Land Business guide: All you need to know to invest in land in Lagos
The decision to invest in land for the construction of a property is the initial step in the great project that is to build a house. ComparaJ.com has created for Marcela Properties a guide with everything you need to know if you are looking to invest in a land for construction. Throughout this guide we will explain to you in four distinct steps some of the aspects to which you should pay special attention, what documents you should use to understand the characteristics of the terrain
Land Business guide: All you need to know to invest in a land in Lagos
The decision to invest in land for the construction of a property is the initial step in the great project that is to build a house.
ComparaJ.com has created for Marcela Properties a guide with everything you need to know if you are looking to invest in a land for construction.
Throughout this guide we will explain to you in four distinct steps some of the aspects to which you should take special care, what documents you should use to understand the characteristics of the land you want to acquire, and lastly, the entire licensing process so that to build a property on the same land.
Step 1 - Finding a Land
Finding a land will be the first step of your project, but also the basis for everything you will do later. If you are currently searching for a Plot in the municipality of Lagos, click on the link above to access the opportunities available from Marcela Properties.
In order for your land to be successful, there are a number of factors that must be taken into account, some of which are listed below.
The morphological characteristics of the terrain are important in your choice
The characteristics of the land you want to acquire are of extreme importance so that the entire construction process can occur without problems. The slopes, the characteristics of the soil, the existence of water sheets are some of the factors you should study if you want to build later.
Although structural engineering is at an advanced stage of development, later it can be costly to solve or amend problems in the structure of a building. The ideal situation is to be accompanied by a technician who can advise you and to help you get your project right.
Location, Location, Location
The location of the land is one of the pillars of the whole construction project of a dwelling.
Ideally, it should already be in an area with a building permit, and basic infrastructure such as basic sanitation and power lines should be easily accessible.
Step 2 - Check what can be done on the ground
Before starting the contract of promise of buying and selling, and being that the motivation for the acquisition is to build, it is very important to check the land classifications at the municipal level.
Consultation of these documents will allow you to understand whether or not you can build on the land that you want to acquire and what conditions may apply.
The document to consult is the PDM, Municipal Master Plan, part of the Municipal Planning Plan (PMOT) which is, in turn, the set of documents where you can find all the important information.
In PDM you can find:
The regulation, the normative facet of the PDM, responsible for establishing the rules that apply to the use, transformation and occupation of the soil, with a binding character before the public and private entities.
The planning plan, in which it is possible to verify the organization of the present space in the municipal territory.
The plant of conditioners where zones of administrative easement are identified, and any restrictions of public utility that may limit or prevent in any specific way the use of the soil for other purposes.
Planning plan
The planning plan is a plan where you can find the allocation of all zones of the municipality.
You should consult this plan to understand if the land you are buying is classified as urban urban land or urban urban land. If the land is classified as Rural Land, construction is still possible, but some procedures will be necessary to carry out construction work.
Condition Plan
In the conditioning plan, also part of the PDM, you will find all the restrictions (if any) that the land you want to acquire is subject.
In addition to the planning plan and the conditioning plan, you should also consult the urbanization plan and detail plan of the area corresponding to the land in view.
Detail plan
If the land is in an urbanization, the detail plan becomes the document that will make the most sense to consult, since it will allow a detailed view of the urbanized area.
To access the mentioned documents of the municipality of Lagos, you can download in the following link all the documents of the Municipal Master Plan of Lagos.
Step 3 - Financing
When you have found a land with all the features you want, it's time to consider how your project is financed.
If it is necessary to use credit, there are two ways in which it is possible to finance the acquisition of land, personal loans and construction credit.
The difference between these two financial products is more evident in the available timeframes and also in the associated interest rates.
| Credit from 25.000€ a 120 Months | |||
| Entity | TAEG | TAN | Monthly Payment |
| Cofidis | 11,3% | 9,65% | 341€ |
| Cetelem | 11,0% | 9,65% | 337€ |
| BPI | 11,7% | 10,30% | 345€ |
| CGD | 13,7% | 11,80% | 371€ |
You can make a personal credit simulation for land acquisition in the free simulator of the ComparaJá.pt platform.
Inclusion in construction credit
This will be the best solution for the vast majority of projects since it allows the inclusion of the cost of land in credit for construction.
With this type of credit the complexity of the process increases and you will need the documentation that is normally required of consumers for a normal housing credit.
An architectural project is also required on which the evaluation of the work and consequently the maximum funding amount will be based.
However, the maximum possible term is much higher and also the interest rate at which the loan will be subject will be lower.
It should also be noted that, historically, the interest rate implicit in construction credit agreements is lower than that found in credit agreements for purchase.
If you want support without any commitment, to find the best financing options for construction in the market by the experts of ComparaJá.pt, simply access the previous link.
Step 4 - Acquisition and Next Steps
With the land studied and the financing proposal chosen, the next step will be to sign the contract of purchase and sale.
After the acquisition of the land, it will be necessary to present a project of licensing in the City Hall.
This document is a basic architectural project of a new construction and includes all the drawings and written elements necessary for the licensing of the work.
Later it will also be necessary to submit the project of specialties that will also have to receive a positive opinion.
After communicating the deferment, it is necessary to submit the documents of the builder and the applicant to be made the application for a construction permit.
Once the work is completed, the work book and the respective documents will be handed over and the permit / permit for housing permits at the City Hall may be requested.
Taxation
The final stage in the process of acquiring a building land will be to understand the associated taxation, and for the costs associated with your application for licensing, knowing the total responsibility is a task of somewhat high complexity.
You should check all the information on the applicable taxes and the exemptions and reductions available in the Municipal Regulation of Rates Related to the Urban Activity and Related Operations (RMTRAUOC) of the municipality of Lagos.
There are two types of fees that the licensing process will be subject to:
● Urban Rates
● Urban Compensation Rate
In addition to the applicable municipal taxes, IMT and IMI will also apply to land.
With regard to IMI, we have used the CIMI, the Municipal Property Tax Code, to understand the tax classification of land.
First of all it is important to understand what, for tax purposes, is considered a building.
This is defined by CIMI as follows: "a building is any part of the territory, including waters, plantations, buildings and buildings of any nature incorporated or established therein, on a permanent basis, as long as it forms part of the heritage of a natural person or collective and, under normal circumstances, has economic value. "
Within the buildings there are also the rustic buildings and the urban buildings.
The amount of the IMI to be paid on the property will be based on its tax net worth, and the applicable rates are as follows:
● The applicable IMI rate for a rustic building is 0.80%
● The applicable IMI rate for an urban building varies between 0.30% and 0.45%
The IMT on land will also vary between the two types:
● The applicable IMT rate for a rustic building is 5%
● The applicable rate of IMT urban building is 6%
Now that you have read this guide, you are aware of virtually all the factors involved in acquiring land, from the concerns you must have before acquiring it to the tax burden you may have to bear.
The acquisition of land for construction is often a project that will serve several generations of a family and should be considered as such, creating wealth for the household.
Remember that you can count on the support of Marcela Properties and ComparaJ.pt to realize this project.