Housing Association - Whole Development Purchase
Discussion
Currently speaking to a housing association with regads to a development of 18 apartments I am currently looking at building.
They have stated that they would be 'interested' in buying the whole development, however, as yet have not got round to figures. I have meeting with them in a couple of weeks time but wondered if anyone on here has had similar dealings ?
The development has been valued by 2 estate agents & an independant valuer, and they are all around the £2.3 million area.
What kind of discount would you expect a housing association to ask for ?
They have stated that they would be 'interested' in buying the whole development, however, as yet have not got round to figures. I have meeting with them in a couple of weeks time but wondered if anyone on here has had similar dealings ?
The development has been valued by 2 estate agents & an independant valuer, and they are all around the £2.3 million area.
What kind of discount would you expect a housing association to ask for ?
The only way to find out is to ask the blunt question but over the years some of the HA's have become very commercially aware and have been known to pay open market price if the overall deal is right
I have even heard of HA's outbidding developers for land on which to build their own flats
Unless they are complete numptys (and these days most aren't) they will appreciate that you will need an element of profit
It could be money for old rope if you can presell the entire development, get them to pay a 10% deposit and use that as collateral to raise the development finance. As long as you can keep control of the build cost you have a guaranteed return and should be able to get 100% development funding so you can plough your own money into the next project
I have even heard of HA's outbidding developers for land on which to build their own flats
Unless they are complete numptys (and these days most aren't) they will appreciate that you will need an element of profit
It could be money for old rope if you can presell the entire development, get them to pay a 10% deposit and use that as collateral to raise the development finance. As long as you can keep control of the build cost you have a guaranteed return and should be able to get 100% development funding so you can plough your own money into the next project
As they approached you I think that they should be making the first bid. I would let them have details of your intended sales prices and leave them to work out what they can afford. You will find out very quickly if they are being realistic
I would be very surprised if they don't offer a sensible figure but check what they want in terms of spec. They might put forward what seems like a low price but make sure you are talking about the same finish otherwise you might be spending more than you need to
I would be very surprised if they don't offer a sensible figure but check what they want in terms of spec. They might put forward what seems like a low price but make sure you are talking about the same finish otherwise you might be spending more than you need to
They may just want to buy the land with planning pemision and then spec up there own flats for the land, based around you planning permision.
If you had your flats to a high spec, then they are not going to want to have all the fancy video entry systems etc that a private purchaser would want.
If you had your flats to a high spec, then they are not going to want to have all the fancy video entry systems etc that a private purchaser would want.
I deal with HA's regularly in my job. (check my profile).
To be honest it doesn't matter what spec they choose to build the units to - all the HA has to do is meet your figure you want for the site? Unless I'm missing something?
If the HA can't meet your figure then approach another one in your area. Check the Housing Corporation for HA's that are preferred in your area.
Better still - do it anyway. I'd argue that it's better to have 2 or 3 parties fighting over your land than one.
Also - does your site have planning? If so - what does the S106 say? Or are the 18 units all 'private' at the moment with no affordable element?
Some boroughs do not allow grant under their S106 terms which, in turn, will lead to a lower offer from your affordable provider. But if they affordable provider is simply bidding on 18 units (thus choosing to make them affordable whether or not they're designated that under the planning permission) should not lead to a lower bid than if you went to a private developer.
If it hasn't got planning and you're at the design stage I'd suggest you ring another affordable provider and ask them for their ideal size of units (for 1, 2, 3 bed apts) as I think you'll find that they're usually bigger than your average private unit).
I could go on and on and on but it might be easier (if you want that is) for you to pm me and we can talk on the phone - it's just a whole lot more straight forward.
Incidentally - where is your site - I might actually be interested in buying it! (seriously).
To be honest it doesn't matter what spec they choose to build the units to - all the HA has to do is meet your figure you want for the site? Unless I'm missing something?
If the HA can't meet your figure then approach another one in your area. Check the Housing Corporation for HA's that are preferred in your area.
Better still - do it anyway. I'd argue that it's better to have 2 or 3 parties fighting over your land than one.
Also - does your site have planning? If so - what does the S106 say? Or are the 18 units all 'private' at the moment with no affordable element?
Some boroughs do not allow grant under their S106 terms which, in turn, will lead to a lower offer from your affordable provider. But if they affordable provider is simply bidding on 18 units (thus choosing to make them affordable whether or not they're designated that under the planning permission) should not lead to a lower bid than if you went to a private developer.
If it hasn't got planning and you're at the design stage I'd suggest you ring another affordable provider and ask them for their ideal size of units (for 1, 2, 3 bed apts) as I think you'll find that they're usually bigger than your average private unit).
I could go on and on and on but it might be easier (if you want that is) for you to pm me and we can talk on the phone - it's just a whole lot more straight forward.
Incidentally - where is your site - I might actually be interested in buying it! (seriously).
Under 106 if appears that I would have to make 4 units available to a HA, 50% of which are for thier sale & the remainder for thier rental.
The HA I am meeting next week have stated they would be interested in the whole development as it falls within an area in which they need affordable housing.
I was just wondering what I should be expecting to hear from them, ie whether they pay market value, or would require a discount, and if so what %.
I have a meeting lined up early next week so will find out soon enough exactly what they are offering.
The HA I am meeting next week have stated they would be interested in the whole development as it falls within an area in which they need affordable housing.
I was just wondering what I should be expecting to hear from them, ie whether they pay market value, or would require a discount, and if so what %.
I have a meeting lined up early next week so will find out soon enough exactly what they are offering.
They should pay the market value otherwise why bother to sell it to them? If you can get 400k more (or whatever) by going to a private developer (who'll take on the HA units and flog them to an RSL anyway) then I'd do so.
Its not your problem that they are looking for sites in a given area - that's great news for you - it means they should be happy to pay more for your site.
On the subject of units I'd give them a call and find out their optimum size of Social rented unit and shared ownership unit (you might have them slightly too small for example). Try to work with them to extract the maximum out of the units. Do they pay more for wheelchair optimised units for example (usually 10% bigger than standard). Will they pay more for a 2 double bedroom (ie a 4 person 2 bed) rather than a 3 person 2 bed (one dble and a single bedroom) unit and is it worth your while adjusting things to accommodate that.
Can they make the shared ownership units a different tenure (perhaps discounted market sale) and if so does that give you more money?
All this will help you extract the maximum for your site. Also - make them pay for the S106 contributions too if they are any (education contribution, open space, they should be annotated in the s106 agreement).
Hope that helps. I should charge for this knowledge!
Its not your problem that they are looking for sites in a given area - that's great news for you - it means they should be happy to pay more for your site.
On the subject of units I'd give them a call and find out their optimum size of Social rented unit and shared ownership unit (you might have them slightly too small for example). Try to work with them to extract the maximum out of the units. Do they pay more for wheelchair optimised units for example (usually 10% bigger than standard). Will they pay more for a 2 double bedroom (ie a 4 person 2 bed) rather than a 3 person 2 bed (one dble and a single bedroom) unit and is it worth your while adjusting things to accommodate that.
Can they make the shared ownership units a different tenure (perhaps discounted market sale) and if so does that give you more money?
All this will help you extract the maximum for your site. Also - make them pay for the S106 contributions too if they are any (education contribution, open space, they should be annotated in the s106 agreement).
Hope that helps. I should charge for this knowledge!
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