FAQs

We use publicly available information from the Land Registry, Google maps, and Valuation office to find sites with development potential. If you do not want to receive any further letters from us that’s fine, please just let us know by phone or email and we will ensure you won’t receive any further letters.

Whilst this is the question people want an answer to, it is more complicated than applying a £ per hectare rate or using the ‘third/third/third’ rule that some estate agents quote. The reason for this is that every site is different. To establish a sites value, we have to use what is known as a residual valuation.

A residual valuation is what developers and surveyors use to work out the value of a site. This starts with the end value of the finished units that we can build, so we need to know what is achievable in terms of planning permission. We then subtract all costs and profit, using the following categories:

S = GDV-(C+P)

Where
S = Site value
GDV = Gross Development Value (the total end value of all the units being built)
C = Costs
P = Profit, that the developer needs to make the project worthwhile, and also cover the risk of market changes during the course of the project.

Costs vary by site but can be summarised as follows:

1. Purchase costs – Legal fees, Stamp Duty, Surveys
2. Pre-construction costs – Architects and Engineers fees, planning application fees, and the various services that may be needed before construction can start, such as Party wall surveys, contamination, ecology or archaeology surveys
3. Development costs – The bulk of these are construction costs, but also include the cost of new utility connections, highway works and insurances for the site/build
4. Finance costs – most developers will be using development finance to fund their build, so the interest, valuations, reports and legal work for these also has to be taken into account
5. Sales costs – marketing, legal and estate agents fees for the sale of the finished units
6. CIL/S106 – these are costs payable to the local authority on new dwellings – these vary between local authorities.

Profit is what the developer needs to make in order to make a project worthwhile and also cover the risk that build costs increase during the build, or the market turns and the end value of the units reduces.

A bit like a stopped clock, (which is right twice a day!) the third/third/third rule works sometimes! However, it is a very blunt tool to appraise land value, as the costs mentioned above can vary so much from site to site. For instance a rural site may have very high utility connections costs if the electricity network is not close to the site or needs upgrading. Contamination may add a lot to the development costs. Or if you are converting an existing building, your build costs may be lower than new build, depending on the condition of the building. Broadly speaking, if you are in a high value area, the site purchase costs are likely to be more than a third of the total costs, whereas if you are in a low value area, they are likely to be less. However, a full appraisal and residual valuation (see above) based on a scheme that will achieve planning permission is the only accurate way to establish what a site is worth.

This is an offer for your land if we get planning for to build. The usual process in the sale of a property is to exchange (once all the legal due diligence is done) and then complete a week or so later, once the usual arrangements for removals etc. have been set up.

The only difference in this process is that the process of getting planning permission is inserted in between exchange and completion. The planning process can take some time, so instead of the usual week between exchange and completion, some months are required. How many depends on the complexity of the site and the planning required.

An unconditional offer means that there are no conditions attached to the offer, so we do not require planning to be granted to move from exchange through to completion. This may be because there are permitted development rights that we can use which give us the certainty that we can develop the site. Or it may be that in discussion with a vendor it has become apparent that they cannot accommodate the wait that is required for planning to be granted. In this case, the offer we make will usually be lower than if ‘subject to planning’, although the timescale will be shorter.

An option agreement is a legal contract which gives the buyer the right but not the obligation to purchase a site or property. This is similar to a ‘subject to planning’ purchase, in that it provides the developer with time to get planning, usually 18-24 months, but on more complex sites, where extensive work is needed to obtain planning permission, this can be 5 or 10 years. This option gives the vendor less certainty on timescales and the eventual sale of the land, as the buyer is not obliged to complete and can in fact let the option lapse. However, this is unlikely, since the developer will be spending a significant amount of money on legal and architectural fees in order to get a development agreed (otherwise why get into the option in the first place?).

A promotion agreement is where a developer or promoter agrees to take on all the planning work to get development agreed for a site, in return for a slice of the uplift in value achieved once planning is granted. This can work well on larger sites where the site has to be ‘promoted’ such that it can be allocated in the local authorities next local plan. This takes a significant amount of time and money, and the landowner may not have the time, expertise or funds to make this happen. Teaming up with a developer or promoter gives them the knowledge that they have an expert optimising the development value of their land, without all the upfront cost.

The developer or promoter is paid once planning is granted, and the land is sold on. The developer may want the option to have ‘first refusal’ on buying the land once planning has been granted. However, many promoters have little interest in developing themselves and will arrange for the land to be sold to the highest viable bidder, and will take a slice of the profit, plus the fees that have been expending getting the planning permission.

The answer to this question is ‘it depends’. It will depend on the amount of time and experience you have, as well as the resources you wish to devote to getting planning permission for your site. If you have experience and know the right team members (architect, town planner, plus the various other professionals that maybe needed depending on the nature of the site (ecologist, archaeologist, contamination consultant, engineer etc.) then you can put together a planning application and potentially get panning for your site. There will be fees involved for both these professionals and the planning application itself (payable to the local authority).

The thing that is less easy to quantify is whether you are maximising the development potential of your site. Sometimes one or two additional units might make the difference between a profitable development and one that doesn’t get off the ground and can’t be sold for a profit. If you have the time, experience and funds to take your site through planning permission, then this may be the right answer for you. If not, then we would be happy to have a discussion about your site – we have a team that we work with regularly who can get the job done, and the fees are payable by us (only legal fees payable by the landowner).

Each planning application is decided in accordance with the Local Authorities local plan. Therefore if we can demonstrate that the way we are developing a site conforms with this plan, then planning should be approved, and if it is not, we will have good grounds to appeal and have that decision overturned.

One of the key things which local authorities do to control what sites can be developed is to draw a ‘settlement boundary’ around cities, towns and villages. Sites within this line are deemed to be within existing settlements with amenities such as shops, schools, doctors surgeries, pubs and communities facilities etc etc, and are therefore generally considered ‘sustainable’, since residents will have access to those facilities and will not have to use a car to access them.

Development within the settlement boundary is generally seen to be acceptable in principal, as long as it fits within the context of the area and doesn’t have adverse impacts on the surroundings and neighbours. Character is a key phrase in planning, and development has to fit in with what is already there, not necessarily stylistically, but in terms of size and form. This is where planning can become more subjective, and it is important to have a good team (planning consultant and architect are the main two) who can demonstrate that the proposals are in keeping with their surroundings.

Outside the settlement boundary, development becomes more difficult, as the default position of the local authority is that development is not permitted, unless the site has been allocated in the local plan for development.

There are various exceptions to this rule, however, which will allow development to be accepted, such as:

• Infill sites
• Class Q conversions of farm buildings
• Previously developed land
• Replacement dwellings
• Affordable housing

These are more tricky to get through planning, however, with the right team and experience value can often be added to these sites through development.

Every site is different, and it’s rare that a site has no potential at all.

Examples of things that can constrain development are:

Ecology – the presence of protected species such as bats, newts or others
Historical – if the site contains a listed build, is in a conservation area or is otherwise protected
Flooding – if a site is at risk of flooding from seas or rivers, or surface water flooding
Highways – if the site cannot be easily and safely accessed from the public highway
Utilities – Mains water and electricity can be obtained from most sites, gas and mains sewerage can be more tricky if a site is rural. There are different solutions that can be used, however the costs of these can vary hugely and can affect viability.

As every site is different, we will carry out a full appraisal and get a full understanding of what issues may affect the development potential of a site and have an excellent team of consultants built up over the years who can advise on the best way forward with issues such as these.

Please give us a call or send us an email and we will be in touch to discuss your site and circumstances further. There is no obligation and everything will be kept discreet and confidential.