Approached By Propert Develoment Company

ianjul

I would appreciate other moneysavers views / advice in relation to the below.

I live in a house situated on a corner plot of land. I recently recieved a letter (Out of the blue) from a 'land acquisitions and residential development' company stating that my land has potential for property development, and basically offering to purchase my house from me for the current market value plus up to 30% more. I invited the agent round for a chat and basically what they say is that they would ask me to get my house valued by ay least 2 local estate agents, then with those valuations they would offer me a price for my house, this offer price is subject to the condition that they then get planning permission for whatever they want to build on my land. This is drawn up in contract form and basically sounds like the sale goes through if during the next 12 months the company gets planning permission on the land, if the planning is refused then they can pull out of the deal, during that period I am in contract with them and therefore unable to sell my house to anyone else.
I had no plans to sell my house and the 12 month contract bit causes me no immediate problems but I was wondering what other people might think ?

Has anybody had any dealings with these sort of companies before, are there any hidden agendas ? If theres a possibility that my land can be developed then should I go to the housebuilders / builders direct ?
I was told that my house and land is a small to medium sized development ?
I am in no rush to do this and under no pressures but would welcome other peoples views if they know or have had similar dealings.
Many thanks and keep moneysaving !

LittleTinker

All I would say to that one is.....do you really want to tie yourself into a 12 month contract which limits you for other options? Someone else may come along who wants to offer you more money......How do you know what the land is going to be worth in 12 months?

Are you able to put in planning permission yourself?? If you can afford to do this, you can then sell at a later date for much more money.

matto

They could apply for PP without entering into any form of contract with you but it will cost them a few grand and if PP was granted there would then be the possibility of you selling to someone else and/or a bidding war.

12 months seems a long time though and I might try and negotiate that and the 33%, but if it was me I'd definitely be looking at pursuing it.

Robert_Sterling

When I bought my house about 25 years ago I realised I might get another house on the side garden. As a building plot I had it valued at £12,000 over 25 years ago. About 10 years later I obtained outline planning permission and then had it valued again this time at £50,000. I again got outline planning permission about six years ago. This time £120,000. Currently the land is valued at £240,000. I am in no hurry to sell. The plot is better than money in the bank. My equity on the house and on the building plot is increasing in line with house prices.

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The value of your house to you as a house is one thing.
The value of your house to a developer is another.
The value to a developer can be expressed as a percentage of the selling price of the subsequent developement.
What that percentage is varies with location.
In my area the developer pays about 40% of the final selling price of the developement.

e.g.

Build 12 flats. Sell for £249,999 each. Total £3,000,000 approx
Value of land £1,200,000 approx.

However if 14 flats are built and sell for £3,500,000 then the
Value of land would be £1,400,000

My point here is that the amount you get for your land should depend on the actual nature of the final development.

The amount you get will obviously need to be more than the current value of your property. Add on cost of legal advice etc and the fact that you may pay Stamp Duty and add an allowance for the increase in value over the coming year.

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Good luck. You are in a "no lose" situation.

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N B I have frequent offers from agents who do not themselves want to buy my land but can get about £10,000 for introducing me to a developer if a sale to the developers follows.

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Doozergirl

I agree it sounds like you can't lose if you weren't planning to sell anyway.

Selling for 33% up on value is great but in your situation though I'd definately be looking at applying for that Planning Permission myself. It would allow you to reap the most profit without having to get your hands really dirty.