How much does planning permission effect house value?

mrbios

A house I'm looking at which looks ideal for my purposes is up for sale, but vastly over what the house itself is worth.

The house is up for sale at £280k, an identical house two doors down from it sold for £220k in September 2016. The only difference? The house at £280k has planning permission for a two bed house (which would turn this 3 bed semi into a terraced) to the side of it. I've seen the plans on the council site, it's an horrifically ugly design and not in keeping with the local aesthetic and has multiple objections from locals as well as the parish council, but the plans were approved anyway.
Nothing has happened with these plans yet and the house is just being sold to buyers with the knowledge that these plans are available.

Should this planning permission really be bumping the house value up by such a significant amount? I would actually be looking to make use of the land to the side, but as an extension (a granny annex to be exact) rather than selling it off for a separate dwelling.

I'll be contacting the estate agent tomorrow anyway, anything specific i should ask?

I should add: Very new to all this. Been a renter for most of my life with the exception of a short stint owning a flat (which subsequently dropped into negative equity...yay for buying in 2007 )

da_rule

Look at it this way. If you built the new house, would it plus the value of the current house (which may now be less as is sounds as though you are making a semi into a mid-terrace) be worth more than £280k after you've paid all of the costs of the build? If it is then it could be worth it if someone is looking for a developement opportunity.

In terms of asking, you'll need to know if the planning is still active, when it was granted and whether any work has been done. It may also be a good idea to ask whether the sellers ever had any quotes for doing the work. You could also ask the estate agent to give you a ball park value on the two houses should you choose to build them.

da_rule

Something else to consider is wheter you could alter the plans and make it into an extension or annex which may be better for your enjoyment of the property.

mrbios

The planning is still active, looks as though it was approved in August last year.

Considering the buy price of £280k, the cost to build the end of terrace (£50-70k? by all means correct me! looks to be 4m x 8m over two floors) and the devaluing of the now terraced house in the middle, i can't really see how anyone would make a profit. It's also directly next to a railway line, which I imagine would put a small dent in the house price as well. I think anyone following up those plans would be lucky to break even....

The house two doors down is in a better condition than the one for sale by quite a long way, modernised throughout with a new kitchen and room for an extension if they could get permission for it. That sold for £220k in July (I got it wrong in the OP, it wasn't September, that's another house locally).

To look at the two houses, I'd be tempted to offer £210-215k for the one that i deem to be over priced, but i guess i'd just be laughed at?

EDIT: was going to post links to rightmove/google maps but it seems I'm not allowed

da_rule

Try posting it with spaces in it.

All you can do is offer what you'll feel comfortable with, and if it gets laughed off then so be it. You don't want to overspend and then regret it, especially as you don't seem overly keen on actually doing the building work.

mrbios

See here: https:// goo.gl/maps/afrxjP6gj6m Far left is the house up for £280k, two houses to the right is the one that sold in July for £220k.
Here's the listing and pictures of the one that sold for £220k: rightmove.co.uk/house-prices/detailMatching.html?prop=58827242&sale=88157250&country=england
Here's the listing for the one that's up at £280k: rightmove.co.uk/property-for-sale/property-62095226.html

We're keen to build an extension, just not the one that they have planned. We would have to start over i imagine in terms of planning application, as we wouldn't want to sell off the land as a separate house. We would want to build a "granny annex" which could be turned into a proper extension in years to come, along with an extension outwards to the kitchen.

da_rule

http://www.rightmove.co.uk/property-for-sale/property-62095226.html/svr/1121#

If it is a house you want and you can afford it then put an offer in I guess. At the end of the day it is only worth what people are willing to spend. Just know where your limit is and be prepared to walk away.

alun4

Live in a house, build another on your land/garden, sell it and the "profit" is not subject to tax or move into the new build and sell the original = no tax liability.
It is how many have progressed up the housing ladder over the last 40 years! Most difficult part has been getting planning permission but the sums must add up.

kinger101

alun4 wrote: »

Live in a house, build another on your land/garden, sell it and the "profit" is not subject to tax or move into the new build and sell the original = no tax liability.
It is how many have progressed up the housing ladder over the last 40 years! Most difficult part has been getting planning permission but the sums must add up.

Although you haven't gone into precise details on what you've done, in many circumstances, what you've described would be classed as trading by HMRC. Which would make it fall under income tax rules.

Anyone setting to buy this property and build on it should work out the tax implications as part of their due diligence.

tim123456789

PP for a new build property of the value indicated here could easily add 50-60K to the value of the plot, yes


tim

tim123456789

da_rule wrote: »

Something else to consider is wheter you could alter the plans and make it into an extension or annex which may be better for your enjoyment of the property.

99 times out of 100, that wont increase the value of the plot by more than the build costs.