Is building a house from the land-up the best option for you?

Buying at an auction is one of the most exciting and potentially profitable things you will ever do. It avoids all the lengthy purchasing procedures you will have to endure should you choose to buy a property that is already constructed. At an auction, as soon as the hammer falls the property is yours as well as all the potential problems should you not have done your homework properly - and the same can be said when buying a piece of land!
Strangely enough, even in this day-and-age when many thousands of properties have been sold at auction, buying land for construction is still classed as brave when it comes to investments.
As with anything worth investing in, the best way to reduce potential problems is to research everything about the investment before actually getting involved with it. The risks of placing a bid at an auction without doing your homework thoroughly beforehand are immense.

Potential disadvantages
  • Make sure you know exactly how much you can afford and the funds have been sorted beforehand. You will need identification and a10% as a deposit to be available on the day. The remainder will need to be paid within the next 28 days and mortgage lenders need far more then that to approve a loan. There are many cases out there where people have paid the deposit then lost it because they haven't come up with the remainder in time.

  • Take a builder or friend who understands construction to the auction with you. Make sure you have worked out how long it will take you to get a return on the perceived construction to allow you to get a return on your investment. It is all to easy to over spend due to not allowing enough capital in your project. Make sure you check if the auctioneer charges any additional costs as some charge entry fees to allow to be included in the bidding process.

  • As the bidding increases so will your heart rate, believe me. This is where you have to make sure you have control on the situation and don't get carried away. It can be very easy to get carried away and go over budget especially when you have put so much effort into analysing the details prior to the auction.

  • Exactly how much a piece of land costs will depend upon many different factors - it's location, size and proximity to any major links such as railways. Undoubtedly the biggest factor is whether it has planning permission so make sure planning has been approved on your land before buying if your intention is to build on it. Many pieces of land are sold without planning and only worth a fraction of one that has planning approval.

Potential advantages
  • Buying a section of land before any construction has been carried out will inevitably be a cheaper option then if there is a building already on it. Even if planning has already been approved there are many reasons why this could be withheld or even fall through before construction is completed.

  • An empty piece of land has a blank profile and the agreed construction can be sensibly adjusted without incurring large amounts of problems. The design, direction, size and shape can all be changed providing agreement is approved with building control officers.

  • In November 2014, Section 106 was abolished for Self-Builders. This was whereby a building contractor was expected to contribute to the local Council for improvements around the construction area. This could have been for road widening, a roundabout or even an extension to a local school. This has now been cancelled for all self building projects up to 10 properties and will save the owner many thousands of pounds.
The thrill and euphoria at biding at auction, having your bid excepted and knowing it is a legally binding deal as the hammer goes down is just fantastic! So just you make sure you do your homework correctly you can get yourself a bargain for life at the same time as having the best day of your life!