Considering selling part of your garden

The sale of land is something our residential property team get asked about frequently – whether it’s selling a plot to a neighbour or developer, building in your garden or just trying to realise cash from your property asset.

However, there are many considerations to chat over with your property solicitor before the sale sign goes up as it is not always a straightforward process, with matters such as rights of access, planning permission, and title deeds to consider.

Do I need my Mortgage lender’s consent to sell my garden?

If you have a mortgage on your property this could restrict your plans and you will need the mortgagee’s consent to sell off the land as essentially you are disposing of part of their security. Without their permission, you won't be able to sell anything, so they are your first point of call.

A valuation of both areas will also be required, the land to be sold off and the existing property and garden as the valuation will undoubtedly have changed.  It is always worth considering that development by a third party could also devalue your own home.

What is a Transfer Deed?

A ‘Transfer Deed’ - a legal document transferring ownership of the sold land from you to the new owner will then be required, your solicitor can draft this document for you and register it with the Land Registry.

Costs are a consideration and at this stage, your lender will charge an administrative fee for the ‘Transfer of Part’ – that is the process of selling off part of a property.

Restrictions and Covenants

Secondly, there may be restrictions on the use of your garden, or a covenant in place prohibiting the development of the plot, this can happen if the plot is within a conservation area.  Sometimes even if planning permission is in place a covenant on a title is independent of that permission. This information will be on the deeds to the house and your residential property solicitor can check this out for you in detail.

How the plot will be developed is another thing to consider, sometimes when it’s in a garden it is easy to overlook access points for necessary building work to take place, look at services to the plot, is there proximity to electricity, gas, water and sewerage?

If you are seriously thinking of making money from the sale, then planning permission is always a good idea.  Along with all of the above good access to roads and local infrastructure will increase the value of your land and help overcome any potential planning obstacles.

If the land is sold off this development will also be your new neighbour, so it might be worth taking time to think about how the plot is to be developed, there may be building stipulations you want to insist upon at this early stage and your solicitor can advise on these and how to go about it, working alongside the planners.

Do I have to pay tax when selling my garden?

As with most aspects of life there are also tax implications and you may be liable for Capital Gains Tax, unless a claim for Private Residence Relief (PRR) can be made. You may however qualify for PRR if the land was part of your main home and doesn't exceed 0.5 hectares (about 1.24 acres).

Other tax considerations are Stamp Duty Land Tax (SDLT) or VAT and again a good professional property solicitor can offer advice on your obligations and help minimise your tax liabilities.

Head of Residential Property, Victoria Marshall said:

“As with any transaction getting your solicitor involved early can make or break a deal. If you know before negotiating a purchase the restrictions you want to set and can address any issues at the outset the negotiation of a sale will be far easier.”

“As solicitors we often have clients who haven’t considered potential overage agreements if the buyer was to develop the land, or even pre-emption agreements if they would like the opportunity to have first refusal if the land was ever to be sold on.”

“We discuss these scenarios with clients and give them options so when they find the right buyer they are not changing the deal after a price has been agreed,” added Victoria.

And finally, a quick tick list to consider if you’re thinking of selling off your garden or land:

• Check your mortgage and speak to your lender about permissions
• Get your land independently valued
• Check your deeds
• Instruct a residential property solicitor
• Establish boundaries and, building stipulations
• Seek planning permission if necessary

How can we help?

For legal advice on selling off land for development contact our residential property lawyers on 0161 785 3500 or enquiries@pearsonlegal.co.uk.

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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.