How much is my land worth and how do I maximise its value?
In short, a site is worth as much as a developer will pay. Generally speaking, the value of land is a percentage of how much money a buyer can get from it and in developer terms would be what the final Gross Development Value (GDV) would be. For instance, a field with planning permission for residential development has value based on what financial return can be made from selling the residential units. As land agents we can assist in identifying land potential and the development that will bring the highest value.
How do I achieve planning permission on my land with a view to sell?
What many land owners fail to see from the offset is that obtaining planning permission for the right scheme is crucial to maximise the land’s value. Yes they are able to get planning themselves, however not taking into regards the time and financial burden they may have to risk. We see time and time again, developers resubmitting planning to unlock and maximise the value, this is why it is imperative to choose the best land agent who understands the planning process and has the experience, knowledge and most importantly the contacts that give you both the right exposure and the best buyer for your asset.
A brief overview of the four most common mechanisms of sale for land transactions;
Similar to buying a standard residential house – An offer is made to buy the land without any planning on conditions other than vacant possession on completion. A bit of a risk against reward scenario posing the biggest risk but potentially the highest gain. The method and process is normally a lot faster for the land owner to receive their capital.
Conditional/Subject to Planning/Option Agreements
The buyer and landowner enter a contract whereby the buyer attempts to gain planning permission on the land at their cost. Once planning is granted the buyer is obliged to buy the land for an agreed price. This ties the owner in for an agreed period of time with the developer however this will give owner a bigger sale price in comparison to the unconditional deal due to the risk element being reduced on the site as it is based on a positive outcome on planning. Another way to do this is enter into an Option Agreement where the developer has an option to buy the land (or if not) within the agreement at an initially agreed price which is normally triggered once planning is granted.
This is where both parties enter an agreement to maximise the value of the land through gaining a planning consent at the cost of the promoter. Where the owner supplies the land and the promoter works the planning at the point consent is granted the landowner and promoter market the land to secure the best price which is split by the landowner and promoter at a pre-agreed percentage which normally relates to around 80/20 in favour of the land owners but this can vary.