Building plot - help needed with what to offer.

eatsleaves

I'm new to the forum:), and hoping that I can get some help re. what a building plot's value might be.

I understand that it's normal to calculate backwards, starting from the value of the proposed house based on similar sold houses in the area. I've spoken to several estate agents and a surveyor, and the overall consensus is that the finished house would be valued at ca. £340,000. Taking that figure as the starting point, and after receiving different quotes for the cost of building the house of an average of £120,000, what price should I be prepared to pay for the plot?

Thanks for any comments.

Kiran

What's it on the market for?

eatsleaves

Kiran wrote: »

What's it on the market for?

It's not officially on the market at the moment (the plot owner is a friend of my neighbour) The plot has full planning permission by the way, and the £120,000 build cost has been based on the house which has the permission to be built.

AlexMac

Take a look at past copies of 'Homebuilding and Renovating' magazine which does a monthly feature on self-builders plot searching in different parts of the country. http://www.homebuilding.co.uk/ I think they run a plotfinder service too, so might be worth asking in case they can help sell. http://www.homebuilding.co.uk/advice/beginners/plots/complete-guide-finding-plot

And look at past auction results; most auctioneers have back catalogues with achieved prices - see http://ukauctions.org.uk/ for a list by region;

I assume it varies by size and area, like housing. For example, Allsop are currently offering a small 0.020 Hectares (0.049 Acres) plot with planning approval for a 3-bed house in Plumstead SE18 (admittedly one of the cheapest areas of London) with a guide price of £70-£80k
http://www.auction.co.uk/residential/LotDetails.asp?A=833&MP=24&ID=833000069&S=C&O=A

tim123456789

eatsleaves wrote: »

I'm new to the forum:), and hoping that I can get some help re. what a building plot's value might be.

I understand that it's normal to calculate backwards, starting from the value of the proposed house based on similar sold houses in the area. I've spoken to several estate agents and a surveyor, and the overall consensus is that the finished house would be valued at ca. £340,000. Taking that figure as the starting point, and after receiving different quotes for the cost of building the house of an average of £120,000, what price should I be prepared to pay for the plot?

Thanks for any comments.

about 150K

tim

Richard_Watters

It's worth what someone will pay for it!

Historically a builder/developer would assume a third for the plot, a third to build it and a third for profit. In the boom years when there was a lot of competition they were working on lower margins.

On this basis if the finished house will be worth £340,000 the land is worth about £113,000. However it will depend on the size of the plot, whether it is flat, etc. If you could fit more smaller properties on the plot (and get planning permission) then it could be worth more e.g. if 3 terraces at £150,000 each, could be worth £150,000.

However I'd ask the owner to tell you how much he wants. It's unlikely he hasn't thought about this if he's got PP! Then negotiate from there.

andy.m_2

I would think that you will be looking at c. £120k under the thirds rule, but that seems to have gone out the window recently and you may end up having to part with anything up to £200k!