LAND. HOW MUCH IS IT WORTH?
The biggest question in a land owners mind is “How much is my land worth and what’s the most I can sell it for?”
There are 2 main schools of thought for land owners and what I am going to do in this article is highlight these trails of thought and explain why they don’t always work.
1.Land is worth a price based on size.
A lot of people base what they think their land is worth purely by the size of it. For example a price per acre.
Whilst this measurement can work in an agricultural sense, it doesn’t always work in a development scenario and here’s why:
"Land is only worth what you can do with it."
Land is a tricky subject and it is not as simple as all land is the same. Whilst a piece of land might look like a prime development site, its only after thorough investigation and due diligence is done that the worth of a piece of land can be obtained.
Here’s an example, take two separate pieces of land that have the potential to be developed, both are 1 acre in size and we will call them plot A and plot B.
Plot A is open land with great access, no TPO’s (Tree Protection Orders), No hidden cables underground, connection to local services is easy, there’s no archaeological remains, no bats, no bunny rabbits and it’s in the best location where the building density is 15 houses per acre.
Plot B is on a hill, there’s 4 trees that are over 200 years old right in the middle, there’s a fibre optic cable in the pathway that needs to be lowered in order to get a new road in place, there’s bats living on site and there’s a bus stop in the way of the new access. The most that could be built on the site is 3 large bungalows.
You can quickly see that Plot B is going to take a hell of a lot more time to sort out all the details and will carry significant extra costs to do so. Not to mention the building potential is a lot smaller.
So the value of the land would be completely different to the value of the land in Plot A.
It is all these details that most developers miss and fail to recognise early within the process of making a deal with a land owner which then creates future friction and let downs for everyone involved.
Thorough analysis and appraisal of every site is essential to a successful deal for land owners and developers.
2. A plot down the road sold for this much
It’s human nature to look on the market and see what has sold similarly close to the land you own.
This gives you a feel for the market and a level of what you could achieve.
In some cases, your land could be worth much more but on the other hand it could be worth slightly less.
Remember:
Every piece of land is unique and is only worth what you can build on it/ develop on it.
Below are just a few of the factors that can differentiate the prices in land for development:
Location
Access
Neighbouring properties
Types of property that can be built on the land
Sewerage
Utilities
Hidden Cables
Flatness of the land
Trees
Covenants in the title
Acceptable building heights
Land designation in the local plan
Amenities
Section 106 agreements
CIL (Community Infrastructure Levy)
Affordable housing
Planning complications
Failed Planning applications
There are hundreds more variables and again, this is where a full appraisal and expert analysis of your land is key from an experienced developer.
If you have land that you are thinking of selling and you would like to discuss the potential, give us a call and we will happily work with you to design a winning scheme.