how much is planning permission worth?

pigeonpie

A nice flat we have seen has a potential for a roof terrace. The owner has applied for permission to the local council planners & the indications are positive according to the estate agent.
But the owner claims that the flat sold with planning permission for the terrace makes the flat worth an extra £40 000. He won't build the terrace btw, nor sell the flat as is.
Our view is that if the terrace were in place, the flat would be worth that much more, but it would cost about £20 000 to do, plus would have to redo the lounge afterwards as the access door would be through a thick wall.
Estate agents think that with the permission alone it's only worth about £15k more.
We are talking London and a period conversion flat in a very nice road.
The estate agent thinks the owner is unrealistic but he says the owner is convinced about the extra value of pp. Obviously terraces are rare. The terrace is about 15m2 as no councils are allowing total roof spaces on period conversions to be terraced any longer because of over looking by the neighbours (don't get their logic but that's the rule apparently).
Does anyone in London or who knows the London property scene have any informed opinion on this please? We would have to put in an offer soon. thanks everyone.

johnbrooks

"Our view is that if the terrace were in place, the flat would be worth that much more, but it would cost about £20 000 to do, plus would have to redo the lounge afterwards as the access door would be through a thick wall.
Estate agents think that with the permission alone it's only worth about £15k more."

I think you've answered your own question. You agree with the experts - the vendor is being unrealistic.

seven-day-weekend

I've got no experience of London property or prices, but it seems realistic ro me to say that the flat MAY be worth #40000 more if the terrace was actually constructed, but with Planning Permission alone, less than half that (which is what the EA says).


If you like the flat, and you're not in a hurry, why don't you put in an offer based on the EA's estimate (which probably won't be accepted) and tell the vendor to come back to you if he doesn't sell? You may be lucky!

seven-day-weekend

Don't forget also, his planning permission may be refused.

pigeonpie

Yes he says the price is conditional on pp being granted but is convinced it will be.
The EA is not neutral as wants us to buy something else; hence my asking on this forum.
We are in a hurry to buy unfortunately. Just wondered if anyone has informed info on the (London: always higher) value of pp for something as opposed to it being already constructed.

cattie

Don't forget that even if planning pemission were to be granted you would need the permission of the freeholder before any such works could be carried out.

You don't say where in London the flat is, but unless you are in a prime central location I can't see how a flat with a garden or terrace would be worth £40,000 more. I'd only be willing to pay £10,00 more for a flat with outside space than one with none.

Listen to your estate agent, he obviously has a reasonable knowledge of the market & what prices are realistic.

pigeonpie

It's a nice, leafy area and we are renting the flat we want to buy
so it's not as simple as what would it go for on the open market.
Owner has a history of asking inflated prices but getting more than it's worth & more than it should have gone for. He does not need the money either
Well all we can do is put in an offer. He will refuse. Eviction to where??? Then he probably will only get what we'd offered anyhow.....OH is not well so we are trying not to move.
This is called being held to ransom I know but we are so tired that wanted to ask you lot who can still think clearly! There is almost nothing for sale on the market at the moment which is pushing the prices even higher. Have already paid a fortune in rent to this owner, now look like will have to pay someone else another rental fortune for yet another 6 months.
Keep dreaming that people in London all put in low offers on everything, thus pushing the prices down a bit. (as you can see, very very tired and stressed).

Mrs_pbradley936

Sounds to me as if the owner does not want to sell but would let it go for well over its value. Do not telegraph your desperation, simply let it be known that you are a serious buyer for a sensible price. Meanwhile look at other properties in the area. That will enable you to do two things, firstly to open your eyes to what current property prices are and secondly you might find something that will suit you just as much. Do not pay over the top for “could be” or “might be”.

[Deleted User]

I found myself in the same situation except I was the seller. My EA valued the flat £15,000 more AFTER I obtained planning permission.

Then I was quoted 14,000 for the work, my EA said it would increase the value of the flat by another £25,000-30,000, so we went ahead. I then sold it no problem. Of course I had to get my Freeholders permission to carry out the conversion.

What your seller is doing, increasing the asking price for something he hasn't actually got, is being very greedy, yet he's not doing anything illegal. He can ask what he wants, but will he sell?

If you really like the place and want to put an offer in, just say that you will offer xxx on condition that pp is granted and the freeholder gives his consent. If pp is not granted, then the offer is reduced to xyz.

pigeonpie

Thanks for the advice. Owner does want to sell, but for a major price. He may have to chase an appeal and suggests that only if the second amount (ie what we'd pay with pp) is sufficiently interesting would he really do so! Actually if council don't object, he will get pp as council's consultation process with neighbours is a joke and it's not going to run into freeholder probs. I'm so tired that I don't care if he gets the pp or not as the terrace looks a bit odd on the plans. These days they are all a lot smaller than the roof. He would not want to sell the flat as is unless all appeals fail.

We have looked around intensively for alternatives but there's not much for sale and what there is, is not great or is also v overpriced. Told it should change from late September, but that's too late to complete etc so would have chuck 1000s at another 6 month rental somewhere.
Owner knows that of course! So there's a convenience amount to be factored in. But there's also an unaffordable amount. Thanks for the suggestion of 15k for just the pp. I think we will do a 2 tier offer. Not negotiating from a position of strength though unfortunately.

Find myself wondering just how much borrowing we can do so as not to have to move continually - this will be the 5th move in 2 years for various reasons.
This makes me argue with the owner that we may give him more than Mr X who trots in off the street under no pressure to buy (but who doesn't know that when you are in the shower and someone turns on the tap somewhere else, it goes freezing!)
thanks for helping me to think a bit straighter.