Overpaid for a site in 2006 - finally got Planning - now what?

section112

I'm 31 years old and I've Just got planning permission on a seven acre site about 15km north of dublin.

Bought the site five years ago for 330k approx.Financed with 8% commercial loan as site did not have planning.

Right now, we owe BOI 200k and parents 35k. Total borrowings with car loan, 240k.

Currently living with my parents (also w/my wife and 3 kids ) ) - has to be done.

Savings - 15k - 20k

Income - roughly 80k between the two of us.

1. We were first time buyers, didn't really know anything about property, but had a huge sense of urgency 2006/2007 to do something about getting on the property ladder - we knew we didn't like the houses that had been on the market the time we were trying to buy so decided to buy a site.
   
2. The site is lovely but when my wife and I watch grand design, which we do regularly, and they talk about the price they paid for the site in the UK over the years, we know we've made a major balls of it here.
   
3. Our original plan was to turn the commercial loan into a proper mortgage with a lower interest rate once the site had planning, and borrow more for the build. Now the banks the way they are, this plan may not be realistic.
   
   

1. If we manage to arrange funding, How much house can you build for let's say, 200k these days?
   
2. What would you do if you were in the above situation :pac:?

antiskeptic

section112 wrote: »

I'm 31 years old and I've Just got planning permission on a seven acre site about 15km north of dublin.

Bought the site five years ago for 330k approx.Financed with 8% commercial loan as site did not have planning.

Right now, we owe BOI 200k and parents 35k. Total borrowings with car loan, 240k.

Currently living with my parents (also w/my wife and 3 kids ) ) - has to be done.

Savings - 15k - 20k

Income - roughly 80k between the two of us.

1. We were first time buyers, didn't really know anything about property, but had a huge sense of urgency 2006/2007 to do something about getting on the property ladder - we knew we didn't like the houses that had been on the market the time we were trying to buy so decided to buy a site.
2. The site is lovely but when my wife and I watch grand design, which we do regularly, and they talk about the price they paid for the site in the UK over the years, we know we've made a major balls of it here.
3. Our original plan was to turn the commercial loan into a proper mortgage with a lower interest rate once the site had planning, and borrow more for the build. Now the banks the way they are, this plan may not be realistic.

1. If we manage to arrange funding, How much house can you build for let's say, 200k these days?
2. What would you do if you were in the above situation :pac:?

I don't know how realistic their being but I've just seen a row of 3 (smallish) serviced sites in Kilcoole Co. Wicklow go up for sale for approx 175,000 each. They've got planning permission for large homes on them.

What would the chances you could do the same with (some of) your site. 7 acres is a lot of land afterall. Whatever about the housing overhang, there will always be a niche market for folk who want to do their own thing. I imagine the site-market is insulated, to an extent, from the malaise in the housing sector.

I don't know how much adding value by way of a serviced site would bring in over and above mere planning permission but it might be worth considering if you head down that route.

Commiserations on being caught up in the bubble trap.

section112

~No need for any commiserations, being caught in the bubble tends to keep life interesting at least.

Thanks for the comment, it's a good idea but this wouldn't be an option based on the road frontage and lay of the site.

Victor

Moved from Accommodation & Property.

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You should be able to build a reasonable home for that amount, but is all down to what you want and what those wants will cost. Are you going to spend €50 on a wash hand basin or €1,000?

It would be useful to get some professional advice on costs.

RATM

I wouldn't know how big a house you'd get for 200k exactly but I reckon it'd be bigger than the average. Both building and construction matierals costs have come down in the last few years, I've heard 30% less for builders but am unsure of how much go by this as I haven't read anything concrete, 'xuse the pun=)

mrmitty

If I understand correctly, you propose to borrow E200k to build a house on a site on which you already owe E200k..
All this and support 5 people on E80k pa.
Am I the only one struggling to understand how this is possible ?

BryanF

section112 wrote: »

We were first time buyers, didn't really know anything about property, .

1. If we manage to arrange funding, How much house can you build for let's say, 200k these days?
2. What would you do if you were in the above situation :pac:?

Imho you sort of answering your own question butget some professional advice.
from the tendering processes i witnessed and heard of at the moment any self-builder should consider a good arch/AT, Eng and QS, maybe services engineer depending on the others knowledge gaps. this is your best bet to ensure cost certainty and the home you want.

your next stage after planning:
BER/PHPP checks if not done already
followed by tender drawings and detialed spec,
then cost it for your mortgage, QS followed by out to min 5 builders
get cash approval, agree start date
then you your really at the beginning.

Imho I would recommend a professional guide you through every stage of this.

honestly you seem financially in a bit of a pickle, but you have options, maybe some that seem a bit unconventional to our Irish concrete block mentalities.

an Architect Dominic Stevens, in the Midlands built his own house for 25,000, also check out straw-bale design, there's a good book on the market by Barbara Jones
good luck with it..

bugsymolone

Managed to renovate an old house plus build an extenuation (large 5 bed) on for very little 70K, (I know this is a different build) but I was quoted 175 by one builder! The worst costs are the final stages, doors, kitchens, finishes etc, there the ones that bite you when the funds are all gone. I managed to source everything in budget, did a few trips to UK as it's very hard in ireland to source quality at low prices, it is out there but no one really uses the web, you might be better near Dublin. Good luck and I love your Attitude 'Grit your teeth and push on (A bit like Labour)! PS yes I am Female!

Tazz T

I wouldn't have thought it would be too hard to build a decent house for 200k. One option is to design your build so it can be improved and extended easily when (if) things improve. That's a lot of land too. Build the house in the best corner so to speak. You might want to sell some of that a few years down the line and add to your main home.

Sgt Pepper 64

section112 wrote: »

I'm 31 years old and I've Just got planning permission on a seven acre site about 15km north of dublin.

Bought the site five years ago for 330k approx.Financed with 8% commercial loan as site did not have planning.

Right now, we owe BOI 200k and parents 35k. Total borrowings with car loan, 240k.

Currently living with my parents (also w/my wife and 3 kids ) ) - has to be done.

Savings - 15k - 20k

Income - roughly 80k between the two of us.

1. We were first time buyers, didn't really know anything about property, but had a huge sense of urgency 2006/2007 to do something about getting on the property ladder - we knew we didn't like the houses that had been on the market the time we were trying to buy so decided to buy a site.
2. The site is lovely but when my wife and I watch grand design, which we do regularly, and they talk about the price they paid for the site in the UK over the years, we know we've made a major balls of it here.
3. Our original plan was to turn the commercial loan into a proper mortgage with a lower interest rate once the site had planning, and borrow more for the build. Now the banks the way they are, this plan may not be realistic.

1. If we manage to arrange funding, How much house can you build for let's say, 200k these days?
2. What would you do if you were in the above situation :pac:?

I would advise you sit down and do an honest calculation of your finances and include ALL your expenditure.
Food
Mobile phone bills
Petrol costs
TV License
etc etc

200K at 4% is approx 900 euro so TBH I dont think its a runner at all,
if the 2 of you are bringing home approx net 5k your budget will look something like this

5000
-1800 Original 200k loan
-1000 New loan (new build house budget to include appliences etc
-1000 Food/nappies/kids clothes etc
- 200 Petrol
-1000 House insurance/car insurance x 2/gas/electric/phone/school books etc etc and thats without car tax/upc/holidays/life assurance and your car loan

Thats your 5k right there

Now , god forbid, one of you loses their job and then theres no room to maneuver. Plus the stress of worrying about paying for it all

personally I would look at ways of disposing of this land.
Once that is done, you can then look at renting or buying your own much needed space.
Its going to be a long haul but best of luck.
If you've managed to clear 130k in 5 years, then another 5 and you will be that much closer

So I would take a loss and sell this land or find a way of getting some income on it at least, at the moment its dead money.

Then you can move onto phase 2, getting your own place.
Likely to be a 3 bed semi and nothing grand, but the good news is that everything else has fallen in value

Dont beat yourself up - theres a lot of people out there who did the same

best

mickdw

7 acres near Dublin with Planning still has to be worth a significant amount of cash. IMO, buuiling a basic house on this land would devalue the land if there is no further possibility of selling another site off it or whatever.
Is these a an occupancy clause in the planning?
Do you have outline planning or full planning?

I would put the land for sale to see what the market is like. If a good price can be achieved, let it off and start again albeit somewhat in debt.

section112

jesus guys,

sotoole1

section112 wrote: »

I'm 31 years old and I've Just got planning permission on a seven acre site about 15km north of dublin.

Bought the site five years ago for 330k approx.Financed with 8% commercial loan as site did not have planning.

Right now, we owe BOI 200k and parents 35k. Total borrowings with car loan, 240k.

Currently living with my parents (also w/my wife and 3 kids ) ) - has to be done.

Savings - 15k - 20k

Income - roughly 80k between the two of us.

1. We were first time buyers, didn't really know anything about property, but had a huge sense of urgency 2006/2007 to do something about getting on the property ladder - we knew we didn't like the houses that had been on the market the time we were trying to buy so decided to buy a site.
   
2. The site is lovely but when my wife and I watch grand design, which we do regularly, and they talk about the price they paid for the site in the UK over the years, we know we've made a major balls of it here.
   
3. Our original plan was to turn the commercial loan into a proper mortgage with a lower interest rate once the site had planning, and borrow more for the build. Now the banks the way they are, this plan may not be realistic.
   
   

1. If we manage to arrange funding, How much house can you build for let's say, 200k these days?
   
2. What would you do if you were in the above situation :pac:?

My advice is that if you are still servicing this loan. Section the land with planning and go to sell.
If this is section 47 land hold of doing anything because you may never get planning again in your name and have a think can you continue to pay the loan. But definitely do not build till you are 100% on where you are going to be in the next 2 years because you may lose all

Wildebrian

As a Valuer I would expect (subject to location) that this property is already in negative equity.If it has unrestricted planning ie no local needs clause you may get away with it. As regards buliding costs I recently saw a quote for a property of 200 sq ms for 200 K complete.I would strongly recommend that you speak to a good mortgage Broker to see if your proposal can be properly packaged .

martinn123

Not sure how Bankable this situation is in reality.As I read it. OP has borrowings of 240K, and requires a further 200K to build.So total borrowing proposal is for 440K, first question will be........how much will the house/land be valued at post build.Assuming no further sites available, to be sold from land parcel, and little prospect of getting further planning for another house.So a Mortgage of 440K, with combined income of 80K, The achievement of Planning 5 years after buying land, I would hope has increased the value of the land parcel,....personally, I would sell, and go back to the start.........not what OP wants to hear.......sorry.

imitation

I don't think selling the land straight away is a good plan as were pretty much at the bottom of the recession now (hopefully !).

I think having a chat with a few experts is a good plan, see what you can afford and if that will meet your needs (that gives you breathing room incase anything happens).

gman2k

I can't see the OP obtaining any further funding on this site from any lender in the state.
You are already in neg equity on the site, unless you were to obtain planning for a number of dwellings......scratch that.
House prices are now so depressed and likely to fall a lot further yet, there is simply no profit to be had from building.
I.E. unit cost to build <200k, value <200k and falling. You would be building to standstill or worse. If there is no profit............... (and that's excluding soft costs, dev levies etc),
No one is going to lend to you further.
I presume the land is in agricultural use at the moment? and you are getting a rental income from same? If not, then do this asap.
Try and sell and cut your losses. Negotiate with your current lender.
Don't forget, they made a punt on this site too, I don't see why you should be hammered for all the risks. (I know that's a debate for another day)

mrmitty

imitation wrote: »

I don't think selling the land straight away is a good plan as were pretty much at the bottom of the recession now (hopefully !).
.....).

Property prices have only just started to fall in Ireland and will most likely continue to fall further until they are more in line with the rest of the world.

A quick search of Daft will confirm how overpriced property still is.

martinn123

mrmitty wrote: »

Property prices have only just started to fall in Ireland

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Where have you been for the last 3 years ?

muffler

mrmitty wrote: »

Property prices have only just started to fall in Ireland

And here was me thinking they have been falling for the last 3 years

mrmitty

muffler wrote: »

And here was me thinking they have been falling for the last 3 years

And as the saying goes "ya ain't seen nothing yet".
Think Japan, 'baby'. 20 years and counting....

muffler

Please stick to facts here and also stay on topic

mrmitty

muffler wrote: »

Please stick to facts here and also stay on topic

The facts are that property is still vastly over rated in Ireland.
Shouting, however loudly will not change this.

Basic valuation methods accepted as norm by banks and real-estate industry professionals are as follows,
1) cost approach where by the value of the land, building construction and profit are taken into account.
2) Currrent or comparable market anylasis where by property prices are estimated based upon the achieved price of similar properties. Of course we all know that this cannot be used because Ireland, in her infinite wisdom decided that we are not allowed access to this.
3) finally we have the income approach which is self explainatory.Most property in Ireland which is listed on Daft or any other property sales website for that matter is vastly overpriced when any an informed valuation is performed.

In the example above (op) there is little economic value to the land as it cannot be subdivided into sites and even if this were possible, there is little to no demand therefore little value. It's value as agricultural land will be calculated by the banks in future based on the 'income approach'. (Ask yourself how much income will be derived from seven acres)
Ireland will see prices drops for some years to come and then, perhaps in ten or so years when the banking mess is straightened out there might be some capital influx again but I'm confident that it will be conservative in nature unlike in the 'naughty'

muffler

mrmitty wrote: »

The facts are that property is still vastly over rated in Ireland.
Shouting, however loudly will not change this.

Infraction given

section112

Update -

Managed to restructure land loan over 10 years at a much better interest rate.

Still haven't built yet,

Servicing loan and clearing debt / saving.

Might be able to build next year when we have a decent deposit.

Land purchase in 2007 probably set us back 10 years - but not the end of the world.

Many thanks for the advice,