Starting with the fact that land for development is often scarce, there are probably several benefits to selling off part of your large garden.
However, there may be some disadvantages as well for both you and the buying developer. Before selling all or a portion of that large garden, take a few moments to consider the pros and cons.
Will You Lose Private Residence Relief?
There is so much to consider when selling a portion of your large garden, not least of which is the tax implications. If you are selling a large enough lot to realise any significant profit, you might want to consider contracting a solicitor. The tax implications are far-reaching, among which is the Private Residence Relief, PRR, you have been enjoying. Oddly, if you sell only your main residence, you will not be subject to Capital Gains Tax, but the land is another story altogether. While there is a shortage of land for development in the UK, there is no shortage of the taxes you are subject to, so always think this through carefully before selling a portion of that lovely large garden you have been enjoying. By the way, the size of your garden and the lots you will be selling also matter, so do hire a solicitor as soon as possible.
Is Biodiversity Net Gain an Issue for You?
This is a question often asked when trying to sell a portion of a large garden. The answer is somewhat tricky, depending on exactly when you purchased your land. If your permissions at the time of sale included the 10% biodiversity net gain, BNG, then you may find that selling off a portion of your garden could interfere with the plans you have made to leave the natural habitat at least 10% better than it was prior to your ownership.
You might want to contact the Biodiversity Net Gain Plan Group to see if a sale of any portion of your lovely garden will impact your improvement of the ecology of your land. The 10% Net Gain law is newer and comes into full swing in 2023, but there are still areas of the UK that are enforcing it strictly. If your property will be affected, you might want to look at what it would take to bring you back within those legal parameters. Again, it basically depends on when you bought your home and garden.
Will New Homes Impact Your Enjoyment of Your Residential Property?
This is also something else you might want to consider. Will the development of new homes interfere with the quality of life you have been living? Perhaps new homes in what has always been your back garden would add to the noise level and traffic in your neighbourhood. One of the reasons you bought that property in the first place could have been to escape the noise and confusion of an urban area. Or perhaps that land has been in your family for generations. Will seeing those new homes crop up be a source of irritation? This is another area that needs careful consideration.
Will New Development Bring More Amenities to Your Town?
On the plus side, maybe living so far out in a rural area was not at all what you had expected. Maybe your area is so sparsely populated that there is not much call for new shops and businesses to open in your town. This may be a factor of rural living you were unprepared for but the development of new homes might be an attraction for commercial growth. If this is a concern, you may want to meet with other land holders in your area to see if they are also thinking about selling off a portion of their land. If there seems to be a major move toward residential development, then there is every chance that your town might attract new shops and businesses.
Profit as the Deciding Factor
At the moment it is a seller’s market almost anywhere in the world. Land is scarce for development in many regions and so sellers can just about name their price – within reason that is. Even so, most of the time, realising a profit is the reason why people sell off a portion of their land. Here again, it is time to discuss exactly how much profit, after taxes, with a solicitor, accountant, or perhaps an estate agent. We tend to envision larger profits than we actually net, so estimating that net amount can be of vital importance. Unless you are in the business of buying, selling, or developing land, this may be a subject you are not familiar with. Taxes are going to impact your profit significantly, so keep that in mind.
The Final Question – Sell Now or Hold?
The final question you should ask yourself is whether to sell now or hold. After all, the reason most developers are seeking properties for residential development is primarily due to a lack of land. With this in mind, do you think there will be any less need a year or two or a decade down the road? If you are not in a position to need money from the sale of your garden in the immediate future, you might also do well to hold a bit. If land is scarce now, what will it be like in another few years?
The economy is one thing that has an impact on whether or not land will sell but an ever-growing population is something else altogether. Economies wax and wane over time, but the population continues to grow. It just might be that your land will rise in value over the next few years and the economy may have righted itself again by then. With this said, it is always possible to realise a higher asking price when the economy is good and mortgage loans are easy to qualify for. All of these things should be taken into consideration and only you know your real needs. What will it be? Will you sell now or hold?
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