To buy or not to buy?

C

condato

Guest
Hello.
I've been presented with a bit of an opportunity, but don't know if I should take it. I would appreciate another opinion.

I bought a small farm a few years ago. It is laid out in 2 fields, one lying on either side of a private lane, which I share with one other farm which lies at the end of the lane. At one time, the two farms belonged to the one family and there are two small semi-derelict cottages on the properties. They are side by side, and one belongs to me.

The other farm has recently come up for sale, but not before the owner got planning permission for a site on the field nearest my cottage. I don't need the extra land, and I don't need to buy a site as I could apply for pp on my own land, but I would like to have sole access to the lane. I would also not be keen on having the new house right next to me.

The farmer whose land adjoins the property from the other side is also interested in buying the farm, and has aproached me to ask me to stop bidding against him. In return, he has promised to relinquish the right of way across my lane, and take access to the farm, and the new site, from his own land. The condition is that I agree to demolish my cottage, as it overlooks the building site.

Leaving issues of trust to one side, I am still in two minds as to my options. I have a mortgage out on the farm I already bought. I managed to talk the lenders into giving a mortgage on the cottage and the 11 acres which go with it. I've checked with them about building elsewhere on the land, and they say that the mortgage is tied into the cottage and that if I were to build elsewhere I would have to re-negotiate a mortgage on the new house, and take out a higher-interest land loan on the rest. So knocking down the cottage is going to cost me.

I'm also a bit concerned that perhaps the legal right of way would still exist, even if the farmer and I agreed to extinguish it, and that if he sold on the site, the new owners might ressurrect the right of way down my lane.

The final part of my problem is financial. I have an income of c 50k a year. I have the current mortgage of 85k (repayments 430ish per month) and the bidding on the other farm stands at 63k at present and God knows where it will end. I reckon I can afford to buy it, but would also I be able to actually manage to raise the cash to build on it myself?

I presently live at home, rent-free. I'm putting the maximum amount into the SSIA, but have no significant savings or assets otherwise.

Any advice would be appreciated.
Thanks in advance
C
 
This is a very interesting situation. I suppose if you approach it from a purely business point of view, the way forward is to see which situation gives you the best value on your land.

1. How much is your land worth now with the cottage and potentially one other site with the right of way through it?

2. How much would your land be worth if you demolised the cottage and possibly covenanted with your neighbour not to build where it was, but with the right of way extinguished and potential to build elsewhere.

3. If you buy the land, factor in the potential cost as against the increase in value to your own land.

From a legal point of view, you CAN enter a binding agreement with your neighbour to not bid in exchange and agree to demolish the cottage ( and he may request you to covenant not to build there) for a promise to extinguish the right of way, but it would have to be done in writing, preferably through a solicitor. Also if the right of way was only used by this farmer who is selling then it is possible to extinguish it totally and not have it open again- but if it is used by more than that farmer or if it is a public right of way then it is not that straightforward.

Finally in relation to whether you could both purchase AND get a loan to build- perhaps one of the other contributors could reply, I'm afraid its outside my expertise.
 
to buy or not to buy

Many thanks on the legal. That puts one large part of my mind at rest. Now it's just the financial side that's bothering me :)
Thanks again
C
 
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