Purchasing land and finance companies

[Post Driver]

Some land has come up for sale near home and my brother is looking into purchasing it. I've tried a few searches on here but not had much luck.

Can you guys recommend any finance companies for purchasing Agri land?

Its on the market for £175k and he has about a 25% deposit, will they laugh him out the door?

Thanks

 

[GTB]

First port of call should be his existing bank then AMC. If they don't want to lend then I'd question the wisdom of buying the land, as other finance companies will charge extortionate interest rates/terms to borrowers who can't get loans from the bank or AMC.

 

[Walterp]

I know farmers who have only put down 5% deposit on neighbouring parcels, but as has been said the bank/AMC will need to see decent P&L for a few years to justify lending the balance.

Short version: it's not the deposit, it's the accounts.

 

[Flossie]

I know farmers who have only put down 5% deposit on neighbouring parcels, but as has been said the bank/AMC will need to see decent P&L for a few years to justify lending the balance.

Short version: it's not the deposit, it's the accounts.

+1

They want to know how you run your business/whether you can run your business

 

[GTB]

Last time we bought extra land all the bank wanted to know was how much our assets were worth. No business plan at all but we've been with the same bank for decades.

I suspect it would be a different matter for a first purchase though.

 

[Post Driver]

He's on the books PAYE, say £25k a year. Only 21 but worked since he left school at 16... Sounds like a business plan needs writing up and a chat with the bank.

 

[paddler]

Try his existing bank.I have just bought some land and they offered a 100% loan over 20 years at 1.8% over base with no fees.We are long term customers with good profits and the deal was done in 3 minutes over the phone.

 

[jade35]

Some land has come up for sale near home and my brother is looking into purchasing it. I've tried a few searches on here but not had much luck.

Can you guys recommend any finance companies for purchasing Agri land?

Its on the market for £175k and he has about a 25% deposit, will they laugh him out the door?

Thanks

He's on the books PAYE, say £25k a year. Only 21 but worked since he left school at 16... Sounds like a business plan needs writing up and a chat with the bank.

Who does he have the deposit with and what does he want to do with the land? Guide prices are generally on the lower side to get people interested. Are you talking about 20 acres or less?

 

[S J H]

He's on the books PAYE, say £25k a year. Only 21 but worked since he left school at 16... Sounds like a business plan needs writing up and a chat with the bank.

I'd go to your bank, can you put together a business plan for the land, if you use it for equestrian?

They seem to question mostly serviceability of the loan and asset to borrowing ratio, that's where I'd have it would help for him to be a partner in the business rather than an employee.

I think the ratio was around 50% asset to total borrowings.

I think the way for a young person to be able to buy land is to be made a partner in the business if possible to increase their asset value.

 

[Post Driver]

Who does he have the deposit with and what does he want to do with the land? Guide prices are generally on the lower side to get people interested. Are you talking about 20 acres or less?

He's got it with TSB (was with Lloyds before the break up) and wants the land as an investment, to keep a few cattle and as a way of starting out.

It's about 18 acres with an old, almost derelict, corrugated tin shed/barn, has been used to store machinery in our living memory. There is a private house within about 50m of the barn, if he were to start rearing calves in there would he fall foul of planning?, even though its an Ag building.

They seem to question mostly serviceability of the loan and asset to borrowing ratio, that's where I'd have it would help for him to be a partner in the business rather than an employee.

I think the ratio was around 50% asset to total borrowings.

I think the way for a young person to be able to buy land is to be made a partner in the business if possible to increase their asset value.

My old man still runs the business as a sole trader! But something to think about, thanks.

 

[S J H]

He's got it with TSB (was with Lloyds before the break up) and wants the land as an investment, to keep a few cattle and as a way of starting out.

It's about 18 acres with an old, almost derelict, corrugated tin shed/barn, has been used to store machinery in our living memory. There is a private house within about 50m of the barn, if he were to start rearing calves in there would he fall foul of planning?, even though its an Ag building.


Can you put a building the other side away from the house ?

An intensive livestock building like dairy or pigs will need to be 400m away from the nearest dwelling. A cattle shed won't need to be, but 50m is pretty close for comfort.



My old man still runs the business as a sole trader! But something to think about, thanks.

 

[brynseiri]

No harm in asking the bank, rule of thumb with a house is 10% deposit, plus his job salary is guaranteed, with 25% deposit and a good job I'd have thought the obvious lenders such as AMC, HSBC and the bank he has his nest egg with would all accommodate him.

 

[Clive]

Any lender will be more interested in a credible repayment / business plan than the level of deposit or security, they will need to see history of consistent profit to lend

No lender wants to ever use security offered if they can help it !

 

[caveman]

If he can get residential planing on the tin barn as a redundent farm building under the new permitted development rules, he could end up with the land for nothing!

 

[Post Driver]

There is an uplift clause on the event of planning being granted for any non agri development of 25% for 25 years. If he got a house tied to agri use for himself, would that avoid the uplift clause?

 

[Andy]

Lenders at present still want to see sufficient Loan to Value to support any lending but with land prices continuing up this is only likely to rise and is often not an issue. The main factor banks are looking at is serviciability - the ability to repay the loan. A strong business plan with budget cashflow forecasts are often requested and will help from the outset.

 

[Post Driver]

Good advice from the forum as is usual.

Spoke to AMC. They would just about consider a parcel of land of this size however would like to see a 50% deposit and would then only lend 3 times his income so falls quite a bit short with them. They wouldn't consider a business plan for repaying off income the land earns as its not proven yet.

They suggested approaching high street lenders including Ecology Building Society and Rural and Business Specialists LTD.

 

[brynseiri]

Good advice from the forum as is usual.

Spoke to AMC. They would just about consider a parcel of land of this size however would like to see a 50% deposit and would then only lend 3 times his income so falls quite a bit short with them. They wouldn't consider a business plan for repaying off income the land earns as its not proven yet.

They suggested approaching high street lenders including Ecology Building Society and Rural and Business Specialists LTD.

But they did take his salary into account, so looks better for high street lenders in that sense.

 

[Cooper3075]

Amc here was a push for them but the did it as my profits are so low like I told them I I put the hours in I need to to pay the bills I now have to do more lol they got a 30% deposit and wanted my whole farm and house as security as well as the land I bought so they have about £600k+ security for £80k I borrowed. Don't like it but only way they would say yes