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land acquisition

When wanting to sell a piece of land to property developers there are a few ways that can be approached.

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Selling Land and Landing Value

When you own a substantial plot of land there are two questions that circle around that are the tougher ones to answer; it is either ‘What do I do with it’ or ‘How do I sell it right and get what it is worth?’ There are many worthwhile options available and plenty of property developers looking for land acquisition.

They are both valid questions to have when in ownership of a plot with great potential, but to get the right answers to your questions you must first know the right avenue to take when selling land to a property developer.

 

Sell As It Is

Obviously, the quickest way to sell up and get a receipt is to sell it in its current state without planning permission.

This means that the buyer would be investing money with the hope that secure planning permission could be attained in future. It must be stated that this method is considered the option that will provide you with the lowest value and also is the riskiest should any policy change which would affect the planning permission security.

After all of the risks are considered by the interested buyer, they will make an offer based off of them and somewhere between the site’s worth for new build developments and it’s worth with planning permission.

Subject to Planning

Another avenue you could pursue with your land sale is agreeing on the sale of your site on the provision the buyer secures planning permission prior. This is known in the circles as a conditional contract.

This option does provide an understanding of the buyer’s behalf of the uncertainties in securing the planning permission, but they are not tied in to buy the site should they be unsuccessful. This is a solid option for both parties as it reduces financial risk for the buyer whilst increasing what they would be open to paying, which makes this option a preferred method for housebuilders to go this route.

The preparation of a planning application and getting permission can take time, so selling a site on this basis is a longer process. This could include the extra time the residential property developers will take in preparing an offer due to its timescale being drawn out. If they deem to not be selling homes from the site for over three years they may find an alternative site if they don’t buy yours. The buyer may also walk away from the deal if their assumptions for the planning permissions are not reflected in the sales contract during land acquisition.

Sale with Planning Permission

If you go the route of getting your own planning permission, the risk for developers is greatly reduced.

The best way to go about this is to secure an outline planning permission approving principal housing on the site, leaving room to detail further matters at a later date. This route does provide developers with certainty and some flexibility to impose their trusted business models into the plan. This maximises interest upon being marked for sale.

Applying for planning permission is pretty costly as much as it can be complicated. The average cost ranges between £100k up to £300k depending on size and complexity of the site.

For a full breakdown of potential for your land acquisition, talk with the acquisitions team at Virtu Homes today.

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