Selling to a Property developer

ringo · 17 May 2007 at 11:24AM

We have been approached by several developers all of whom seen to be willing, subject to planning permission, to pay substantially more than local estate agent valuations for our site. Has anyone else had any experience of this method of selling a house? If so are there any pitfalls we should be aware of?
If we decide to go ahead how do we find a solicitor specialising in this type of property transaction?

Raggie · 17 May 2007 at 11:29AM

once your site has planning permision for a development it will be worth more.. IMHO.

to offer you more cash subject to PP is their way of mitigating the risk. After all without it they do not have to continue with the sale.

What you should do is get them to pay the higher figure without PP in place.. and for them to gamble they will get it.

if not why not invest a little time/money.. get PP yourself and sell on at the top amount you can.

any solicitor that undertakes convancing should be able to handle this.

lush_walrus · 17 May 2007 at 1:02PM

Ringo, the thing with a deal like this is it is set for the developer to gain, rather than you. Planning permission will take in excess of 8 weeks (it will be 8 weeks for the application to be processed, but presumably they will also have to prepare their submission too). If the condition of the sale is that planning permission needs to be granted, then in effect what they are actually saying is that they will pull out if they do not receive planning permission. Which will leave you back at stage one of looking for a purchaser.

If you have been approached by 2 developers, then my guess is your property has great potential. Why not have a go at getting the permission yourself? It may well be worth the risk, as said above it will most certainly increase the value of your property and you still will not have to do a great deal as you can sell the property with the permission rather than develop it yourself (unless that interests you...In which case go for it!).

Personally, if I were you I would try to get the permission yourself and do not accept an offer from a developer, unless they offer the additional price without waiting for planning permission.

If you want any advice about how to go about applying for planning permission, post back on here with details of what you think they are plannig for your property and I can talk you through it and the costs involved.

ringo · 17 May 2007 at 8:58PM

Thanks for the replies both of which suggest trying for planning permission ourselves. The developer is "suggesting" they would be applying to put 2 semi's and 1 detached on the site. Any ideas on what the up-front costs of applying for such planning permission are likely to be? Obviously the property developer will bear such costs and take the risk that permission is denied. Also we feel that a property developer is probably more likely to make a successful first application than we are.

CB1979_2 · 17 May 2007 at 9:38PM

nah get yourself a decent architect and get them plans drawn up yourself!

imo it costs you £1k for the plans, etc. if it takes 2 months and it gets rejected your place probably would've gone up by at least £1k anyway so no real loss!

seriously you could well be talking in excess of £1m worth of housing!
where abouts are you and what's the value they and the EAs have given you?

ringo · 18 May 2007 at 1:48PM

We live in Cobham, Surrey. The EA's top quote was £900,000 whereas the top developer is £1.2M; as I said a significant difference. You have quoted the likely architects fees but aren't there fees for submitting plans to the council?
We were advised that these could amount to £20K or more!

Doozergirl · 18 May 2007 at 2:07PM

Who told you that? The developer? :rolleyes: Seriously, it's £135 to make a submission for planning permission where I live. I spent £700 on an architect and that was for full plans, you only need outline permission.

Planning departments often have surgeries where you can just turn up and have a chat. They are very helpful and will advise you on exactly what outline permission is and what sort of build they might approve. Do use an architect to advise you though as it's worth trying to get a bit more through than they suggest

.

Seriously, the developer is going to be trying to buy as cheaply as they can. Don't con yourself out of money just because someone said PP is expensive. Get the facts first!!!!!!!

ringo · 18 May 2007 at 8:32PM

Grateful thanks to all who replied - I don't know if our local planning office have surgeries but it looks as though the perceived wisdom is that we should contact the planning office and see what the costs are. This site is really amazing, the more I use it the more I am impressed.

Rick62 · 19 May 2007 at 12:31PM

So if you get planning, site for two semi's and one detached is probably worth about £800k for the site (in Chobham), £200k each for the semis, £400k for the detached and the developers are offering you a £300k premium subject to and conditional on planningl. So for an investment of a couple thousand the developer could make £500k without even building the properties.

Get the planning yourself, it might be a bit more than £1,000 for 3 house plans, but nothing like £20k and well worth the risk for the potential.

ringo · 21 May 2007 at 3:20PM

Thanks Rick. It's actually Cobham not Chobham but the principle is still the same. We've spoken to one architect, so far, who has quoted £2K - £3K for outline planning permission or about £6K for full planning permission; he says that full pp. would be required to maximise the potential but we are not sure as that may be tying any prospective developer's hands too much?

lush_walrus · 21 May 2007 at 3:53PM

Go for full planning I would suggest, it may tie the developers hands temporarily, but it will offer them a guarantee that x amount of houses are permitted to be built. They can then chance their arm further should they wish.

Definately you will end up with more than £300k if you receive planning permission.

With regards to the application costs, it will be £265 per additional dwelling (ie per house or flat). £135 is the flat fee for residential extensions.

Planning applications can cost well over £20,000 but only for when the application fee is calculated in accordance with value rather than no of units. With this sort of development, planning keep it simple and offer a per unit fee.

£6k sounds responable for the architects fee, what are they including in this? Submitting the application obviously, but are they proposing to come up with a few options on how the site can be developed? This is really what you should consider, as you need some lateral thinking on the site. Are they going to survey, or will you need to get a survey done (this will probably be about £1000, maybe less).

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Selling to a Property developer

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