Buying and selling parts of gardens

Hi Adrian,

If you sell part of the garden from a property where a lender holds a mortgage you are materially affecting the lenders security and potential value of the property.

Therefore if you have a high Loan to Value mortgage the lender could refuse your proposal, or if it is a very low LTV they could be less concerned. However they may require a Valuation Survey be done first indicating the future value post sale of garden area.

In struggling to see the point in doing what your suggesting. For example if you sell part of your garden to raise funds in property 1 for say 25k, and then pay say 25k to increase the garden in property number 2 you haven't really achieved anything so what's the point? Maybe we need some more info on the details to understand where your gain is gong to be because if your not gonna make any money out of the idea then there's really no point in doing it.

Look at the websites for local commercial property estate agents and auctioneers: they frequently have sections devoted to land, in which you should find some examples of non-developable land that's up for sale, e.g. for grazing a pony. However, garden land is arguably more valuable than grazing, especially if the original gardens are small.

Or Savills and Knight Frank do regular surveys of land values, although these are usually for developable land and agricultural land, not little pieces of garden.

Or ask your friendly local estate agents: how much would your and your neighbours' properties be affected in price if they had a smaller or larger garden? Using an agent as honest broker may also be the best way to reach agreement over price with your neighbours, if you can both accept the agent's opinion, or the median value from two or three opinions.

It would probably be a gentlemanly thing to do if you offered the agent(s) a small fee for their time, such as £100. Usually the buyer pays for the valuation.

In my experience land agents and surveyors expect to charge a fortune for this kind of valuation - £1000 minimum - even though all they do is look at their tables of current land values and do a Rightmove search to establish typical values for your respective houses. Avoid.

You will probably need to have the house valued by your mortgage provider if you are selling land. I've done this and the removal of half the 150ft garden apparently made no difference to the house's value. Unless the garden is really spectacular, the core value lies in the buildings, provided the house still has a reasonable amount of garden space remaining after the sale. The minimum requirement by many local authorities for new houses is 11 metres from the rear of the property to the back fence, so about 35 foot.

I can't speak about valuation but small plots of garden land with no development potential don't normally have much value – perhaps a few hundred. Valuers usually look at sales of comparable properties when determining a value but bits of garden don't change hands very often so they would probably not be able to help you very much.
So you would really have to just try and agree an acceptable figure with you neighbours.
On the legal side, you will certainly need to get your mortgage lender to release any land being sold, and likewise if you buy any land the seller will need to get his lender to release it. The value of a property is usually in the building so they often do agree to release small areas, but might well want a survey done to confirm (at your cost of course!)
The Land Registry fee for transfers of part where the price is under £80,000 is currently £40 – you only pay that on a purchase. There is no Stamp Duty Land Tax on purchases under £125,000 and no need to complete a SDLT return if the price is under £40,000.
Proper scale plans will be necessary to satisfy Land Registry requirements when only part of land in an existing registered title is being transferred. You can find companies which will prepare LR compliant plans and it is worth using them as the LR is very fussy about plans nowadays. The cost of a professional plan is not normally too high but it is an additional expense to bear in mind.
It's a bit difficult to say what legal costs would be, the best thing is to get a few quotes. Make sure that the solicitors/conveyancers know it is not a normal house purchase.
On the purchase it would not be necessary to do usual searches and enquiries. Also formal contracts are normally dispensed with on small transactions, so it should be possible to save a bit on legal costs compared with a standard house purchase.
A couple of bits of advice if you do sell part of the garden:
1. Ask your solicitor to put a restrictive covenant in the transfer preventing the buyer from building on or otherwise developing the land – even if there's no development potential at the moment there's nothing worse than selling for a few hundred and then seeing your neighbour get planning permission a few years later. If that did happen you could claw back some money by agreeing to release the covenant at a price!
2. Double check that there are no drains or other services under or over the land being sold, or if there are make sure that proper legal rights (easements) are reserved for your retained land. Also if appropriate reserve rights of light to your existing building.

Make the buyer pay the legal costs for your side and theirs and follow the advice given above, write in an uplift if the site is built on in the future for say 20 years, they are not making land anymore so land is worth much more to a neighbour than to a third party, ask a lot and come down later, for a piece of garden ground in Northampton Id ask at least 5% of the value of the property acquiring it plus legals.

I have carried out several such transactions during my career.

The key to valuation in this case is not via comparables of land deals but to look at (depending on whether you are buying or selling): the diminution in value of the property which will lose the land - will it be worth less with a smaller garden and by how much? What will be the uplift in value of the property buying the land? Will it just get a bigger garden or will it also be able to do something that will enable a higher value to be achieved, such as build a garage or an extension or a rear access?

I agree with others above that you may be able to get the other side to pay your reasonable legal costs, and that you should seek a covenant regarding no building/ development without your express consent . However I am not familiar with the suggestion that formal constructs re dispensed with, so do take advice from a solicitor practising in residential property, and do not be tempted to take shortcuts on the paperwork which may come and bite you later.

Reply to the comment left by "Rob " at "05/08/2014 - 09:49":

If Property 1, has 300 sqm of garden & Property 2 only has 50 sqm of garden. You will not necessarily cause a vast amount of harm to the value or attractiveness of property 1 but could drastically improve property 2.