Everything to know about Valuing Your Land

When it comes to valuing your land, you might think this is going to be an easy process.  After all, the house next to the piece of land you want to sell is worth £x so your land must be worth at least half of that price.  Right?  Unfortunately, there are many factors that will affect the value of your land.  Including what will be put on it and its value, as you thought, but there are several unforeseen factors that also come into play.  So, let’s take a look at some of those.  Because knowing these factors will make you better informed and able to value your land with a better level of accuracy.

 

Although, if you can’t be bothered to work your way through these points and want to
leave it to the experts give The Windley Group a call/email today for their free appraisal. 

Let’s take a look at land values

By far, the most abundant land around us is for farming.  So, what is that worth?

According to The Farmers Weekly publication from 2021, agricultural land is worth the following prices and note how dependent this is on the region and its use.

 

Average land values 2021 (£/acre)
Region	Arable			Pasture
	Prime	Average	Poor	Prime	Average	Poor
Eastern	10,734	9,900	9,048	8,433	7,773	7,242
South East	10,759	9,941	9,364	8,635	8,009	7,539
West Midlands	10,670	9,977	9,581	7,931	7,480	6,930
East Midlands	9,969	9,290	8,388	7,965	7,264	6,710
Yorkshire	9,625	9,130	8,690	8,250	7,700	7,260
South West	10,859	10,193	9,617	9,020	8,439	7,834
North West	9,630	8,067	7,113	7,711	6,809	6,300
North East	10,622	7,607	5,380	5,943	4,880	4,005
Wales	9,393	8,641	6,763	8,266	5,500	3,850

 

Likewise, when valuing your land, we need to also take into consideration the region and its potential use.

Thus, if we can add planning permission to the land, this will skyrocket the price.

However, getting planning permission for your land can easily cost between £10,000 and £15,000, and there are no guarantees of success when dealing with the Planning Department! We’ve seen very simple, straightforward planning applications fail for minor issues and easy-to-overcome mistakes.

Often, the land owner gives up having been burned with the large expense of losing a planning application. This is where a property developer partner saves you all the time and money because partnering with a reputable and honest developer like The Windley Group means that you’ll be safe in our hands. The best part is you don’t take any risks, and we do all of the work!

We need to consider several other factors that might not be as obvious. 

Build Costs when valuing land

Of course, this will vary based on regional labour costs, material costs and design.  So, just how important is this very unquantifiable expense?   A reasonable idea of costs will be very important to work out the overall value of your piece of land.  But there are several routes that this new build might take.   After all, who will undertake the build and what are their costs? what route will you choose? A main contractor or something with you overseeing the build directly?  Before a piece of land can be valued accurately, build costs need to be well estimated.

Value of End Product

This brings us to the value of the end product, which is where we started.  How much is that new house/s worth?  So, can we assume the calculation below is correct?

House value is £x minus the build costs of £y equal land value £z

No.                             

Your land’s value will depend on combined expenses and potential values.

There are many other factors to be taken into consideration, not least of all the costs associated with getting your piece of land from soil to house/s.  For example,

The preliminary expenses before the land can even be marketed. 

• Surveys, architects’ plans, specialist reports, and extensive reports
• Planning fees
• Appeals

Then we need to take into account the build costs

• Materials
• Labour
• Machinery
• Getting services to the plot (gas, electric, water)
• The percentage profit margin for the builder/developer in order to build the house/s

 

Specific considerations with regard to your plot of land

• Does your land have good connections to water, gas, and electricity? Having services on your land adds value or needs to be costed for.
• Local services – shops, trains, buses, schools, hospitals. All add value to your land and are often required to gain planning approval.
• Size – bigger is not always better, as this can vary depending on location. Remember, the bigger the build, the bigger the costs.
• Ongoing and prospective developments in your area and their impact – good/bad will alter the potential value of the sales price of the new build and, therefore, your land. Consequently, a new school nearby would increase the value of the property, but flats built on neighbouring land would reduce the value. When valuing land, it is important to understand the council’s local development plan.
• The site’s topography – flat land is valued higher than heavily sloping land due to the extra work and expense required to build.
• Legal issues – restrictions on what can be built. These will show up in your deeds.  These can often be overturned, but it is a lengthy and potentially costly process, which reduces the value of the land.

Then we need to apply the following figures 

• Selling fees
• The value of the house/s at the time of sale. Currently, it looks like there may be a downturn in the property market due to the unsettled economy, so this might impact the actual value of the house/s as much as 5% to 10%.  This will affect the profit margin for the builder/developer and can have a knock-on effect on the value of your land.
• Taxes

Risk – Reward

Of course, if the preliminary surveys discover issues that need tackling before any build can take place, this will impact the value of your land.  This might include something like contamination or may identify gaps in the ground that might need filling before construction can begin.  Listed trees on your land will limit the area that can be built on.  Tree roots are protected, and trees create light considerations.

Although, as the land owner, you will want to get the best possible price, these costs and margins need to be taken into the overall value of your land, or the budget will be too tight to proceed with the build and not allow for any unforeseen problems.  Like economic shifts in the property market or the supply chains.  If the land price is too high, the project will become too risky.

 

Conclusion on valuing your land

If you now feel a little over your head, and who would be surprised, it’s a complicated business.

As our director, Luke Windley, says, “When most people use an investment company to manage their pension, why manage the development of your land yourself? Especially when your land could be worth even more and the development process is so much more complex.”

At The Windley Group, we have years of expertise on hand, so when you partner with us, you can be sure that we have the skills to get you the best possible price for your land.

Call us today on 01392 982537 and have that initial chat that could potentially make you thousands of pounds richer.

 

Check out our other blog posts to be better informed.