Selling with planning...

eshroom

Is there a formula for calculating the value of planning in cases where the increase in value is measurable.

For example, a £500k property receives planning for an extension that will cost £150k but will increase the value to £1m.

Potential increase of £350k or more for a professional developer. What would this property be worth undeveloped with the benefit of planning?

davidmcn

Probably not a great deal more than it was previously - getting planning permission for an extension to a house isn't particularly complex or time-consuming, and if your design isn't what the purchaser wants then they'll pretty much have to start at square one anyway.

Fuzzyness

eshroom wrote: »

Is there a formula for calculating the value of planning in cases where the increase in value is measurable.

For example, a £500k property receives planning for an extension that will cost £150k but will increase the value to £1m.

Potential increase of £350k or more for a professional developer. What would this property be worth undeveloped with the benefit of planning?

if you think it will cost 150k to do the extension and you expect to make 350k from it why not do it yourself rather than passing on that uplift to someone else?

Doozergirl

It might make the house a bit more desirable to some people, but it isn't going to uplift value.

There's a big difference to realising the development potential of a virgin piece of land by getting planning permission for a house. Value increase there is in the change of use of the land. Then the value increases again when the house is built and habitable square footage created.

Permission for an extension doesn't increase land value, you need to create the square footage.

AnotherJoe

eshroom wrote: »

Is there a formula for calculating the value of planning in cases where the increase in value is measurable.

For example, a £500k property receives planning for an extension that will cost £150k but will increase the value to £1m.

Potential increase of £350k or more for a professional developer. What would this property be worth undeveloped with the benefit of planning?

I agree with a previous poster, whatever the cost and perhaps allowance for hassle, of getting the planning permission is.
eg if you say to council "can i replace my house with an estate of 50 houses" using plan drawn on back of napkin, and they say "yes" after looking at your plans for two minutes, then perhaps £25. Or if its going to take a team of 10 people two years to do that preparatory work for the council to replace your napkin note, then a tadge more :-)

Its not the value after its developed you should be considering, its the cost of getting to that position of permission to develop, since anyone else could do that also. If it cost you £500 for an architect to draw up the plans and get permission, then why would it be much more than that at best? Might even be valueless if they dont want an extension or want one thats very different.

BJV

Fuzzyness wrote: »

if you think it will cost 150k to do the extension and you expect to make 350k from it why not do it yourself rather than passing on that uplift to someone else?

Exactly what i thought ?

eshroom

Thanks for the replies. Permission is for doubling delapidated property in size on a plot where an increase in size would not normally be granted (green belt). So the uplift is both for refurbing and increasing in size.

I understand that if this was a standard semi with planning to extend out the back and into the loft then planning permission wouldn't add a whole lot.

Doozergirl

eshroom wrote: »

Thanks for the replies. Permission is for doubling delapidated property in size on a plot where an increase in size would not normally be granted (green belt). So the uplift is both for refurbing and increasing in size.

I understand that if this was a standard semi with planning to extend out the back and into the loft then planning permission wouldn't add a whole lot.

Our specialism as developers was taking broken old detached houses on large plots and renovating and extending them massively. It's a heck of a lot of work and gaining planning permission is the easy bit. The reward comes from doing the work!

The key thing is that valuers value what is there, not the potential - whether that is regular mortgage or business loan. You need someone with cash prepared to pay backwards from the end product, less work, and not be so concerned with the profit. Not impossible, but you need a very strong market and someone desperate for that location.

Fuzzyness

eshroom wrote: »

Thanks for the replies. Permission is for doubling delapidated property in size on a plot where an increase in size would not normally be granted (green belt). So the uplift is both for refurbing and increasing in size.

I understand that if this was a standard semi with planning to extend out the back and into the loft then planning permission wouldn't add a whole lot.

that makes more sense. so essentially you're selling a plot rather than a house with an extension. as Doozergirl says above, this does limit your market as you'll need to find someone that wants a challenge and also wants to live in that location. what have the local agents said?

phoebe1989seb

davidmcn wrote: »

Probably not a great deal more than it was previously - getting planning permission for an extension to a house isn't particularly complex or time-consuming, and if your design isn't what the purchaser wants then they'll pretty much have to start at square one anyway.

This ^

A neighbour in the same Conservation Area as us obtained planning permission to convert his detached Victorian house into two semis, then put it on the market for £100k more than he'd paid less than a year before. Apart from one builder that obviously couldn't see any profit in it for him, the only viewers were families who weren't interested in the pp or splitting the house up. Vendor has since decided to extend the property instead