How much is planning permission worth

JC1988

Just wondering how much the value of a property would increase with planning permission to split a garden and build a detached dwelling.


My fianc! and I have been waiting for houses to come up in a certain area and one has come up but the guide price is much more than we have seen for similar properties in the area.


Also seen on Zoopla that it was last sold May 2017 and the guide price now is over 100k more with no apparent improvements being done from what I can see on the listing. Does planning permission really add that much value almost instantly or is the seller trying their luck?


Thanks

Surrey_EA

Several factors to consider:

How much would the value of the current house drop when a new property were built in the garden?

How much would the value of the new house be when completed?

How much would it cost to built the property?

It is entirely possible that a property being sold with a building plot could be £100k more than a similar house without a building plot, but answers to the above questions need to be answered first.

Moony8

I suppose what you need to factor is the following:

1. How much is a plot of land that size worth without planning
2. How much is a plot of land that size worth with planning
3. What is the reduction in value of the main residence due to the loss of part of the garden.

A 550sqm (0.15 acre) garden near us has just been split off from it's main house and sold for £225k with outline planning for a detached house.

I reckon the loss of that part of the garden will likely have a negligible effect on the price of the house - certainly no more than £10k looking at how much land it still has.

Doozergirl

Absolutely, it would increase the value far beyond garden land!

I'm never sure why people then go on to sell house and plot together. I think they are worth less separately than they are together.

Tom99

The house next to me has just sold a very small plot with PP for a very small 2 bed for £250K

The_Real_Cheddar_Bob

Tom99 wrote: »

The house next to me has just sold a very small plot with PP for a very small 2 bed for £250K

it depends what you call a very small plot. A farmer with 20,000 acres would call 100 acres small.


anyway, after my not helpful comment, planning can add value, however it is entirely dependant on geographical factors and who is willing to pay for it. A cash rich ex Londoner wanting a different lifestyle might just pay £100k for the land you refer to

JC1988

Ok so just to lay this out so I understand better the property is 325k with planning permission

If the current property as probably worth 225k as it is without planning permission.
It would be worth 20-25k(?) less with half the plot and a new property close next door (& extension removed to make space for the new property).

It would cost 150k(?) to build the new 3 bed detached property on the plot.
The new property might be valued at 250k.

So I would have to spend 465k to end up with 2 properties worth 460k. Meanwhile this person buys a house, spends a few £ on planning permission and puts it straight back on the market for 100k more?

I might not understand very well, only just started paying attention to property.
Can it really be as easy as that for someone to make a quick 100k on property?

Slinky

Doozergirl wrote: »

Absolutely, it would increase the value far beyond garden land!

I'm never sure why people then go on to sell house and plot together. I think they are worth less separately than they are together.

We looked at a property which had planning permission for another in the garden. We weren't interested in building the house as there really wasn't enough room and we would have wanted the garden for ourselves. The permission had been granted for a long thin house, much against the wishes of all the other neighbours in the close.


We didn't buy in the end due to overlooking from a new build house on the other side. I don't think the vendors achieved a price for anything more than the value of the existing house. It's a while since we were in the area, it'll be interesting to see if the people who bought have built.


The vendor was an estate agent.

AlexMac

“… it was last sold May 2017 and the guide price now is over 100k more …Does planning permission really add that much value almost instantly?”

Yes- subject to house values in the locality, the state of the market and build costs (and whether you can project manage; or sell on to someone who can).

I assume you’re saying that since May, the current owner of the plot to which you refer has successfully applied for PP? Either way, unless you’re a developer with experience and access to funding, why ask?

Are you planning to buy both plots, live in one, build on the other and turn a profit? If so, I hope you know what you’re doing.

It works in my street, where prices rocketed in the years 2008-2016. So much so, that as well as the “garden-grabbing” infill projects which you seem to describe, developers thought it worthwhile demolishing and replacing. As examples of both, a bungalow which sold in 2007 for £750k was demolished and, despite neighbour opposition, replaced during 2014-15 by a pair of 4-storey semis; which sold in 2016 for £1.3 and £1.6 million respectively. Dunno about build costs, but presumably the developer made north of half a mil profit (although the owners of one are still suing him for shoddy work)?

Similarly, an end of garden plot, one of the few left on our street (which used to be the mews, with stables in the huge gardens of the posh houses behind us) was sold off by the Council freeholder, with encumbrances and no planning permission for (rumour has it) about £250k in 2013. With planning permission and architects’ drawings, it then went for (again it’s rumoured) £750-800k a year later. The local family who bought it and took on the project hope it will be worth up to £2mil when finished next Spring. But I reckon that’s optimistic, as even in this inner London suburb, the market has cooled and I reckon the £1.6 mil in 2106 is a ceiling price.

In fact we have three sets of mates locally who have tried, and failed to sell in 6-9 months, whereas houses were going like hot cakes three years ago.

Scale down to your site and, even assuming there might be £50-100k+ profit on a new build worth £300-400k; you gotta ask; where are you gonna get the capital and do you feel lucky?

On the other hand, if after seeking advice from a few local estate agents about values, and doing some build cost calculations (lots on google) and you can afford the extra £100k- or even assuming you can beat that down in a buyers’ market- it might be worth buying.

Then you sit on it, maybe get PP (for a few £k or less of fees) for an even bigger house than alraedy planned , split the site and build yourself or sell on to a developer. OK, your neighbours will hate you for 3 years, but memories are short

(PS- I bought into my street before the prices went crazy. Otherwise I'd still be in a cardboard box)