Selling Part of Your Garden or Property When You Have a Mortgage
If you own a property with a large garden or surplus land, you may be considering selling part of it to release some cash. While this can be a good way to make money, there are additional steps to take if your property is mortgaged. Here’s what you need to know.
Check the Value of What You’re Selling
Start by having the land professionally valued by a surveyor. Ask them to also assess the value of your remaining property after the sale. This gives you a clear picture of what you stand to gain and how the transaction will affect your home’s worth.
Review Your Title Deeds and Boundaries
Confirm that the land you want to sell is included in your property title. When selling, this part will be split from the title your lender holds as security for the mortgage. Have a professional prepare an accurate plan showing boundaries, access routes, and any utilities that affect the land.
What to Do if You Have a Mortgage
Most homeowners have a mortgage, which means the land you want to sell is very likely covered by your lender’s charge. This makes your lender a key decision-maker in the process.
Lender’s Consent: You’ll need their consent to remove the piece of land from the mortgage. Without it, you can’t proceed.
Residual Value: The lender will want assurance that your remaining property still holds enough value to cover the outstanding loan. If selling reduces the property’s value too much, your lender may refuse.
Loan Terms: Some lenders might require part of the sale proceeds to be paid directly towards your mortgage balance to reduce their risk.
It’s essential to contact your mortgage provider early in the process to understand their requirements.
Rights of Way and Access
If the land you’re selling needs access over your retained land (or vice versa), legal rights of way must be set out clearly in the sale. This ensures you don’t create future disputes or restrict access.
Planning Permission
Decide whether to apply for planning permission yourself before selling or leave it to the buyer. Securing permission yourself usually increases the land’s value and gives you control, but it requires time, cost, and effort.
Neighbours and Community
Consider how selling land may impact neighbours. A new development could affect their privacy, views, or enjoyment of their homes. Upset neighbours can object to planning applications and delay or derail the process.
Tax Considerations
Selling part of your property may attract Capital Gains Tax (CGT), unless it qualifies for Private Residence Relief (for example, if it’s part of your main home and meets certain criteria). A tax adviser can help you understand the implications.
The Bigger Picture
Even if you make money from the sale, think about how it will affect the long-term value and appeal of your home. Future buyers may not want a smaller garden or may see neighbouring development as a drawback.
Legal Documentation
Work with a solicitor to ensure all contracts and documentation are correct. The legal paperwork should cover boundaries, rights of way, planning conditions, and any restrictions on future development.
Key Takeaway:
If you have a mortgage, selling part of your garden or property isn’t just about finding a buyer, it’s about securing your lender’s approval and protecting the value of your remaining home. Before moving forward, speak with your lender, solicitor, and tax adviser to make sure the deal benefits you both now and in the long run.
The good news is, Snaith & Grey Homes can support you through this whole process.
If you have land to sell, simply contact us and we can guide you through it, step by step.
