Getting a Valuation for Land with Planning Permission

[Pemu]

Morning everyone

Are there any standard or recommended ways of ascertaining the market value of a plot of land?

I'm sure the list of variables is infinite but are there any paid services that can do a valuation or any general rules for working things out?

To provide some specific context, the land I'm looking in to is in London (TFL Zone 5). The plot is about 200sqm with planning permission to build a small 3 bed with a footprint of roughly 50sqm. The land has come up because the owner of the end of terrace house has got permission to knock his garage down and build the house after splitting the title. 

I haven't come across any similar sites for sale in the areas so any pointers on how to work out the value will be helpful. 

[Ferdinand]

You ask a a local valuer to value it.

 

Usually a member of RICS., perhaps via a local Estate Agent.

 

They will have their standard procedure.

Edited May 24, 2019 by Ferdinand

[Jeremy Harris]

We had our plot valued by a local RICS valuer.  He came out and looked at it (after we'd levelled it and got services sorted), looked at the plans, worked out the market value of the completed house, knocked off 5% because it was (in his words, not mine) an "eco house" and worked back to get the plot value from that.  I can't remember what the valuation cost, but it wasn't overly expensive.

[Ferdinand]

25 minutes ago, JSHarris said:

We had our plot valued by a local RICS valuer.  He came out and looked at it (after we'd levelled it and got services sorted), looked at the plans, worked out the market value of the completed house, knocked off 5% because it was (in his words, not mine) an "eco house" and worked back to get the plot value from that.  I can't remember what the valuation cost, but it wasn't overly expensive.

 

Pron £100-200 normally I would think.

 

Or less if you just want a steer.

 

If a LL revalues one for a remortgage ,it tends to be about 150-170 to the Bank.

[Jeremy Harris]

6 minutes ago, Ferdinand said:

 

Pron £100-200 normally I would think.

 

Or less if you just want a steer.

 

If a LL revalues one for a remortgage ,it tends to be about 150-170 to the Bank.

 

 

Yes, if it had been more than about £200 I'd have remembered it!

[scottishjohn]

my experience of valuers is that they don,t do a real valuation  anymore, just look at prices  houses sell for in same road --and how good you have made yours  makes little or no difference .

same way as zoopla etc do it -when you look at  house prices for a road

as @JSHarris said i was told to remove my solar thermal panels as it would lower the value .

I could take a wild guess and say the price of the plot you are looking at will have been priced so there will be NO profit in building and selling within at least  next 10 years

same as you would --if you were the seller

I had experience with a commercial valuer when I wanted a valuation  on my big building --price they came back with was not right 

when challenged they said that they do their valuation by looking at what other similar buildings have sold for in last 12months in same area 

- said there no others like mine around  here .

"no he says i compared with glasgow"

where there are lots of buildings empty  and none with parking for 30 cars and a compound the you could build another 30m x24m building on 

mine is the only one for 30 miles  and i already have refused prices better than he said mine  is worth.

to build a new building  not including land or services  it would cost nearly twice what this valuer says it is worth !!

 

so bottom line is your guess is probably as good as any valuer and price will always assume a very low internal basic spec

there are always 3 prices for anything 

what you would like

what someone will offer

the amount you will take to get rid of it

fit Hi-spec internals  ,but do not expect to get paid for them if you sell any time soon 

 

 

 

[Moonshine]

I have just gone through this process with a couple of local estate agents that specialise in development land, they have based the plot values on the percentage of the gross development value (end sale value).

 

These are site dependant, but they were generally that on a flat straight forward site they were looking at the plot being 30% of the gross development value, and on a more complex site 25%, however this was not in London, and different rules may apply there.

 

Are there any houses nearby that have sold recently similar to the proposed that you can estimate the gross development value? 

 

You could go to some local estate agents with the planning drawings and ask them for a valuation based on the plans 

 

 

Edited May 24, 2019 by Moonshine

[Jeremy Harris]

I've just dug out our valuation from 2013.  The valuer put the completed house value down as £340k, with the plot value being £140k, so in our case the plot was valued at about 40% of the completed house value.  A part of that will be because we chose to build a 2 bedroom house, rather than a 3 or 4 bedroom house of the same floor area, I suspect.  The 3 bedroom cottage just up the lane from us, which is a fair bit smaller than our place and needed complete refurbishment (been lived in by an old lady for around 40 years, with nothing much done to it), sold for £390k last year, which suggests that more bedrooms = greater value.

[Moonshine]

1 minute ago, JSHarris said:

which suggests that more bedrooms = greater value.

 

in other news, water is indeed wet... 

[Oz07]

4 minutes ago, Moonshine said:

 

in other news, water is indeed wet... 

Shouldn't work like this though isn't it a peculiarity of Britain. 

Most other countries value on gia plus a few variables like land etc 

To be fair around here prices around 2500-3000m2 

Most plots get put up for 1000m2 gia of proposed development if not more. 

[the_r_sole]

.

Edited September 26, 2019 by the_r_sole

[AliG]

I had a professional valuation done on a plot and it was a total waste of time and money as he seemed to put way too much of his own personal opinion into it.

 

It is pretty straightforward really.

 

1. What will the finished house be worth. Normally you can get a very good idea of local per square foot prices. There may be a premium for a new place in London. So if the house is 1000 square feet and the prevailing price is £800 a square foot then it will be worth £800,000, assuming 1000 square feet.

 

2. What will it cost to build the house?

 

There are many sources that suggest build prices. Most of these will suggest £120ish a square foot I think. Many people on here are finding that the cost is much more, but a lot depends on the spec. Would you be building it to live in forever, you might spend £170 a square foot, building it to sell you might spend £120.

 

So build cost around £150,000. Don't forget to include any extra services, permissions, architects etc that you might need, this might take you up towards £200,000. You may be able to get an estimate from a builder, but this will almost certainly be wrong/too low.

 

3. This is where it gets interesting.

 

If you were a property developer you would want to make a 15-20% profit. So a professional valuer would probably value the land at around £500,000. Plus £150,000 build cost plus profit = £800,000. Using my example prices.

 

I think that people find most plots are actually valued closer to end value - build cost. This is due to there being a lot more self builders than available plots, especially in urban areas.

 

I would base it on, what would you pay for a house there less what you think it would cost to build. You can then bid below this if you think you can get away with it and don't mind missingf out on the plot if you think the price is too high.

 

 

 

[newhome]

42 minutes ago, AliG said:

I would base it on, what would you pay for a house there less what you think it would cost to build. You can then bid below this if you think you can get away with it and don't mind missingf out on the plot if you think the price is too high.

 

Very sensible advice. There seem to be quite a lot of plots available where the price of the plot plus the cost to build is in excess of what you could buy a house for there (Graven Hill for example). That might be acceptable to someone if there are really good reasons for wanting to have a house of their choosing in that location but alongside that there has to be an acceptance that you will likely lose money on it if you ever come to sell. 

 

[nod]

3 hours ago, scottishjohn said:

my experience of valuers is that they don,t do a real valuation  anymore, just look at prices  houses sell for in same road --and how good you have made yours  makes little or no difference .

same way as zoopla etc do it -when you look at  house prices for a road

as @JSHarris said i was told to remove my solar thermal panels as it would lower the value .

I could take a wild guess and say the price of the plot you are looking at will have been priced so there will be NO profit in building and selling within at least  next 10 years

same as you would --if you were the seller

I had experience with a commercial valuer when I wanted a valuation  on my big building --price they came back with was not right 

when challenged they said that they do their valuation by looking at what other similar buildings have sold for in last 12months in same area 

- said there no others like mine around  here .

"no he says i compared with glasgow"

where there are lots of buildings empty  and none with parking for 30 cars and a compound the you could build another 30m x24m building on 

mine is the only one for 30 miles  and i already have refused prices better than he said mine  is worth.

to build a new building  not including land or services  it would cost nearly twice what this valuer says it is worth !!

 

so bottom line is your guess is probably as good as any valuer and price will always assume a very low internal basic spec

there are always 3 prices for anything 

what you would like

what someone will offer

the amount you will take to get rid of it

fit Hi-spec internals  ,but do not expect to get paid for them if you sell any time soon 

 

 

 

Go on John 

You've stop short at saying the values haven't got a clue  

Great answer though 

[scottishjohn]

well they haven,t  -and in some ways they are correct and others they are wrong 

what the market will pay is always the proof of what something is worth 

I know someone who just sold a 1971 landrover ,a petrol one for £5500--

ok chassis is good etc ----market has gone mad with somethings .

i wouldn,t give you £500 for an old  landrover --terrible to drive ,unreliable , and terrible mpg +pollution .

 

everyone to their own 

[Mr Punter]

I use Excel's goal seek feature to obtain the residual land value based on the required developer profit.  In the example below I use the feature to set the value of B13 to 15% by changing B4.

 

 

 

 

Edited May 24, 2019 by Mr Punter

[Ferdinand]

What you pay for with a formal valuation is that other people will listen to it.

[Simplysimon]

OH had an estate agent look at our plots when things were going t1ts up with the build to see whether it would be viable to sell. estate agent deals in farms, estates, plots and high value houses, they knew what plots were going for and the price was quite good. i had no intention of selling as plots were a good price and location is ideal. i suppose it's different up here as opposed to being in  a city.

[ProDave]

We have it easy here. There are always plots for sale to you have something to compare. When I bought mine I valued it at exactly the same as a similar size plot 5 miles away was on the market for.

 

There are 3 plots for sale half a mile away, but they were £30K more.  5 years later they are still for sale, clearly over priced and nobody wants them at that price.