that mean that pp means no liveries or does it mean that it is classed as domestic? It's all so confusing.

I know for a fact that they have always had liveries, because I used to be there and also because I used to be good friends with their daughter. Although, of course, that doesn't mean that they were allowed to.

It would hardly be a business- just making enough to help cover the payments, although I suppose that doesn't make any difference to them ,even if I am not making a profit?

 

[paddy]

Many livery 'businesses' do not make a profit. That doesn't mean they're not treated as a business for business rates purpose. Although there appear to be a number of livery yards who do not pay business rates.

 

[Orangehorse]

I think this is what is classed as a "grey area." When pp is granted for stables, etc. and they say no commerical use they mean that you are not going to run a riding school, or a large livery yard. Having a couple of friends with their horses seems to be common, although not strictly according to the pp. I have known members of the Parish Council see an advert for livery and known that the pp was for private, and told the local Council about it. Not sure what the outcome was.

 

[Polos Mum]

By the time you've paid for proper insurance and rates, along with water/ electric and maintenance I'm pretty sure 2 DIY's would leave you nothing to put towards the loan repayments. I'd do the maths very carefully. It may have been a 'below the radar' uninsured yard before but if you're putting up your parents house to raise the cash and looking to apply for planning later on you might want to do everything above board and by the book.

Perhaps think of other ways of funding the repayments, making hay, bringing on some sheep for meat etc. and remember you'll be saving your own livery which can go towards repayments.

 

[LynH]

My pp says private use only but as I mentioned above the council said that I could not run it as a business but could rent a couple of stables (not all of it) in the same way that you can rent a couple of rooms to lodgers.
Commercial or non commercial for planning purposes is entirely different to domestic or non domestic for rates. You can be liable for non domestic rates even if you don't even use the stables or if they are not rented out at all. The criteria for domestic rates is that they are close to the house and that they are used by the occupant of the house for leisure activities. I recently had the council here working out if my stables were domestic or not. They measured how close they were to the house and said as I had a three bed house and have three stables then it was reasonable that the occupants of the house would be using them for domestic purposes/enjoyment.
If you are liable for non domestic rates then you are better off being a business as you can apply for small business relief.
The problem you have is that a) the number of stables aren't sufficient to bring enough income as a business to satisfy the banks requirements for a business loan or mortgage so you will need to find another source of income to purchase. b) the pp specifies non commercial so you cannot run a business that would satisfy the bank's requirements and c) as there is no house on site you will have to pay non domestic rates but will not be able to apply for small business relief due to a and b.
I have three stables at home and by the time you pay for public liability insurance, care custody and control insurance, land maintenance equipment or contractors to do the maintenance, water charges, muck removal, rates, electricity etc etc the price you need to charge to cover your costs will be so high there is little profit on top, if any. The more stables you have the more liveries the fixed costs can be divided by.

 

[samlf]

Yes I don't think DIY would be viable, but possibly part/5 day livery. That's interesting about other options, not sure I'd get enough hay off 4 acres to make enough though, and have no idea about sheep.

Thanks for the clarity regarding commercial and domestic, seems it'd be both non-commercial and non-domestic.

Think the best thing regarding business rates is to contact the council and see if they can clarify exactly how it would work and what I would be expected to pay for that.

The other option I can think of is to buy an area of land and build stables and a school, but would have to look into that more aswell.

 

[carthorse]

I have to pay non domestic rates but I am not allowed liveries on my planning. Are you sure that these stables have planning permission because if they do then they will be paying rates. Mine are £80 a month and I have 5 stables

 

[lachlanandmarcus]

I see. Well it says 'non-commercial' use, does that mean that pp means no liveries or does it mean that it is classed as domestic? It's all so confusing.

I know for a fact that they have always had liveries, because I used to be there and also because I used to be good friends with their daughter. Although, of course, that doesn't mean that they were allowed to.

It would hardly be a business- just making enough to help cover the payments, although I suppose that doesn't make any difference to them ,even if I am not making a profit?

From a planning perspective it means that anything more than incidental livery use to your own private use would not be allowed, nor would taking significant sums in livery fees. So for eg if you have 4 stables and two horses of your own and get a pal with one horse in one stable to give horse company when other one is out riding, and share duties and holiday cover and they give you nominal money then that would probably be fine, but you having one horse and renting the other three out on a commercial basis and charging for services etc probably wouldn't as there's more of that commercial activity than there is of the private stuff.

In respect of non domestic rates, this is a different system, and you can be charged these whether you use it all privately or not, the key is whether the land is divorced from a dwelling and /or outside the curtilage of the dwelling. Many in this category haven't been identified and so don't pay the non biz rates, but that's only cos it's fairly recently that cash strapped councils have started to get busy identifying them as a cash cow.

Personally I don't think the rates should be charged if they are private use only and in the same land parcel as the house and instead the council tax band should reflect the facilities that come as part of the house, that would be more coherent and match the planning approach, but that's not how it works currently, it does seem unfair that you can be restricted to private use of a stable planning wise and still have to pay non Dom rates on it.

 

[JillA]

If you have any competition venues near by you could try for occasional overnight stays - more lucrative for the amount of time than regular liveries and in between times you get to call the place your own. Or holiday liveries - anything which is not on an ongoing basis would generate an income, albeit a sporadic one. As for rates - my council granted PP for both a barn of stables and a manege, all with provision that it is non commercial, and at no time have they asked for rates on the buildings. I don't know whether that is because they don't qualify or there is no communication between the departments.
And if your stables have been there, open and visible for all to see, for a period of (I think it is) 4 years without objection from others, they cannot require you to get consent for them. Check up on the period though, I'm not sure whether it is 4 years or 6 and it may vary according to the type of development.
Residential buildings, whether temporary (log cabin, caravan etc) or permanent ALWAYS need planning permission and it is all but impossible to get in a rural area. Speak to your planning dept about it, they will tell you the current situation, and IME they don't bite lol.

 

[Oliver12]

My stables etc all had planning permission but I've never been asked to pay rates. I keep very quiet about it....

 

[The Fuzzy Furry]

My yard is fine for me to use - but as long as I do not run commercial livery.
Commercial in the deeds is seen as 'making a living or profit' from the keeping of horses and ponies.

So, tho I only have the odd livery for a few months, I don't see it as a problem for me

OP, you do need to find out exactly what is in the deeds, what covenants (if any) before heding off to planning dept

 

[samlf]

Thanks, really helpful all the replies.

So as long as I don't make profit I can run a 'livery' on a non-commercial property?

I just need to find out about business rates really, and look more into other options but I'm now swaying towards buying land and building exactly what we want.

Possibly doing full grass livery.