How much is the plot worth?
Discussion
Been looking around for property to buy, I quite fancy a bit of a project, and not too far from me I have spotted a rough looking bungalow in half an acre. technically the house is liveable in, but its a bit of an odd layout and really needs a lot of work(or even pulling down) before you could enjoy it. I am tempted to make an offer but I am wondering how much of the asking price relates to the plot. Within a few streets there are probably half a dozen other properties which are broadly similar, but have smaller plots - prob third or quarter of an acre, but are habitable from the get go. Most of these are within 10% higher asking price (a couple are less but need work). I think usually these properties would be snapped up by developers but they seem to be sticking on the market a bit these days.
To me the rougher house in a bigger plot should be a fair bit cheaper, as it needs work to get the accommodation up to speed, but if the land cost is high then I guess that logic might not apply.
How does this work?
To me the rougher house in a bigger plot should be a fair bit cheaper, as it needs work to get the accommodation up to speed, but if the land cost is high then I guess that logic might not apply.
How does this work?
Bigger plot has more scope to build develop etc I currently live in a new build house built in an old back garden of about 1/2acre and there are 4 3bed semis with garages and 8 flats in total and the old house that the garden used to belong to is next door. As bigger plot has more potential that's what keeps the price up!!
shimmey69 said:
Bigger plot has more scope to build develop etc I currently live in a new build house built in an old back garden of about 1/2acre and there are 4 3bed semis with garages and 8 flats in total and the old house that the garden used to belong to is next door. As bigger plot has more potential that's what keeps the price up!!
Looking around the local area, that doesnt seem to happen, in the main these older plots are redeveloped into one large newbuild or heavy reno'. This particular place doesn't have an impressive street presence - there is no where to put the chelsea footballers gates!sawman said:
Been looking around for property to buy, I quite fancy a bit of a project, and not too far from me I have spotted a rough looking bungalow in half an acre. technically the house is liveable in, but its a bit of an odd layout and really needs a lot of work(or even pulling down) before you could enjoy it. I am tempted to make an offer but I am wondering how much of the asking price relates to the plot. Within a few streets there are probably half a dozen other properties which are broadly similar, but have smaller plots - prob third or quarter of an acre, but are habitable from the get go. Most of these are within 10% higher asking price (a couple are less but need work). I think usually these properties would be snapped up by developers but they seem to be sticking on the market a bit these days.
To me the rougher house in a bigger plot should be a fair bit cheaper, as it needs work to get the accommodation up to speed, but if the land cost is high then I guess that logic might not apply.
How does this work?
The asking price relates to plot size in 2 basic ways.To me the rougher house in a bigger plot should be a fair bit cheaper, as it needs work to get the accommodation up to speed, but if the land cost is high then I guess that logic might not apply.
How does this work?
1. The agent has looked at comparable properties with large gardens that have sold and used that as a basis, taking into account the work that needs to be done on the bungalow
2. The agent has looked at the potential for redevlopment in terms of the number and types of units that could be developed on the plot and arrived at a land value (normally a residual land value which is revenue, less cost and profit)
There could be an hybrid approach, or the agent could have guessed a value.
The agent will also take account of any covenants that could constrain or prevent development
If you want to develop the plot, you should make an offer based on the residual appraoch, which means that you need to understand the following:
1. What will the planners let you do
2. What type of unit is appropriate for the market (if you plan to sell on), this usually means what is the smallest unit you can build to achieve the maximum proce the location can stand
3. Build cost
4. Abnormal costs eg demolition, abnormal ground, extra costs to service or drain the plot
5. Professional fees for buying and selling
6. Contingency
7. Cost of any borrowing over the period until the house is sold
8. SDLT
9. Profit (how much if any do you want to make. Most professional developers will look at 20% of revenue as a minimum)
blueg33 said:
The asking price relates to plot size in 2 basic ways.
1. The agent has looked at comparable properties with large gardens that have sold and used that as a basis, taking into account the work that needs to be done on the bungalow
2. The agent has looked at the potential for redevlopment in terms of the number and types of units that could be developed on the plot and arrived at a land value (normally a residual land value which is revenue, less cost and profit)
There could be an hybrid approach, or the agent could have guessed a value.
The agent will also take account of any covenants that could constrain or prevent development
If you want to develop the plot, you should make an offer based on the residual appraoch, which means that you need to understand the following:
1. What will the planners let you do
2. What type of unit is appropriate for the market (if you plan to sell on), this usually means what is the smallest unit you can build to achieve the maximum proce the location can stand
3. Build cost
4. Abnormal costs eg demolition, abnormal ground, extra costs to service or drain the plot
5. Professional fees for buying and selling
6. Contingency
7. Cost of any borrowing over the period until the house is sold
8. SDLT
9. Profit (how much if any do you want to make. Most professional developers will look at 20% of revenue as a minimum)
Cheers Blue, thats helpful. I am looking for somewhere to live, rather than selling on for profit, I am trying to retionalize in my own mind what the plot is worth. 1. The agent has looked at comparable properties with large gardens that have sold and used that as a basis, taking into account the work that needs to be done on the bungalow
2. The agent has looked at the potential for redevlopment in terms of the number and types of units that could be developed on the plot and arrived at a land value (normally a residual land value which is revenue, less cost and profit)
There could be an hybrid approach, or the agent could have guessed a value.
The agent will also take account of any covenants that could constrain or prevent development
If you want to develop the plot, you should make an offer based on the residual appraoch, which means that you need to understand the following:
1. What will the planners let you do
2. What type of unit is appropriate for the market (if you plan to sell on), this usually means what is the smallest unit you can build to achieve the maximum proce the location can stand
3. Build cost
4. Abnormal costs eg demolition, abnormal ground, extra costs to service or drain the plot
5. Professional fees for buying and selling
6. Contingency
7. Cost of any borrowing over the period until the house is sold
8. SDLT
9. Profit (how much if any do you want to make. Most professional developers will look at 20% of revenue as a minimum)
sawman said:
Cheers Blue, thats helpful. I am looking for somewhere to live, rather than selling on for profit, I am trying to retionalize in my own mind what the plot is worth.
You are welcome. I love this stuff its why I do it for a living 
Ok in that case ignore the profit element, take a view on the legal fees etc, you won't need to factor in selling fees either, but make sure you allow for planning fees, architects, building control. As a rough rule of thumb, for a single plot for your own use the build cost should be about the same as the land value.
sawman said:
Cheers Blue, thats helpful. I am looking for somewhere to live, rather than selling on for profit, I am trying to retionalize in my own mind what the plot is worth.
IMO as an amateur.... The build will cost about £1000 per sq m, so a 200m^2 4/5 bed place is £200,000ish. Add fees and demolition costs. Then look at how much 200m^2 places on half acre plots go for and subtract your first figure from that.You'll be competing with developers who'll want to pay less obviously, so you have that 20% to play with depending on now much the hassle will "cost" you.
Bill said:
IMO as an amateur.... The build will cost about £1000 per sq m, so a 200m^2 4/5 bed place is £200,000ish. Add fees and demolition costs. Then look at how much 200m^2 places on half acre plots go for and subtract your first figure from that.
You'll be competing with developers who'll want to pay less obviously, so you have that 20% to play with depending on now much the hassle will "cost" you.
As long as they have the cost base right, an individual looking to build a house for himself will always outbid a developer. As soon as it become multiple plots the developer should win except that individuals often miss some of the costs You'll be competing with developers who'll want to pay less obviously, so you have that 20% to play with depending on now much the hassle will "cost" you.
Many plots are bought by mistake!sawman said:
Thats what I would like to avoid,
Dont s'pose you would have a rough idea what typical demolition cost are would you? I guess disposal is a major part of this cost!
How big is the bungalow? Assuming about 900 sqft and nothing special in terms of salvageDont s'pose you would have a rough idea what typical demolition cost are would you? I guess disposal is a major part of this cost!
Reputable company probably £8-10k, cowboy (if you can find one)£4-5k
Big plots can be pricy.
I have modern 4 bed, 3 bath, 2 reception detached house. The gardens are mature, and the drive will take 4 cars. Nothing needs doing, and its probably worth 280k.
Further up the road is a wooden shack of a house. It sits on a similar sized plot to mine, but to the rear of that it has about 1 acre of woodland. Its going up for auction with a guide of around 260k.
I have modern 4 bed, 3 bath, 2 reception detached house. The gardens are mature, and the drive will take 4 cars. Nothing needs doing, and its probably worth 280k.
Further up the road is a wooden shack of a house. It sits on a similar sized plot to mine, but to the rear of that it has about 1 acre of woodland. Its going up for auction with a guide of around 260k.
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