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June 2, 2020
Selling any product is about understanding what your customer wants - and selling land to a developer is no different.
It’s important to understand how developers think and how they work so you can make your site seem as attractive as possible to them.
Developers calculate land values by estimating the value of the completed project and then deducting their profit margin and estimated costs - the amount left over is the maximum figure they can afford to pay for the land.

That relies on a lot of estimates, which means the more certainty you can provide a developer - in terms of both the nature of the development that is likely to get planning permission and the costs of building it - the more they will be willing to pay. Providing greater certainty reduces risk, which might also see them reduce their intended profit margin, increasing the value of your land further.

Providing potential buyers with that certainty means getting together as much information about your site as possible.

Here are some of the things you should think about.

Legal details

Get together copies of the title documents showing the exact area of land that you own. If you don’t already have them, you can easily get them from the Land Registry for a nominal fee.

Those title documents will also show developers any legal restrictions they need to be aware of. For example, does one of your neighbours have a right of way across your site to access their own land?

Your own requirements

Think about whether you need the developer to provide you with any rights as part of their project. Anything you ask builders to do can increase the cost and complexity of the development so you should keep these to an absolute minimum. However, if you intend retaining ownership of any adjoining land, you might want to make sure you still have a right of access or for drainage.

Identify existing constraints

To help potential buyers decide how they could develop your site, they’ll need to understand any existing constraints. You should try to get together details about issues like flood risk, existing sewers, pipes and cables, and the adoption status of the road.

Most of that information is either available for free or for a small charge through specialist providers like EnviroCheck.

Explain the planning status

Developers will normally make their own assessment of the chances of securing planning permission on your land, but provide them with any planning work you have done yourself to help them do that.

This might be something simple like a letter you have written to the council as part of their consultation on a new local plan. At the other extreme, you might have already secured your own planning permission.

Although planning applications are expensive - a typical application for 100 homes can cost £150,000 or more - they can add significant value to your site. Without  planning permission, developers have to estimate what they think they are likely to secure consent for and take into account the risk of planning simply being refused. Those risks are reflected in the price they will pay for land without planning.

Where the principle of development being allowed isn’t clear cut - which is often the case for greenfield sites - it could even mean that they won’t even agree a fixed price. Instead they will offer to assess the price once planning permission has been granted - usually with a discount from market value factored in as part of that calculation. By that stage, of course, you will be legally obliged to sell the site to the developer once a price is agreed, so there is every incentive for them to try to keep their assessment of the price as low as possible.

Conversely, if planning permission has already been secured, the developer will know that the principle of development is already agreed and have a much better idea of exactly what type of development they will be able to build. They will also know that they can start development more quickly. Increased certainty and speed of delivery are both things that developers will pay a premium for. While they won’t want to overpay for the land, they will know that other developers will be bidding. They will offer as much for the site as they reasonably can - a complete contrast to the situation had they agreed to buy the site before planning permission was secured.

Provide certainty on development costs

Build costs can vary significantly from site-to-site for a whole range of reasons. Having planning permission in place provides some certainty on costs as things like the materials you need to use, landscaping requirements and the nature of Section 106 contributions for affordable housing, highways improvements and other off-site infrastructure - collectively known as planning gain - are already known.

There are also some technical costs that it is helpful to identify. Even on sites that have never been developed, the nature of the ground can vary dramatically having a significant impact on foundation designs - potentially increasing build costs by as much as £5,000 per home or more. Carrying out specialist site investigations to confirm what ground conditions are like will help developers assess those costs more accurately.

Similarly, knowing how a site will be drained - and whether you need to work with other land owners to achieve that - and carrying out a topographic survey of the site’s levels so developers can work out whether any regrading is needed will help to increase certainty for any potentially interested buyers.

Again, doing this work can be expensive but can significantly increase the eventual selling price of the land.

Sourcing all this information

A good rule of thumb is that the higher the planning risks, the more information you need to provide.

Giving developers the right information about your site can be the difference between selling for a hefty discount to its development value or securing a healthy premium.

Some land owners can afford to do all that work themselves, appointing specialist consultants to help them with each stage of the process. In many cases, though, the cost and risk involved - especially of pursuing a planning application when success is not guaranteed - can understandably be off-putting.

Developers rely on land owners being unwilling or unable to do this work themselves to help them buy sites as cheaply as possible.

As a specialist land promoter, The Strategic Land Group helps land owners deal with those complexities. We secure planning permission, prepare technical information packs, and market your site for sale entirely at our cost and risk.

Our return is a share of the value of the site once it is sold, so we’re motivated to secure the highest price we can - and if we don’t succeed, it doesn’t cost you anything.

If you have a site that you think might be suitable for development and want to discuss how we could help - in complete confidence - then get in touch today.

Find out how we can help.
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