Development Land and access value?

Erin177

Hi MSE forum, a housing developer has offered to buy our house so they can use the plot as access to their much bigger development land behind us, 300 or so dwellings.
There is another plot available but I'm told our plot is their strong preference. There's no other good access avaliable to them.
What value ontop of our houses Market Value could we expect? What might we use to argue the price up some more? They don't need to demolish our house to be able to put the required road in.
Also, the bottom half an acre of our garden could also be built on / developed.
Can we benefit from the developer also building on this if they have purchased our plot? Could we write into any contract that dwellings/profit on our half acre comes to us?
Many many thanks in advance for any advice given.
Erin.

MattMattMattUK

Erin177 said:

Hi MSE forum, a housing developer has offered to buy our house so they can use the plot as access to their much bigger development land behind us, 300 or so dwellings.
There is another plot available but I'm told our plot is their strong preference. There's no other good access avaliable to them.
What value ontop of our houses Market Value could we expect? What might we use to argue the price up some more? 

You could, generally they could cover the market value of the property at the top end of the current market, the full costs of moving and then an amount you view as worth it for you to move. I know one person who got £180k for the latter part of that, but it was a case that they were the only choice for secondary access due to some fairly unique circumstances and the development was nearly 1,000 homes.

Erin177 said:

They don't need to demolish our house to be able to put the required road in.

Are they proposing buying the whole property, or just the bottom of your garden?

Erin177 said:

Can we benefit from the developer also building on this if they have purchased our plot? Could we write into any contract that dwellings/profit on our half acre comes to us?
Many many thanks in advance for any advice given.
Erin.

You could, but it is unlikely that they will agree to a profit share as it would be very messy, involve complex legal contracts due to costs split over the whole development and they may not build those specific properties for many years. They will want to agree a fixed sum now and you should as well.
 

user1977

I would recommend you get some professional advice about the value (from a surveyor used to this sort of development) - you don't want to sell yourself short. In principle you could ask the developers to cover the cost of your surveyors/solicitors, so you might want to start with that before you get too far into discussions.

Section62

Erin177 said:

They don't need to demolish our house to be able to put the required road in.

If they only need some of the land then would you consider staying in the property and just selling the land they need?

Have they got planning consent, or are they just at the stage of making enquiries?  If the scheme isn't that far advanced you could consider a land swap - you sell them the land needed for the road, they sell you some of the development site to add to your garden (which would increase the 'buffer' between you and the new houses)

If they already have planning consent there won't be much room for negotiation, but if the access road is on your land you should have had a notice served on you before the developer applied for consent.

What you are likely to get if you decide to sell up is market value, the cost of moving/storage, and some extra to make it worth your while.  Whatever anyone says, this extra is unlikely to make you fabuously wealthy.  Holding out for millions may leave you nothing except for a new housing estate on the other side of your fence.

Erin177 said:

Also, the bottom half an acre of our garden could also be built on / developed.
Can we benefit from the developer also building on this if they have purchased our plot? Could we write into any contract that dwellings/profit on our half acre comes to us?

You can always ask, but they don't have to agree.  However, as above, it will also depend what stage the process has reached.  If they already have planning consent the additional land isn't likely to be that interesting to the developer.

Erin177

Hi Matt hanks for getting back so quickly. They are proposing buying the whole plot, house and garden.

propertyrental

Erin177 said:

.....
There is another plot available but I'm told our plot is their strong preference. There's no other good access avaliable to them.
.

Go and talk to the other owner.

Between you, you have the developer over a barrel since his 50 plot development is dependant on one of you selling. Rather than undercut each other, why not agree a value (on top of market value) between you and share the extra.....?

mi-key

They are developers, they will want to give you as little as possible    

daveyjp

You need expert advice, but one third of total increase in value of the land if it is a true ransom strip, i.e, your land is the only option is a starting point.

Stokes v Cambridge is the case usually referred to.

theoretica

If they have offered to buy the house, have they named a price?  I would suspect them of trying negotiating tactics if they made me mention the first figure...

Hermann

Definitely worth getting advice from a land agent who is independent of the developers. There are various legal instruments used in these circumstances and you need advice as to which is best in your circumstances.

You don't say whether Planning Permission is approved for the development but that would seem unlikely if the developer does not already have an access route secured.

If this is pre Planning then it may be that something like a Promotion Agreement may be more suitable than an outright sale at this stage, or alternatively an Option Agreement but caution is needed hence get advice.

In terms of value there two basic standpoints.

1) You consider you have a ransom strip, there is no way for the development to proceed without you.
Here your land has a value per acre in excess of the average value per acre of the rest of the development and you achieve a premium over and above the average of the rest of the development.
Experienced professional help is key here to get the correct figure.

2) You don't have a ransom strip but could be included in the development.
Here a good starting point is to consider that all the land involved in the development has an equal value per acre irrespective of whether it a house plot, green space or access road etc. You then take the total value of the whole site and calculate what percentage your land provides and hence it's value.

So if behind you is a 9 acre site and you add 1 acre giving a total of 10 acre site. You provide 10% of the land.
If that land with Planning Approved but not built is valued at £15 million then your land is valued at £1.5 Million.

This would be a basic starting point and a decent land agent would help you with values and negotiations.

If you used a Promotion Agreement then you wouldn't initially sell the land but commit to it being included if a Planning Application was successful. Once Planning Permission is granted the land is then sold at the market value for the development land. 

You mention there is a house that is to stay plus land that could be developed. To get the total value it's likely therefore you define a smaller area of garden for the house and value the house & garden at the market value for that bit and then it is the remaining area that is valued at the average of the development value.
The area to be developed should be clear from the Planning Application.
If the developer has preferred to demolish the house and include the whole plot in the new development then it is the area of the total plot that is used to calculate the value. 

Getting good advice is key are there are many pitfalls and there may be a better to proceed than an outright sale at this point.

Section62

propertyrental said:

Erin177 said:

.....
There is another plot available but I'm told our plot is their strong preference. There's no other good access avaliable to them.
.

Go and talk to the other owner.

Between you, you have the developer over a barrel since his 50 plot development is dependant on one of you selling. Rather than undercut each other, why not agree a value (on top of market value) between you and share the extra.....?

300.

If the development already has consent (or is identified in the Local Plan as a housing site) then a development of that size is likely to be something the local council is keen to see built - it helps them meet their new-build housing targets.

Which raises the possibility the council could help the developer by using CPO powers to acquire the land necessary to construct the road.

That could turn the barrel into something much less attractive.