How to Predict the Value that Land will have after Planning Permission is Granted.

I was asked today how an investor can predict the value that land will have once planning permission is granted.

It is that question that has inspired this article and a useful valuation resource, which I hope is helpful to you.

In most areas of the country DEMAND has increased for all development land.

Land VALUES however over the last 5 years have increased for small plots (for 2 to 3 houses) but have not generally increased for large plots.

This is because national developers were hit hard by the credit crunch and are increasing their capital by widening their margins.

Small developers who are funded by cash are "making hay while the sun shines" by buying, building and selling.

So, if you have historic valuations or historic credible offers (e.g. from a national developer) you can assume that prices have changed little for large plots, but may have increased for small plots. 

For example I had  some land under contract, with planning permission to build 3 coach houses, that failed to sell for £105k in 2012 despite being on the market for almost a year.  

But in 2014 the land sold within 2 weeks for £130k, to a buyer who had viewed, but chosen not to buy in 2012.

Key Idea, the resale value of fields has seen little change, but small plots have increased in value.

Valuing land is generally more of an art than a science.

There are even more variables to valuing land than there are to valuing houses (and we all know how subjective that can be).

One solution is to instruct a RICS surveyor to value the land but this can be prohibitively expensive.

The additional complexity with our business model is that we are generally predicting the value that land will have AFTER planning permission has been granted.

The pre-planning value bears almost no relevance to the post planning value.

Clearly there are a range of possible values that can be attributed to the land.

We certainly cannot stick a finger in the air and guess.

So, just like when we are valuing houses, we draw on a number of resources to help us reach a figure.

To establish a post planning land valuation we will make use of both of the following:

a) The land value spreadsheet from the Valuation Office Agency(VOA).

and

b) The land value based on Gross Development Value (GDV).

Today we will look at the land value spreadsheet from the Valuation Office Agency (VOA).

The Valuation Office Agency (VOA) has been collecting and publishing data on residential development land values since autumn 1983

This has resulted in values of three types of site - large, small and sites suitable for flats/maisonettes - at both local and national level.

The figures in the spreadsheet represent typical levels of value for sites without abnormal site constraints and with residential planning permission of a type generally found within the area.

The valuations are current to 2010 and in most areas values have risen by 4% - 6%, so this helps you be more conservative in your predicted post planning valuation.

You can download the VOA spreadsheet free of charge at

www.millionairestogether.co.uk/land-finding.htmlwww.millionairestogether.co.uk/land-finding.html  

We are holding a SMALL CLASS "Land Finding ALL YOU NEED" 2 Day Event

on Saturday 4th and Sunday 5th April 10am - 6pm in Milton Keynes.
At the end of this 2 day event you will have all of the knowledge, sourcing letters
and contracts which you need to transact and thrive in this lucrative property niche. Book your place for this 2 day event for a fully inclusive price of just £597 at this link:

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Experienced Professional Alan Mackenzie-Wintle Saves Thousands by Attending The Land Finding Course

We last held our SMALL CLASS Land Finding event ON 30th and 31st Jan.

I was delighted to welcome a delegate called Alan Mackenzie- Wintle, who has a lot of experience and currently has a substantial land deal in progress.

I value Alan's opinion and was very pleased when he said:

"It's been fantastic actually it's a real eye opener."

"Very Very Worthwhile"

"I have probably saved two grand in legal fees in two days"                                                                                     


Reserve your place at this brilliant 2 day course here:

www.millionairestogether.co.uk/land-finding-event-4th-and-5th-april.html    

Kind Regards,

Phil Martin