Value of Building Land

[Sam_68]

monthefish said:

Sam_68 said:

Still think £1 million per acre is a good rule of thumb for land value?

Yes.

We've got a huge supply of development land that we'll happily sell you, in that case.

E-mail me via my profile to let me know how many £million you'd like us to relieve you of.

[Tuna]

Planning permission seems to be getting near impossible, riding on the back of the (incorrect) belief that there's a shortage of building land in the UK. It's not helping that Labour have let councils run amok with ever more arcane and complex planning rules.

If you started to apply for permission on a site like that right now, you would probably be still waiting in a couple of years time - and that's assuming there are no complications such as access rights, flood risk, biodiversity or difficult neighbours. By then a new government might see a bit of a shake out of the system and land with overly onerous conditions could loose a bit of value.

The bottom line though is that value will depend entirely on what can be built - so a chat with your council could clarify things. They may also have local development framework documents available online that will give an indication of what might happen to such a site.

You'll get the most value if you take it as far as possible to buildable land, the least if you let someone else do all the planning legwork. In the latter case you can sell with a covenant that can require a percentage of profits, flat fee per house build or any other condition that you or your solicitor can imagine. Whether or not anyone would want to buy it would depend on the price.

[monthefish]

Sam_68 said:

We've got a huge supply of development land that we'll happily sell you, in that case.

Do you work for one of these developers that are feeling the pinch?

Sam_68 said:

E-mail me via my profile to let me know how many £million you'd like us to relieve you of.

Excellent. Will you accept Western Union transfer?

( )

Seriously, if you have reasonable plots in a decent part of Oxford for £67k each, I would definitely be interested.

[Sam_68]

monthefish said:

Seriously, if you have reasonable plots in a decent part of Oxford for £67k each, I would definitely be interested.

Really seriously?

We wouldn't be interested in carving out single plots to self-builders, or anything like that, and we've got no land on our books actually in Oxford city at the moment, but if you were after, say, 50 plots on a nice site in Oxfordshire, then I'm sure we could fleece you work out a mutually advantageous deal.

E-mail me via my profile if you're daft enough interested.

[Sam_68]

Tuna said:

By then a new government might see a bit of a shake out of the system and land with overly onerous conditions could loose a bit of value.

It is possible to apply for permission to vary Planning Conditions, mind you, and there are ways to force the renegotiation of Section 106 agreements, so I wouldn't worry about that too much - if policy changed in such a way that an extant consent was left with unduly onerous conditions attached to it, it can be dealt with (though policy doesn't tend to change dramatically enough that it is usually worth the bother, to be honest).

One thing that I should say - since I know it will be relevant to the site in question - is that Labour party policy has been to concentrate residential development in the existing population centres (eg. towns like Faringdon, Bicester and Wantage, if we are talking about Oxfordshire).

Conservative party policy will almost certainly change the emphasis to allow more development of smaller villages, to encourage the rural economy. This being the case, you could well find that in 18 months time a planning application in such a smaller settlement would be viewed a lot more favourably than it would be today...

[Tuna]

Agreed..

Sam_68 said:

Conservative party policy will almost certainly change the emphasis to allow more development of smaller villages, to encourage the rural economy. This being the case, you could well find that in 18 months time a planning application in such a smaller settlement would be viewed a lot more favourably than it would be today...

..though techically this could mean that with planning permission it could be worth more now than it will in 18 months where the supply of rural plots might be freed up.

Swings and roundabouts - the value of your property may go down as well as up.

[Oi_Oi_Savaloy]

Tuna said:

Planning permission seems to be getting near impossible, riding on the back of the (incorrect) belief that there's a shortage of building land in the UK. It's not helping that Labour have let councils run amok with ever more arcane and complex planning rules.

If you started to apply for permission on a site like that right now, you would probably be still waiting in a couple of years time - and that's assuming there are no complications such as access rights, flood risk, biodiversity or difficult neighbours. By then a new government might see a bit of a shake out of the system and land with overly onerous conditions could loose a bit of value.

The bottom line though is that value will depend entirely on what can be built - so a chat with your council could clarify things. They may also have local development framework documents available online that will give an indication of what might happen to such a site.

You'll get the most value if you take it as far as possible to buildable land, the least if you let someone else do all the planning legwork. In the latter case you can sell with a covenant that can require a percentage of profits, flat fee per house build or any other condition that you or your solicitor can imagine. Whether or not anyone would want to buy it would depend on the price.

Just to add that Planners and Planning Committees don't care whether it's a recession or a boom - all they care about is the built environment and the impact a given planning application will have on that environment.

You'd think, however, with the dirth of applications currently, that they would be able to speed up their decision making - alas to no avail!

[Sam_68]

Oi_Oi_Savaloy said:

Just to add that Planners and Planning Committees don't care whether it's a recession or a boom - all they care about is the built environment and the impact a given planning application will have on that environment.

Yes, that's broadly correct, true enough.

...though they've all got boxes to tick in terms of delivery of housing numbers and the Chief Planner from the Department of Communities and Local Government circulated a letter to all Local Authority Planning Departments in May of this year, titled 'Planning for Housing and Economic Recovery', reminding them of their obligations to deliver housing targets and stressing that they must be realistic with S106 demands, taking account of current economic conditions when applying the criteria of Circular 05/05.

'Tis a good stick to beat your Local Planning Officer with, when he or she is being unrealistic, and one that we've used with some success (usually when coupled with the threat of appeals costs and workload).

[Sam_68]

Tuna said:

..though techically this could mean that with planning permission it could be worth more now than it will in 18 months where the supply of rural plots might be freed up.

Highly unlikely, IMO. Ultimately, land values are directly linked to the sales prices of the houses you can build on them, and it's inconceivable that there would be such a huge increase in the numbers of new homes being built in rural villages that it would have any noticeable effect on the average value of properties in such areas.

[monthefish]

Sam_68 said:

monthefish said:

Seriously, if you have reasonable plots in a decent part of Oxford for £67k each, I would definitely be interested.

Really seriously?

We wouldn't be interested in carving out single plots to self-builders, or anything like that, and we've got no land on our books actually in Oxford city at the moment, but if you were after, say, 50 plots on a nice site in Oxfordshire, then I'm sure we could fleece you work out a mutually advantageous deal.

E-mail me via my profile if you're daft enough interested.

Link

(very first link)

random googled website said:

Building plot for eco build - Harcourt Hill, Oxford, Oxon- Price £280,000

Building plots for sale in Burr Street, Harwell, OX11, Oxon - Price £250,000 per plot

Building plot - Abberbury Avenue, Iffley Village, Oxford, Oxon - £400,000

Double building plot for sale in Woodcote, Oxon - £275,000

Building plot Wallingford Road, Goring, Oxfordshire, RG8 - £215,000

If you seriously can’t turn a profit on land costing £67k per unit, then there is something wrong with your business model (and no wonder the large Developers are going to the wall).

I really can’t decide whether you are being deliberately obtuse (and arguing for the sake of it), or whether you are just too caught up in ‘corporate culture’ (and the associated overheads). Either way, the fact that you wouldn’t touch such a thing can only be a good thing for the ‘smaller’ developers in the country, so I won’t spend any more time trying to convince you.

You are absolutely right and I am completely wrong.


Cheers.

[Sam_68]

monthefish said:

If you seriously can't turn a profit on land costing £67k per unit, then there is something wrong with your business model (and no wonder the large Developers are going to the wall).

They are all individual building plots, for self builders. If you buy such a plot to build a house on yourself, you will doubtless end up with the house of your dreams and, if you manage the project properly, you may well find that the end result is worth a nice chunk more than it cost you... but the profit margin is unlikely to be enough to justify the time and effort to make it a decent commercial development proposition, no matter whether you are a one man band or a PLC housebuilder.

Certainly there are overheads associated with large-scale production (though I'd deny we're caught up in a 'Corporate Culture' - the main reason the company I work for is doing dramatically better than most PLC housebuilders is because we have a very lean and flexible structure, with the emphasis on individual performance and ability), but then there are a lot of overheads for small developers that we don't have, too; I can promise you that due to the clout we wield with suppliers of materials, services and labour, our build costs per square foot are way lower than anyone developing 10 houses a year could achieve, and infrastructure, design, planning and marketing costs all become disproportionately large for smaller developments, which is why we don't tend to touch sites for less than 30 units, these days, unless they are exceptional.

I've worked on both sides - I spent 4 years working for a very small developer (me and him, basically), so I understand the economics of small-scale development, too.

But who's arguing with you?

The strikeouts were there because I'm an honest kind of guy by nature, and I wouldn't want you to say I didn't warn you, but I'm being perfectly serious: if you want us to carve out 100 plots on a very nice site in Oxfordshire to you, with all roads and infrastructure sorted by us, at £67K per plot, E-mail me. I guarantee that we'll be interested if you're in a position to put your money where your mouth is.

In fact, seeing as we're friends, I'll knock you a couple of hundred grand off to pay for your next holiday... let's call it £6.5 million in round numbers, shall we?

I look forward to receiving your e-mail.

Edited by Sam_68 on Saturday 13th June 09:49