Land Value

bag112

We've been approached to see if we are interested in selling part of our garden. The developer has already made an agreement with our neighbours and submitted a planning application but they have been informally advised by the LPA that the garden is too small and to be successful they need a bit of our garden too.

I have no idea how much a bit of garden should be worth. I appreciate it's going to vary depending on location, etc but assume there's some calculation for the value of the land based on the expected value of the completed new development? Anyone know how that's calculated? Is it something I should be asking a local estate agent about maybe?

And anyone have any advise about what to look out for or be wary of in a sale of this kind?

Any advise appreciated!

MacMickster

In a situation like this you are in a strong position. The developer has paid for a bit of land which, on its own, is now worthless to him. He needs the extra land from you to give it any value.

I would begin by finding out what he paid your neighbour and (only if you actually want another house built between you and your neighbour) start negotiations by asking for double that amount.

crazyguy

MacMickster wrote: »

In a situation like this you are in a strong position. The developer has paid for a bit of land which, on its own, is now worthless to him. He needs the extra land from you to give it any value.

I would begin by finding out what he paid your neighbour and (only if you actually want another house built between you and your neighbour) start negotiations by asking for double that amount.

Yep I can see that working asking for double of what others are being given, NOT

lowbrim

At the end of the day a piece of building land in a decent location for one house is worth circa £130k. It is probably worth £15k without planning permission.

You are in the driving seat if I was you I would appoint a land agent to negotiate for you. This takes you out of the equation with your neighbours (putting you under pressure) and the land agent will make an informed commercial decision.. His costs will be paid by the developer.

It does not matter what yor neighbours have been paid they have signed the contract. A good land agent will get the best possible deal and the developer will realise they are not negotiating with a mug.

Remember giving away some of your garden is going to have an impact on the value of yor house. Aanother reason to employ a land agent. Farmers never negotiate to sell land they always use a land agent. That should tell you something.

Best of luck!

Gwhiz

lowbrim wrote: »

At the end of the day a piece of building land in a decent location for one house is worth circa £130k. It is probably worth £15k without planning permission.


Best of luck!

Can I ask how you came to that figure? Where I am, land for a small house starts at around £300K!!

lowbrim

Gwhiz wrote: »

Can I ask how you came to that figure? Where I am, land for a small house starts at around £300K!!

I did say a decent area. I agree some area's are a lot higher. London centre £m's, some parts of country £50k. Again, This is why you employ a land agent.

JQ.

If the development can only do ahead with your parcel of land then it becomes a ransom strip - google Stokes v Cambridge.

If that is the case I would also recommend professional representation via Chartered Surveyor or Land Agent. It is definitely not something for an EA to do, as there would need to be a development appraisal of the whole plot to calculate the ransom value.

I would also ignore any values stated on this thread - there's no meaningful average value for land in the UK, every plot is different and has to be valued on it's merits. Such things as planning guidelines can have a massive impact on value.

kalaika

Also you will need to think about how much non-monetary value you place on this land.
Will the developer build a house that overlooks you?
Is he building a commercial property for a corner shop/pub/etc that will impact you?
Is the patch of land he wants something that you thought about building yourself on with a shed/outbuilding/patio/swimming pool/etc that you will no longer be able to do?
Will it make your house less attractive to buyers when you come to sell?
Will it block light coming in to your garden?
etc

Once you have thought about the impact it has, can you put a value on that for you to live with it?

SilverSix

It's all relative to what they're going to be building.

If it's a couple of houses and you start asking for six figures they're going to tell you to do one.

If however it's going to be a large development bringing in large profit then you'll be in a better position to ask for more money.

I think the suggestion of a land agent is a good idea.

I'd get your property valued now and also valued as if there was the development completed. Then you can ask for the decrease in value of your home plus what your land is worth.

The last thing you want to do is sell your land for £30k to find your house has depreciated £50k after the development completes.

paddyrg

As it is, the developer can't build the property they want to build on the plot. They may be able to revise their plans and build something smaller, and that would be worth less. How much less? What is the price difference between a 2 and 4 bed property where you are for instance? The cost of building them is not that much different, so your parcel of land is worth the difference between a 2 and 4 bed property (if those were the different sizes available to the developer with/without your land). However as you want to leave them some profit in the build, maybe think of a figure somewhere in between, maybe 40-60% of the difference? Just my thoughts, but don't feel bullied into a cheap sale. Appointing a land agent sounds like a good plan.

JQ.

paddyrg wrote: »

As it is, the developer can't build the property they want to build on the plot. They may be able to revise their plans and build something smaller, and that would be worth less. How much less? What is the price difference between a 2 and 4 bed property where you are for instance? The cost of building them is not that much different, so your parcel of land is worth the difference between a 2 and 4 bed property (if those were the different sizes available to the developer with/without your land). However as you want to leave them some profit in the build, maybe think of a figure somewhere in between, maybe 40-60% of the difference? Just my thoughts, but don't feel bullied into a cheap sale. Appointing a land agent sounds like a good plan.

That's not the way to do it, and it's why the OP would require professional advice. The 3 key elements are Gross Development Value (GDV), Residual Land Value and Developer's Profit. To calculate those figures numerous variables have to be inserted into a calculation. Therefore the cash a developer has to negotiate with is certainly not the difference between the GDV's of different types of property. The purpose of getting the expert advice would be to calculate how much money the developer does have to play with so that a meaningful negotiation can take place. A negotiation where only one side knows that true value of the asset will always favour that person.