The end of one year and the start of a new one is often a time for making decisions, for looking ahead and planning changes.
They may be small – like joining a gym or giving up smoking – or something on a larger scale … changing career, starting up a business or looking to find a new opportunity for that land you own.
Maybe you’re a business owner thinking of realising capital from your freehold premises, or you have an inkling your land could be perfect for development.
Acquiring land is important to us here at LW Developments and whatever your reasons for wanting to sell, we can help you understand the potential of your plot. We have the experience and knowledge to help you secure the right deal.
Questions to be asked
The first step is to assess the land. Here are some questions you should consider:
- Does the land already have planning permission?
- Does its position make it suitable for development?
- Is it in the Green Belt or any other restricted area?
- Is it in an area affected by flooding?
- Is the land large enough for development?
If your assessment brings you to the conclusion that you have a piece of land worth selling, it is the first question that could greatly affect its value.
Selling without planning permission
As the owner of the land, this is the easiest option, but also yields the least return. You can avoid all the necessary paperwork and expense that go hand-in-hand with applying for planning permission, but for a developer there is a risk of planning not being granted. Do they go ahead and purchase the land in the hope that permission for development will be granted? Or do they look elsewhere? The result is that the sale price will be less.
Selling with ‘subject to planning permission’ contract
This alternative removes the onus of seeking planning permission from the seller, but also removes the buyer’s risk associated with the first option. Essentially, the buyer agrees to buy the land but will only complete the deal if he can gain planning permission. You can avoid the planning process and the buyer removes the element of risk. The purchase won’t go ahead if planning permission is not forthcoming. For the seller, this puts more money in your pocket.
The main drawback of this option is time. If you’re looking to close a quick deal, this probably isn’t the right choice.
Selling with planning permission
Financially, this is the best choice for the seller. But it is also the option that requires more preparation and expense. If you are confident, having considered the above questions, that the land is suitable for development, you can seek outline planning permission. This will give the go ahead for development, but will allow the buyer to tweak the details after purchase.
The element of risk is removed for a developer, but he will have to dig a little deeper to fund the purchase.
An option agreement is a contract between a landowner and a developer where the developer has the opportunity (but not an obligation) to purchase land from the landowner with a certain time frame.
The developer works on behalf of the seller to secure planning permission, with all costs and fees associated with planning and promoting the site borne by the developer. If successful, the return to the developer is a share of the value of the site once it is sold with planning permission (or a reduction to the purchase price if bought). The seller can therefore be certain that the developer’s objective is the same – to maximise the value of your land.
What is my land worth?
How long is a piece of string? Determining the value of a plot isn’t as straightforward as measuring it and being paid a set amount per square metre or acre. Ultimately, the money you receive will be determined by a number of factors – the key one being the quantum and use of development that would be permitted.
The buyer will assess the land’s potential, looking at what can be built on the site, the value of the properties and the cost to develop the scheme.
Advice on selling
Talk to a professional. LW Developments is a family-owned company with more than 40 years’ experience in working with landowners. Whatever your circumstances, we can help you maximise the potential of your land.
If 2023 is the year you decide to sell your land, get in touch.
Dean Williamson MRICS