Remortgage With Land

One of the first questions when remortgaging a property with land is how much acreage the lender will include as part of the mortgage security.

Most mainstream high street lenders will accept properties with up to around 5 acres of land. Some are willing to go up to 10 acres, while a smaller number may accept 15 acres or more. Beyond these limits, you are likely to need a specialist lender.

The way lenders handle excess land varies. Some will simply exclude the additional land from their security but still offer a mortgage on the property and an acceptable amount of surrounding land. Others may decline the application if the total land exceeds their maximum.

It is important to understand that the land included in the security directly affects the loan-to-value calculation. If a lender only values the property with 5 acres but you have 20 acres, the valuation may be significantly lower than the total market value of the property and all the land.

When researching lenders, ask specifically about their acreage limits and how they handle properties where the land exceeds their maximum. A broker with experience in rural and land-based properties can be particularly helpful here.

Valuing a property with significant land requires specialist expertise, and the valuation process may differ from a standard residential assessment.

The valuer will typically assess the residential property and the land separately, then combine them to arrive at an overall market value. Factors that influence the land valuation include:

• The quality and type of the land (arable, pasture, woodland, etc.)
• Planning potential for development or change of use
• Access to the land and any rights of way
• Boundary disputes or encroachments
• Environmental designations or restrictions
• Local land values and recent comparable sales

Agricultural land values in the UK vary significantly by region and land type. The valuer will consider recent sales of comparable land in the area to arrive at a fair assessment.

If you have land that could potentially be developed, the valuer may assign a higher value, but this depends on whether there is realistic development potential based on the local planning context. Speculative hope value is unlikely to be accepted by most lenders.

To achieve the best possible valuation, ensure that the land is well maintained, boundaries are clear, and any access routes are in good condition. Providing the valuer with accurate plans and details of the land can also help.

When remortgaging a property with land, the state of the title and land registration is critically important. Lenders need clarity about exactly what they are taking as security.

Ideally, the property and all associated land should be registered with HM Land Registry on a single title. If the land is on a separate title or titles, this adds complexity but does not necessarily prevent a remortgage. Some lenders will accept multiple titles, while others may require them to be merged.

If any of your land is unregistered, this will need to be addressed before most lenders will proceed. Voluntary registration with the Land Registry is possible and advisable before starting the remortgage process. Unregistered land can cause significant delays and may deter some lenders entirely.

Other title issues that may arise include:

• Rights of way or easements affecting the land
• Restrictive covenants limiting how the land can be used
• Boundary disputes with neighbouring properties
• Third-party interests such as grazing rights or sporting rights

Having a solicitor review the title before you apply can help identify and address any potential issues early, preventing costly delays later in the process.

The type of land attached to your property can influence both the lender's willingness to proceed and the valuation.

Garden and amenity land. Land that forms part of the property's garden or immediate grounds is generally the most straightforward for lenders. Most will include this as part of the security without issue, provided the total area is within their limits.

Paddock or pasture land. Grazing land or paddocks are common in rural properties. Most lenders are comfortable with these provided they are not too extensive. If the land is used for equestrian purposes, some lenders may have specific requirements.

Agricultural or arable land. Active agricultural land can move the property into agricultural lending territory, which may require a specialist lender. The income potential from the land may be considered in the valuation.

Woodland. Wooded land is generally accepted by lenders, though it may be valued at a lower rate per acre than other types. Environmental designations affecting woodland may need to be considered.

Development land. If part of your land has development potential, this could significantly increase its value, but lenders may be cautious about including speculative development value in their security assessment.

Understanding how your land is classified and used will help you and your broker identify the most appropriate lenders for your circumstances.

If your property has more land than lenders are willing to accept, one option is to split the excess land from the mortgage security.

This typically involves having the land registered on a separate title so that the lender takes a charge over the property and an acceptable amount of land, while the excess land remains unencumbered. This can work well if you want to retain flexibility to sell or develop the additional land separately.

However, splitting land has implications that need careful consideration:

• Legal costs for creating separate titles
• Potential stamp duty implications if the land is ever sold separately
• The impact on the property's overall value and appeal
• Access arrangements between the property and the separated land
• Planning implications if the land is later developed

Your solicitor can advise on the practicalities and costs of splitting land, and your broker can confirm what arrangements the lender would find acceptable. In some cases, this approach can open up mainstream lending options that would otherwise not be available.

Finding a lender who is comfortable with your property and its associated land is the key to a successful remortgage. Here are some practical approaches to narrowing down your options.

Start with a broker. A mortgage broker experienced in rural and land-based properties will have knowledge of which lenders accept various acreage levels and land types. This can save considerable time compared to approaching lenders individually.

Consider building societies. Some regional building societies have more flexible criteria for properties with land, particularly in rural areas. They may take a more pragmatic view of the property than larger national lenders.

Explore specialist lenders. If your property has significant acreage or agricultural use, specialist rural or agricultural lenders may be the best option. These lenders understand the unique characteristics of land-based properties and can offer products tailored to your needs.

Prepare a comprehensive application. Whichever lender you approach, providing detailed information about the property, the land, its use, and any relevant documentation from the outset will help the application progress smoothly.

Be realistic about loan-to-value. If only part of your land is included in the security, the available loan amount may be lower than the total value of your property and all its land. Factor this into your planning from the outset.