In property ownership, whether your holdings consist of expansive gardens, commercial premises, or strategically positioned land on the fringes of urban development, understanding the true worth of your land and mastering the art of maximising its value is paramount. As experts in the field, we recognise that selling your land should be a calculated endeavour to secure the optimal deal.
In this comprehensive guide below, we will delve into various strategies for selling your land while ensuring you extract its maximum value.
The Unconditional Sale: Speed Versus Value
The path of least resistance, an unconditional sale, offers the swiftest means to liquefy your land assets and unlock capital. However, this expediency comes at a price, typically resulting in the lowest possible value for your property. An unconditional sale often incorporates a margin of "hope value," assuming the buyer is confident in securing future planning permissions. Moreover, it is not uncommon for overage payments to be negotiated, allowing the landowner to participate in the appreciation of the land's value upon obtaining planning permission.
Yet, it is crucial to acknowledge the inherent risks associated with unconditional sales, including uncertainties surrounding the quantity of permissible development, financial obligations mandated by local authorities, and the nuanced interpretation of planning policies by individual officers and committees. These variables impact potential buyers' valuation, rendering it an intricate balancing act between expeditiousness and financial return.
Mitigating Risk for Maximum Gain
For those seeking to minimise the uncertainties accompanying planning permission, the 'subject to planning' sale offers an alternative. Under this arrangement, the land is acquired at an agreed-upon price contingent on successfully obtaining planning permission.
This approach, driven by the mitigation of financial risk for the buyer, often commands a more favourable sale price. Nevertheless, it is important to recognise that the planning process can be protracted, and there are no assurances of permission being granted. Consequently, prudent buyers usually include provisions within the sale contract that allow withdrawal if the planning permission falls short of expectations.
Selling with Planning Permission: The Apex of Value Realisation
The pinnacle of land value realisation is achieved when selling with planning permission securely in place. This approach, typically facilitated by securing an outline planning permission, endorses the development's fundamental principles while allowing developers to address detailed aspects, such as design and housing composition.
However, it is essential to confront the reality that obtaining planning permission is an intricate, potentially costly endeavour. Costs can scale significantly, contingent upon the land's size and complexity. These expenses must be weighed judiciously against the anticipated upswing in land value and your circumstances.
A Symbiotic Pursuit of Value
The Promotion Agreement engenders a collaborative endeavour wherein a developer or land promoter undertakes the responsibility of procuring planning permission on behalf of the landowner. The promoter shoulders the financial burden and deploys their expertise at their own peril. In return, they receive a proportionate share of the sale proceeds when the land is ultimately transacted with planning permission.
This arrangement aligns the landowner's and developer's objectives in maximising land value. Post-promoter compensation, landowners often realise a superior financial outcome compared to an earlier sale in the planning process.
The apotheosis of land value maximisation invariably hinges upon attaining planning permission. However, your route to traverse is intrinsically tied to your circumstances. The confluence of expeditious sale versus sale price and your disposition towards navigating the planning labyrinth and its risk will guide your approach.
If you'd like clarity regarding the potential of your land or require seasoned guidance to navigate the intricacies of the planning process, please do not hesitate to contact us for more information.
Get the latest news from Navian!
Subscribe to Navian and receive guides and industry news directly to your inbox