7 acres - housing association want we think
Discussion
Firstly hello to all. Any advice to on land values please, my sisters and i have a field on edge of village in south devon. We have a estate agent working on selling this plot for us, he has been in contact with dch our local housing association and they have visited the site briefly saying it should be ok. Firstly they want to pay 10,000 to hold the land for a few years whilst they carry out checks etc. Housing survey been conducted and it seems there is a need for affordable housing, the figure of 25 or 30 units was suggested by dch with a play park intergrated on the site. Does anybody know the percentage developers / landowners get or how they base a valuation figure for us, my sister once said it was 85% to 15% which is clear as mud to me. Is this best route to take or does the site have any real value as estate agent telling us to contact solicitors regarding avoiding capital gains tax, any help would be wonderful. Thanks in advance
Fiona
Fiona
Edited by blackcat1 on Saturday 30th August 16:02
Land in some placed is by far the biggest element of a property hence the spread of % of property sale value.
Work out what the individual units will be worth, what they are to build and the difference is profit and land cost. An estate agent should be able to help. Let's say its 70 units and if they're worth 100k each, build cost of 50k each there's potentially 3.5m knocking around. The builder will want a big chunk of that but you could be looking at 1m+ so I suggest you take professional advice quickly.
Work out what the individual units will be worth, what they are to build and the difference is profit and land cost. An estate agent should be able to help. Let's say its 70 units and if they're worth 100k each, build cost of 50k each there's potentially 3.5m knocking around. The builder will want a big chunk of that but you could be looking at 1m+ so I suggest you take professional advice quickly.
I hardly think that a motoring forum is the best place for legal advice on land and property matters. With the sort of values you are (potentially) talking about, I would have thought professional legal advice was the first port of call.
Bear in mind that 98%+ of the advice offered here by our resident pub-lawyers will be just plain wrong, and worth diddly-squat in the real world.
Bear in mind that 98%+ of the advice offered here by our resident pub-lawyers will be just plain wrong, and worth diddly-squat in the real world.
Not developer, far from it, so treat this with the caution it deserves.
I understood it to be a rough rule of 3, 1/3 for the land, 1/3 for the build and 1/3 sundries, fees and profit. So as already said if the final housing stock is worth £3m then the land with planning permission is worth about £1m.
I understood it to be a rough rule of 3, 1/3 for the land, 1/3 for the build and 1/3 sundries, fees and profit. So as already said if the final housing stock is worth £3m then the land with planning permission is worth about £1m.
As a small time property investor and with an economics background... my gut reaction was £1.5m
I then did some maths
All an investor is interested in is a rental yield and it is from this figure we can calculate value at a given yield here are the assumptions
Assume yield 6 per cent
Assume monthly rental for a 3 bed property is £850
That puts each property valuation at £170000
30 units times £170k (£5.1m) minus expected build cost of assumed £110k x 30
Makes £60000 x 30 units so £1.8m
At £1.3m it is attractive to an investor... assuming they are well financed and the land is well located and the local market looks sound etc etc...
A simple excel spreadsheet, an a level student and a local new paper should answer your question further.
I then did some maths
All an investor is interested in is a rental yield and it is from this figure we can calculate value at a given yield here are the assumptions
Assume yield 6 per cent
Assume monthly rental for a 3 bed property is £850
That puts each property valuation at £170000
30 units times £170k (£5.1m) minus expected build cost of assumed £110k x 30
Makes £60000 x 30 units so £1.8m
At £1.3m it is attractive to an investor... assuming they are well financed and the land is well located and the local market looks sound etc etc...
A simple excel spreadsheet, an a level student and a local new paper should answer your question further.
FFS
GET ADVICE FROM A LOCAL QUALIFIED DEVELOPMENT SURVEYOR.
I despair I really do. You are talking about something worth up to and in to £m and taking advice from PH. Blueg33 may well be helpful and may be able to recommend someone locally.
GET ADVICE FROM A LOCAL QUALIFIED DEVELOPMENT SURVEYOR.
I despair I really do. You are talking about something worth up to and in to £m and taking advice from PH. Blueg33 may well be helpful and may be able to recommend someone locally.
- A site with outline planning for residential development is worth substantially more than without - especially if outside the curtailment of the village and not already allocated for development.
- Don't bother with legal advice at this stage. You need Surveyor and potentially planning advice more.
Roo said:
Hopefully Blueg33 will see this thread.
Here I am 
Op - It sounds like you are being oferred an option with a £10k premium, this is common where the land is not currently allocated.
The land will be valued on a residual valuation basis, ie the Gross development value less the development costs. Often with options you would then be paid circa 85% of this value.
But, this needs negotiating on your behalf by a professional. You should be able to achieve 100% of the open market value less planning costs etc. Expect to pay a good agent at least 2% of the land value.
I know the patch reasonably well, pm the agents details as its important he knows what he is doing.
A housing association will generate a lower land value (typically) than a regular resi developer. If an HA can get planning then a regular developer may be able to get it also.
What you need to know is:
What is the Local Plan/UDP status?
What is the acreage (density of development is criticak to land value)
What are the typical selling prices for new houses inthe area
What tenure mix is the HA applying
The agent needs to obtain the developers land appraisal and you need to run that past me or someone like me.
Feel free to PM me and I canlet you have my phone number as it will be easier to chat this through, I will have a little time on monday.
If you want to know why I think I may know a bit about this, I have been a housebuilding Land Director for 20 years the first 10 in the southwest, I now deal with development and investment into supported living and extracare for HA's and development of hospitals and health centres across the UK. My supported living business buys a site a week for housing association development. A subsidiary is the UK's largest builder of affordable housing.
(nb, my typing is terrible so apologies for typos I have missed)
Edited by blueg33 on Saturday 30th August 21:11
HarryW said:
Not developer, far from it, so treat this with the caution it deserves.
I understood it to be a rough rule of 3, 1/3 for the land, 1/3 for the build and 1/3 sundries, fees and profit. So as already said if the final housing stock is worth £3m then the land with planning permission is worth about £1m.
No, this is wrong, its so broad brush its meaningless.I understood it to be a rough rule of 3, 1/3 for the land, 1/3 for the build and 1/3 sundries, fees and profit. So as already said if the final housing stock is worth £3m then the land with planning permission is worth about £1m.
nct001 said:
As a small time property investor and with an economics background... my gut reaction was £1.5m
I then did some maths
All an investor is interested in is a rental yield and it is from this figure we can calculate value at a given yield here are the assumptions
Assume yield 6 per cent
Assume monthly rental for a 3 bed property is £850
That puts each property valuation at £170000
30 units times £170k (£5.1m) minus expected build cost of assumed £110k x 30
Makes £60000 x 30 units so £1.8m
At £1.3m it is attractive to an investor... assuming they are well financed and the land is well located and the local market looks sound etc etc...
A simple excel spreadsheet, an a level student and a local new paper should answer your question further.
On a site that size there will be a mix of tenures, so sadlythis doesnt work. A large HA currently will generate investment yields of about 5.5%, but most of them develop and hold, so the key thing is their cost of money. They will apply prudential borrowing rates unless they want the development off balance sheet (can be a factor)I then did some maths
All an investor is interested in is a rental yield and it is from this figure we can calculate value at a given yield here are the assumptions
Assume yield 6 per cent
Assume monthly rental for a 3 bed property is £850
That puts each property valuation at £170000
30 units times £170k (£5.1m) minus expected build cost of assumed £110k x 30
Makes £60000 x 30 units so £1.8m
At £1.3m it is attractive to an investor... assuming they are well financed and the land is well located and the local market looks sound etc etc...
A simple excel spreadsheet, an a level student and a local new paper should answer your question further.
blueg33 said:
On a site that size there will be a mix of tenures, so sadlythis doesnt work. A large HA currently will generate investment yields of about 5.5%, but most of them develop and hold, so the key thing is their cost of money. They will apply prudential borrowing rates unless they want the development off balance sheet (can be a factor)
At about 5.5 versus 6 we are not far apart... the site will have a variety of housing, simple figures based per unit and not hard to change them. There may be some 1 or 2 beds with values worked back according to yield but surely what is most important is actual building cost and rental not what is built. My figures at £110k are top end, ultimately... will it be as broad as long? Obviously if I were to work for the client as an economist / asset valuer a ball park valuation would not fit, there is no pin point valuation, it depends upon whom it is marketed to.I would look to resell to a major house builder who is (relatively) not interested in offering value to the market ie 5.5 per cent yield on valuation but quality homes priced accordingly and they will value the site at more.
0.5 percent yield is a big number when it comes to gdv. Its nearly 20 percent more.
But no RSL will buy a site that size assuming all units are rented. It will be a blend of tenures.
Your build cost is about right assuming no special materials.
IMO if the op sells to an RSL/HA then they will not be maximising the land value.
But no RSL will buy a site that size assuming all units are rented. It will be a blend of tenures.
Your build cost is about right assuming no special materials.
IMO if the op sells to an RSL/HA then they will not be maximising the land value.
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