What happens if you build without planning permission?

Planning permission can be time-consuming and costly to apply for - and there are no guarantees that it will be granted. It’s therefore not uncommon for those who don’t want to bear the risk to sell land to a developer instead.

When you sell land to a developer, they’ll generally be happy to take on the rigmarole of gaining planning permission. This means you can reap the rewards of selling land without going through the costly legal expense of applying for planning permission.

Before explaining what can happen if you build on land without planning permission, we'd like to emphasise that it's always best to consider acquiring planning permission before beginning any form of development on land yourself.

Is it possible to build without planning permission?

If you build on land and structures require planning permission, you will have committed a planning breach. If your local authority is made aware of this, you will be required to submit an application for what’s known as retrospective planning permission to your local council.

If this application is deemed successful then you won’t need to take any more action, however this is still a risky approach as you're even less likely to get retrospective planning permission than initial planning permission.

If you don’t get retrospective planning permission, you will be required to remove any structure you have built and return the land to its original condition.

Is a planning breach a criminal offence?

A planning breach does not constitute a criminal offence on its own, although to avoid any criminal litigation proceedings (such as a fine or a prosecution) you will have to successfully apply for retrospective planning permission.

However, if you feel like this is outside your remit, you may wish to consider selling land to a developer who may then apply for planning permission once they take control of the land.

How does retrospective planning permission work?

If you have built something on your land that would typically require planning permission but have not applied for it, you will need to do so retrospectively. The same applies if you have been granted consent to construct a building but have wavered from the terms and conditions initially set out by the planning officer.

The latter is not uncommon in the UK - consider the following scenario:

- A landowner applies for planning permission.

- Planning permission is granted.

- The initial plan is modified and no longer meets the terms and conditions.

- Upon inspection, the local planning authority realises you have breached the initial terms.

Certificate of Lawful Existing Use or Development (CLEUD)

Another alternative you may consider is what's known as a certificate of lawful existing use or development, or CLEUD for short.

This is a certificate officially provided by a Local Planning Authority to legalise previously unauthorised development or to confirm that development was carried out in accordance with approved permission.

A CLEUD certifies that an existing building/use is legal and prevents any enforcement action from being taken. In most cases, development becomes immune if no action is taken between 4-10 years.

It's worth bearing in mind that this option still bears a considerable level of risk and should not be considered as a first option.

Sell land to a developer

For some, the stress, expense and uncertainty of applying for planning permission - either retrospectively or before a single brick has been laid - is too much. If this sounds familiar, you may find it easier to sell land to a developer.

Developers generally have a lot of experience in dealing with local planning authorities and councils. This makes them more adept when it comes to submitting plans, as they will have an insight into what a council might deem acceptable/unacceptable in a plan.

If you would like to request a land valuation, contact us today. A member of our experienced team will be happy to offer a realistic valuation and advice should you wish to sell your land.

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How long does planning permission last?

Any new construction, whether it's building new housing or offices, will require planning permission. If you are seeking to obtain planning permission for a quick sale and turnaround of your land, you should be aware of the timeframes and necessary protocols.

Planning permission is subject to thorough checks and conditions. It can be complex to navigate the legalities, but it is a requirement by law. If you've already obtained it, you should be aware that this is a central instrument of building law. So how long does this last before it becomes obsolete?

How long does planning permission last?

Once you have obtained planning permission, you will need to know how long it is valid. By law, it only lasts for three years from the date it is granted. Within this time, you must have made a substantive start on your site, such as constructing foundations. However, once you have started development, planning permission lasts indefinitely.

If there are any exemptions to the three-year rule, this will be stated in your planning permission. If you're unable to start the works within the allocated three-year period, you may have to fully reapply. You can extend your permission to four years or beyond, but only if the work has not yet been carried out. If you need to postpone it then you can apply online.

Why do you need planning permission?

All new construction is regulated by the government, so any type of land development will need planning permission. To acquire planning permission, you need to demonstrate that the development you are seeking meets your local council’s local plan, as well as the government’s National Planning Policy Framework, amongst other legislation.

To obtain planning permission, you must submit plans and proposals to your local council, where they will be reviewed by an officer. If the officer is in favour of your proposal, it is subsequently forwarded to local councillors for approval.

Please keep in mind that this is a highly simplified representation of what can be an extremely bureaucratic process, with many variations that may need to be considered.

If you commence building work without the necessary documentation, you could risk a hefty fine and you may be ordered to rebuild any property which you have demolished. Despite the desire to add value to your land, you should make sure you have proper permissions in place before starting any works.

Landowners or property owners often acquire planning permission for two reasons: to build out the new planning permission, or use the planning permission to sell their land. After all, it seems desirable to both buyers and sellers to already have land that is legally ready to be further developed on.

Is planning permission right for you?

Acquiring planning permission can lead to an increase in land valuation, but gaining planning permission yourself may not necessarily be the best option.

It is a costly and subjective process with no guarantees of success. Any submission must comply with the plethora of local Council rules and regulations, including their local plan.

Afterwards it must adhere to national planning guidelines and, in most situations, neighbours or local residents will object.

It may be better to approach a reputable developer that is professional and experienced in maximising the value of your land, whilst taking on all of the planning risk involved, including costs.

If you'd like to know more about planning permission or if you're in possession of a plot of land you'd like to sell, get in touch with us today. Our team of experts can help you arrange a free, no-obligation quote.

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Do you pay Capital Gains Tax when selling land?

One of the biggest issues for property owners is capital gains tax, which can cut into the profits made over an extended period of time through investing.

However, you may not be aware of whether or not the sale of land is also susceptible to capital gains tax. In this article, we discuss the impact capital gains tax can have when selling land.

Do you pay Capital Gains Tax on selling land?

First and foremost, if you’re planning on selling your own home – including your garden – you do not have to pay tax on the sale up to 1.25 acres. However, if you’re planning on selling other types of land, you may be susceptible to capital gains tax.

A sale of land or property will usually invoke a capital gains tax (CGT). This is calculated as a set percentage of the sale price, with the purchase price and any qualifying improvement expenses removed.

The percentage paid in CGT varies depending on the nature of the selling entity. For example, in the event that an individual sells undeveloped land, the gain is taxable at 20% rather than the 28% CGT rate seen on the sale of developed properties (since the land hasn't been developed).

On the other hand, if the entity holding the land is a company rather than an individual, the tax amount shifts due to different legislation. In this case, any capital gains are taxed at the same rate as corporation tax, currently standing at 19% in the UK as of the time of writing.

Are there any ways of reducing the tax burden?

The way that taxation works means there are some ways available to land investors that can increase the profitability of land by reducing the tax burden. This requires planning in advance and varies depending on the nature of legislation at the time of reading this article. Policies regarding tax can change, and a single UK budget announcement can potentially change tax amounts significantly.

One way of reducing the tax burden is by setting up a business for trading land and properties. This is because the tax rate of capital gains differs from that paid by the individual to that paid by a corporation, as individuals pay 20% tax on their capital gains compared to companies paying 19%.

This seems like a minimal gain, but each and every minimal gain in the world of finance adds up. An example of comparing capital gains tax and corporation tax in terms of land sale can be found below.

An example of taxation in selling land

Jonathan bought his plot of land for a value of £100,000. In the time since purchase, Jonathan spent a total of £20,000 on increasing the value of his land, increasing his investment in the plot of land to £120,000.

Market demand shifts mean that he sells the land for £220,000, leaving capital gains of £100,000.

As an individual, Jonathan pays 20% of this (£20,000) in capital gains tax, leaving Jonathan with £80,000 in profit.

On the other hand, Sarah bought the adjoining plot of land, also for the value of £100,000. Sarah matched Jonathan's investment of £20,000 (for a total investment of £120,000) and then sold her land for the same final total of £220,000.

Initial profit on the transaction remains £100,000, although Sarah bought and sold her land through the company she built to process her investments and transactions. In this case, Sarah pays only 19% tax on the profit, giving £19,000 in capital gains tax and keeping £81,000 for herself.

This difference is quite small proportionally, but if you're a business that frequently deals in land sales then it can be beneficial. The extra £1,000 Sarah saves by operating through a company is further investment funding for future land purchases, and her portfolio increases over time as a result of her planning the purchase and sale ahead of time.

Make the most of selling your land with NFC Homes

If you're looking to sell your land for the optimal value, consider NFC Homes.

We have a wealth of experience in trading both homes and land, providing a fully informed and reliable land acquisition service you can rely on. Thanks to our years of work in the industry, our friendly team works with you in a helpful and reliable manner.

Contact us today to arrange a free, no-obligation quote for your plot of land.

Disclaimer: The contents of this article are for information purposes only. We strongly recommend seeking professional advice before making any decisions regarding the sale of your land.