Property is still a solid investment, even with interest rates on the rise. Buying land for development offers the chance to really make a profit, but it’s a complex game. You need to know what you’re getting into before you commit your cash.

Expert Yulia Barnes wrote a step-by-step guide, on the PropertyWire website, to the due diligence you need to carry out before you buy. Here’s a summary:

1. Title Trouble?

First things first, make absolutely sure the seller actually owns the land and has the right to sell it. You don’t want to find out later that someone else has a claim on the property!

This means checking:

• The Title Deed: Is it clear and free of any “encumbrances” (legal restrictions) or outstanding debts (liens)?
• Any Existing Contracts: Has someone already agreed to buy the land, or are there any agreements in place that could stop you from developing it?

2. Local Rules & Restrictions

The local council sets the rules about what you can build, so you need to know them inside out.

Here’s what to check:

• Zoning: Is the land zoned for the type of development you have in mind? For example, can you build houses, shops, or factories on it?
• Planning Permission: Is your development likely to be approved by the local council? It’s worth talking to them before you submit an application.
• Environmental Impact: How will your project affect the environment? This could include things like wildlife habitats, protected areas, or pollution risks.

3. Hidden Hazards – Environmental Assessments

The land may have been used for industrial or agricultural purposes in the past. This could mean there’s hidden contamination or pollution that needs to be cleaned up before you can build.

Don’t just assume it’s clean. Do the following:

• Environmental Site Assessment (ESA): Get a professional to carry out a full environmental check. This will tell you if there are any problems and how much it will cost to fix them.
• Think Big Picture: How will your development affect the surrounding environment? Make sure you’re doing it in a sustainable way.

4. Know Your Boundaries – Land Surveys

You need to know exactly where the boundaries of the land are. A fence or wall might not be on the official boundary line, which could cause problems later.

Here’s why a land survey is crucial:

• Clear Boundaries: You need to know exactly what you’re buying, and a survey will show you the exact dimensions of the land.
• Cost Savings: It’s better to find out now if there are any boundary disputes, rather than wasting time and money later on.

5. Easements – Your Right To Access

Easements are legal rights that give someone else access to your land for a specific purpose.

Here’s why they matter:

• Access and Services: Do you have the right to access the land, and can you connect to the necessary utilities like water, electricity, and sewage?
• Potential Problems: Existing easements could limit what you can build, or you might need to get permission from someone else to use their land.

6. Planning Permission – A Crucial Step

You need permission from the local council to build anything on the land. The wrong plan can kill your project.

Here’s how to get it right:

• National Planning Policy Framework: This is the main guide for planning permission, and it sets out the national rules.
• Local Plan: Each local council has its own plan for development, so check what it says about your area.
• Early Talks: Speak to the local council before you submit a planning application. This can help you avoid any surprises.
• Professional Help: For more complex projects, it’s worth getting advice from a planning consultant and a lawyer.

7. Infrastructure – What’s Available?

You need to be able to connect your development to roads, water, electricity, and sewage.

Before you buy, consider:

• Existing Infrastructure: Is there enough, or will you need to invest in new infrastructure?
• Cost Implications: Bringing in new services can be expensive, so factor this into your budget.

8. Financial Reality Check – Taxes and Costs

Land is only part of the story. You need to factor in all the other costs, including:

• Purchase Price: How much will the land cost?
• Taxes: There are various taxes involved, such as property tax and capital gains tax.
• Development Charges: These are fees you might have to pay to the council for the right to develop the land.
• Construction Costs: This will depend on the type of development you’re building.
• Feasibility Study: Get a professional to assess whether your project is financially viable.

The Bottom Line

Due diligence is vital when buying land for development. By following these steps, you’ll be in a much better position to make a sound investment and avoid costly mistakes. Remember, it’s better to do your homework upfront and avoid surprises later.