Housing, development land query
Discussion
Currently in negotiations with a large housing developers over some family owned land. The developers have made an offer but there have been subtractions made for seemingly everyting.
I have obtained government figures for the value of development land in the area at £x per acre. I would expect an area of building land to be worth the government figure multiplied by the number of acres to be built on.
However this appears not to be so, as the developers only want to pay for the amount of land on which houses will actually sit, and not pay for the land taken up by roads and gardens?
To me this sounds ludicrous. If I buy an apple I pay for the whole thing. I dont offer a fraction of the asking price just because I'm not going to eat the apple core. That is in effect what has happened, we have been offered a figure based on a percentage of the lands area.
Is this right?
If it is, does anyone know the percentage of a development usually taken up by roads etc?
I have obtained government figures for the value of development land in the area at £x per acre. I would expect an area of building land to be worth the government figure multiplied by the number of acres to be built on.
However this appears not to be so, as the developers only want to pay for the amount of land on which houses will actually sit, and not pay for the land taken up by roads and gardens?
To me this sounds ludicrous. If I buy an apple I pay for the whole thing. I dont offer a fraction of the asking price just because I'm not going to eat the apple core. That is in effect what has happened, we have been offered a figure based on a percentage of the lands area.
Is this right?
If it is, does anyone know the percentage of a development usually taken up by roads etc?
THEY ARE TRYING TO F**K YOU ON THIS - dont let them!!
God damn housing developers like this p*ss me right off. You're completely right - you pay for the land, at the 'price per acre with or w/out planning permission. I have no idea wher they got the 'we dont pay for the bits which have roads on' but I would say they're pulling a fast one.
If they dont want to pay your asking price (asuming you're being fair) then tell them that you cannot sell to them and it will have to go to someone else.
developers will usually fight tooth and nail to get land with planning if it's in a good area. If they dont want it, another developer definitely will. To be honest, you should try and get several interested anyway so you have some kind of bidding war.
Not pay for space taken up by gardens - what a load of cobblers
where is it in the UK?
God damn housing developers like this p*ss me right off. You're completely right - you pay for the land, at the 'price per acre with or w/out planning permission. I have no idea wher they got the 'we dont pay for the bits which have roads on' but I would say they're pulling a fast one.
If they dont want to pay your asking price (asuming you're being fair) then tell them that you cannot sell to them and it will have to go to someone else.
developers will usually fight tooth and nail to get land with planning if it's in a good area. If they dont want it, another developer definitely will. To be honest, you should try and get several interested anyway so you have some kind of bidding war.
Not pay for space taken up by gardens - what a load of cobblers
where is it in the UK?
Cheers for the reply, our land is in the south of england.
The only problem with offering it to other developers is that we are in an option agreement with the particular developer we are dealing with. Exiting this option would require legal action, and even then there is no garuntee we would be successful.
Has anyone else been in a similar situation?
The only problem with offering it to other developers is that we are in an option agreement with the particular developer we are dealing with. Exiting this option would require legal action, and even then there is no garuntee we would be successful.
Has anyone else been in a similar situation?
Not sure about the value per acre, however AFAIK building land is worth approxiamtely 30-40% of the final house's being developed on it.
Not sure if that helps, but a quick run through what they intend to build on it what it is expected to go for, bobs your mothers brother etc.
Besides as Surrey is the UK's own La-La land, second only to Kalifonia
, it might even make more.
Harry
Not sure if that helps, but a quick run through what they intend to build on it what it is expected to go for, bobs your mothers brother etc.
Besides as Surrey is the UK's own La-La land, second only to Kalifonia
, it might even make more. Harry
d5hef said:
Cheers for the reply, our land is in the south of england.
The only problem with offering it to other developers is that we are in an option agreement with the particular developer we are dealing with. Exiting this option would require legal action, and even then there is no garuntee we would be successful.
Has anyone else been in a similar situation?
Not been in a situation anything likes yours i'm afraid, but surely it's your land so you set the price, option or no.
Unless you are in desparate need of the money, then stick to what you think it's worth.
Nightmare is completely correct. This line of argument is complete bollox. If they are trying tp pull the wool over your eyes like this, get valuers in to tell you the correct price for the land and then to negotiate with the developer. The cost of their fees will be more than offset by the increased price they are able to obtain. Alternatively, you can put them on a performance fee e.g You have negotiated x already, they can have y% of whatever increase they negotiate over x.
If you need any recommendations please e-mail me off forum and I will see what I can do to help.
If you need any recommendations please e-mail me off forum and I will see what I can do to help.
When does the option expire? The Government figures are not always a good guide however. It might be worth you paying an Independent Chartered Surveyor to value the land.
Be carefull tho' as land prices are hardening a bit at the moment as the doom mongers are reporting a slow down of the housing market.
Be carefull tho' as land prices are hardening a bit at the moment as the doom mongers are reporting a slow down of the housing market.
Plotloss said:
Let them build the houses at the land cost and then charge them an absolute fortune for the access...
There was a case a few years ago IIRC where Tesco had built a new store somewhere in East Anglia - but forgot to purchase the strip of land that allowed access to it from the road. The owner did rather well!
We sold some land recently to Redrow Homes and were in negotiations with Wainhomes, Bellway and several others.
Some promise a deal that will be much reduced by the time it is a firm offer, others try to impose things that may affect the deal before you finally get your payment.
Strongly suggest that you either get a Land agent to represent your interests, as he should negotiate on your behalf for the best deal - or
We talked to a company called Old Road Securities who will, in some cases get the best planning consent for you, leaving you to then sell the land with planning permission to the highest bidder. They take their cut on the eventual sale.
Personally, I just wonder if we might have got a better deal if we'd used them but, as they were down south, we used the Land Agent method.
Oh and get a good land solicitor because, if you're only selling part of your land, you want to ensure that you can keep your options open for the rest of the land, without ever being held to ransom by the chosen developer.
I don't know the value of the deal but, since it can be the biggest deal that you'll ever make, get the right help.
Good luck!
Some promise a deal that will be much reduced by the time it is a firm offer, others try to impose things that may affect the deal before you finally get your payment.
Strongly suggest that you either get a Land agent to represent your interests, as he should negotiate on your behalf for the best deal - or
We talked to a company called Old Road Securities who will, in some cases get the best planning consent for you, leaving you to then sell the land with planning permission to the highest bidder. They take their cut on the eventual sale.
Personally, I just wonder if we might have got a better deal if we'd used them but, as they were down south, we used the Land Agent method.
Oh and get a good land solicitor because, if you're only selling part of your land, you want to ensure that you can keep your options open for the rest of the land, without ever being held to ransom by the chosen developer.
I don't know the value of the deal but, since it can be the biggest deal that you'll ever make, get the right help.
Good luck!
Cheers to all for the replies. We currently have a solicitor and a land agent fighting our cause, although my current feelings are that its blind leading blind. We have queried the reduction with the developers and have left it in their hands to come back with a better offer.
Regarding access, our site is land locked, except for an agricultural track, and borders one of the developers existing sites. It is the developer that controls the access, and as such they have already imposed a large percentage reduction in land value for that.
My point is that I am tired of the attitude which seems to be, reduction for this, reduction for that, and I'm sure that they think that they are doing us a favour by giving us the money.
Davel - did you obtain a figure based on the gross acreage or the net developable land (with actual houses on?)
Regarding access, our site is land locked, except for an agricultural track, and borders one of the developers existing sites. It is the developer that controls the access, and as such they have already imposed a large percentage reduction in land value for that.
My point is that I am tired of the attitude which seems to be, reduction for this, reduction for that, and I'm sure that they think that they are doing us a favour by giving us the money.
Davel - did you obtain a figure based on the gross acreage or the net developable land (with actual houses on?)
It varied, as the land that we actually sold was about 2.25 acres - we still have a further 7.5. The 2.25 acres was brownfield.
The initial aim of the developer is, of course, to build as many houses as possible in line with government guidelines etc but to maximise their gain.
Often the developer will talk to the council, as they are talking to you, to see what size of development might be acceptable and over issues like affordable housing etc.
At one stage, we had the support of the planning committee to recommmend acceptance of the scheme but the local councillors, all seeking re-election, refused the application due to local opposition.
Already had one inquiry and now due a second but no longer our problem as the land has been sold.
Clearly being landlocked means that you can be ransomed yourself, reducing the land value considerably. It doesn't help that some areas are not approving new developments up this way.
You may well have time on your hands to slowly negotiate matters and some developers buy to increase their land bank of potential sites but, if you are not getting good advice, get a second opinion from another agent or ask someone like Old Road to look at it.
The main problem is that, for many of us who sell land for development, it generally isn't something that we deal with often, so getting the right support and advice is essential!
Finally, you will often find that developers bidding will fight very dirty. We were threatened by the Chairman of one large developer, who lived nearby, that if they didn't get the deal-then they'd fight it all to way to stop development.
The initial aim of the developer is, of course, to build as many houses as possible in line with government guidelines etc but to maximise their gain.
Often the developer will talk to the council, as they are talking to you, to see what size of development might be acceptable and over issues like affordable housing etc.
At one stage, we had the support of the planning committee to recommmend acceptance of the scheme but the local councillors, all seeking re-election, refused the application due to local opposition.
Already had one inquiry and now due a second but no longer our problem as the land has been sold.
Clearly being landlocked means that you can be ransomed yourself, reducing the land value considerably. It doesn't help that some areas are not approving new developments up this way.
You may well have time on your hands to slowly negotiate matters and some developers buy to increase their land bank of potential sites but, if you are not getting good advice, get a second opinion from another agent or ask someone like Old Road to look at it.
The main problem is that, for many of us who sell land for development, it generally isn't something that we deal with often, so getting the right support and advice is essential!
Finally, you will often find that developers bidding will fight very dirty. We were threatened by the Chairman of one large developer, who lived nearby, that if they didn't get the deal-then they'd fight it all to way to stop development.
yeah - as davel says be a little wary - I had some interesting discussions and diputes with Cro*n indutries over land in Napsbury....who lied, cheated and even tried to burn the existing buildings down (I kid you not...they claimed it wa kids playing...whod been playing there with narry a fire for about 15 years!). They also threatened to "make my life very difficult"...i was amazed they went that far....
the landlock issue does make it more difficult, but again there is only so far they acn go - an dit must be within the bounds of reasonableness with regards to things like access.
As a guide, land in Hertfordshire, with planning permission for houses, is worth around £1 million / acre. you DEFINITELY buy on gross land, NOT net development land.....
cheers
Night
the landlock issue does make it more difficult, but again there is only so far they acn go - an dit must be within the bounds of reasonableness with regards to things like access.
As a guide, land in Hertfordshire, with planning permission for houses, is worth around £1 million / acre. you DEFINITELY buy on gross land, NOT net development land.....
cheers
Night
They're taking the piss big style!
So what if its currently land-locked? At some point they'll flog all the houses on the current development, leaving it free to put an access road into your property.
paying only for tha land the houses are on??
who thought that one up?
Personally I'd get a few (like 3 or 4) INDEPENDENT agents in to value the property, then tell the the developer to match the average/highest or bugger off. Get yourself a GOOD lawyer as well, don't mess around with someone who doesn't specialise in land as you could (as you are finding out) get screwed royally.
Good luck, and don't let em get away with anything.
So what if its currently land-locked? At some point they'll flog all the houses on the current development, leaving it free to put an access road into your property.
paying only for tha land the houses are on??
who thought that one up? Personally I'd get a few (like 3 or 4) INDEPENDENT agents in to value the property, then tell the the developer to match the average/highest or bugger off. Get yourself a GOOD lawyer as well, don't mess around with someone who doesn't specialise in land as you could (as you are finding out) get screwed royally.
Good luck, and don't let em get away with anything.
If your land is landlocked, then the owner of the land, where any access road might be provided from, is entitled to ask for ransom.
I believe that it can be related to the potential value of your land, in whatever form it gets valued.
If there's no incentive, why should he/she provide say a wider roadway, or larger scale drainage system etc to cater for the development on your land?
I know it's a bit harsh but it depends if you are the landlocked landowner or the neighbouring owner.
I believe that it can be related to the potential value of your land, in whatever form it gets valued.
If there's no incentive, why should he/she provide say a wider roadway, or larger scale drainage system etc to cater for the development on your land?
I know it's a bit harsh but it depends if you are the landlocked landowner or the neighbouring owner.
I mentioned this to my wife last night, who works within a national developer.
They do calculate the vaule of land on the net developable space because that is what they can sell. The other infrastructure bits have to be built regardless of the number buildings / properties and the costs to absorbed into the selling price of the houses.
So they purchase the whole site, but paying for what they can sell.
One point to note, are they just buying the land, or have they offered you a deal based on getting them planning permission? The latter usually yeilds a higher land value.
They do calculate the vaule of land on the net developable space because that is what they can sell. The other infrastructure bits have to be built regardless of the number buildings / properties and the costs to absorbed into the selling price of the houses.
So they purchase the whole site, but paying for what they can sell.
One point to note, are they just buying the land, or have they offered you a deal based on getting them planning permission? The latter usually yeilds a higher land value.
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