Letter re land purchase request

[Ridgeway]

Developers are often willing to negotiate with other values than cash for the SQM we’re talking about. Here it’s not uncommon that in such a deal:

- the seller may get his house rebuilt
- the seller may get extensions, house modifications thrown in
- the buyer may offer other land or properties they may have as part of the deal

What I’m saying is if you need a snazzy new MH storage garage then now’s your chance

 

[Pausim]

Not sure what the problem is, all four owned by your family members, all willing to sell. the price offered is above market value. Get organised find somewhere to live get yourselves a planned moving date then go back to the offer who could complete with short notice and negociate the price on four units on for given date. They are the developers not you

The developer may be offering above the market value for 4 bungalows but it is very unlikely that it anything near the value of a site on which perhaps 50 flats could be built. The owners could very easily be taken to the cleaners without proper professional advice. Great care is needed, beware of taking sweeties from a stranger.

Small edit made.

 

[buttons]

The developer may be offering above the market value for 4 bungalows but it is very unlikely that it anything near the value of a site on which perhaps 50 flats could be built. The owners could very easily be taken to the cleaners without proper professional advice. Great care is needed, beware of taking sweeties from a stranger.

I did say the buyers are the developers not the sellers. If the sellers would prefer to become developers then it is a simple process as long as you have finaces or finacial backers. As sellers it is a negotion on the value of what you are selling not the profit potencial of the developer.

 

[Coastal Cruiser.]

If the sellers would prefer to become developers then it is a simple process as long as you have finances

A lot of people think that but come unstuck when it comes to it.
You can loose a lot of money if you don’t know what you are doing or have good tradesmen

 

[Pausim]

I did say the buyers are the developers not the sellers. If the sellers would prefer to become developers then it is a simple process as long as you have finaces or finacial backers. As sellers it is a negotion on the value of what you are selling not the profit potencial of the developer.

A lot of people think that but come unstuck when it comes to it.
You can loose a lot of money if you don’t know what you are doing or have good tradesmen

At no point have I suggested the sellers become developers. As sellers they need to know the value of what they are selling and this is far more complicated than just looking at the price of 4 bungalows.

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[Van Aert]

Do you want to move?

We are open minded about moving.

 

[Van Aert]

A lot of people think that but come unstuck when it comes to it.
You can loose a lot of money if you don’t know what you are doing or have good tradesmen

We wouldn’t be interested in taking on the development ourselves.

 

[Coastal Cruiser.]

no point have I suggested the sellers

Probably why I quoted the person who suggested it!!

 

[Van Aert]

The developer may be offering above the market value for 4 bungalows but it is very unlikely that it anything near the value of a site on which perhaps 50 flats could be built. The owners could very easily be taken to the cleaners without proper professional advice. Great care is needed, beware of taking sweeties from a stranger.

Small edit made.

This is something I am most curious about. I have heard in the past of developers working on a third/third/third rule I.e a third of the total flat resale value being the land purchase price, the next third being the build cost and the final third being their profit. Not sure if there is any truth in that.

 

[Pausim]

Probably why I quoted the person who suggested it!!

Sorry, I was really answering buttons and should not have brought your post in at that point.

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[carolyn]

We had a similar type of unsolicited offer quite a few years back from one of these retirement companies like McCarthy Stone. There are us and our 2 neighbours, our house is next to a footpath and it’s a level walk into town. The plots are large, I think the idea was they’d offer 20% above market rate and the option was open for 2 years whilst they tried to get planning permission etc to build a block of retirement flats. If they failed then we would get compensation but not much. Can’t remember the other details but even if we had wanted to move it sounded far too complicated and you couldn’t really crack on and get moved before they had the planning permission etc.

None of us were interested though.

 

[Bessy765]

The best thing is to have valued by say a chartered surveyor, estate agents may not give the correct valuation but over value it to get the take on. Then ask you to reduce the price if it then fails to sell. Probably sound out a solicitor as well

 

[Hirsch]

I'd get all four of you together with a legally binding agreement and get outline planning permission yourselves.

Pay someone to do it. The properties will be worth a lot more with planning permission.

 

[Themselves]

As far as problems go, this is a decent one to have.

 

[Van Aert]

We had a similar type of unsolicited offer quite a few years back from one of these retirement companies like McCarthy Stone. There are us and our 2 neighbours, our house is next to a footpath and it’s a level walk into town. The plots are large, I think the idea was they’d offer 20% above market rate and the option was open for 2 years whilst they tried to get planning permission etc to build a block of retirement flats. If they failed then we would get compensation but not much. Can’t remember the other details but even if we had wanted to move it sounded far too complicated and you couldn’t really crack on and get moved before they had the planning permission etc.

None of us were interested though.

Interesting, thank you……if we receive a similar type offer to yours we’ll be staying where we are, the only other properties that we would consider moving to nearby are more than 20% above our current open market value.

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[DerryW]

I would contact a local estate agent and get a valuation of what you could be talking about on the open market, and if you are really interested in selling let the buyers fight it out between them.

Exactly what I was about to say. In fact I would get 3 valuations.

 

[Badknee]

Think about how much it would cost to get a new property or build a new one no point in ending up with a mortgage.
And could you all live in the same aria again
Bill

That was my thinking too.

 

[Jimbohorlicks]

I have seen on some sites that when they are sold they have a condition imposed that if the value of the land increases in value when planning permission is granted that the original owner gets a percentage payout of the new value which is determined by a valuer. Forgot what it was called.
If the value of the land doesn't increase then nothing is paid.
I suppose its a bit like farmland. When planning permission is obtained the value rockets.many fold.

 

[Ingwe]

I have seen on some sites that when they are sold they have a condition imposed that if the value of the land increases in value when planning permission is granted that the original owner gets a percentage payout of the new value which is determined by a valuer. Forgot what it was called.
If the value of the land doesn't increase then nothing is paid.
I suppose its a bit like farmland. When planning permission is obtained the value rockets.many fold.

Overage, is the term i think.
Overage gives you, as a seller, a second bite of the cherry. As well as receiving the sale proceeds, overage allows you to share in any increase in value in a property that is realised after the property has been sold.

 

[DerryW]

No:1 check to see if a pre- planning application has been made. That’ll give you a good idea of what the developers have in mind. If it’s for access to much larger plot you can almost name your price.
No:2 engage 3 estate agents specialists in land valuation. You need two valuations 1 as the property sits now, and 1 with whatever the developers are proposing.
No:3 you should also think about attaching an uplift to any sale.
No:4 if it ticks all you boxes, sell up and enjoy the fruits of the opportunity.

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[Van Aert]

No:1 check to see if a pre- planning application has been made. That’ll give you a good idea of what the developers have in mind. If it’s for access to much larger plot you can almost name your price.
No:2 engage 3 estate agents specialists in land valuation. You need two valuations 1 as the property sits now, and 1 with whatever the developers are proposing.
No:3 you should also think about attaching an uplift to any sale.
No:4 if it ticks all you boxes, sell up and enjoy the fruits of the opportunity.

Will do, thanks.

 

[TheMachMan]

We did something similar with our neighbour a few years ago. You need to definitely take paid legal advice and ensure that their offers are binding though it will be subject to planning consent. They will try and chip you down during the process!

 

[Coastal Cruiser.]

This is something I am most curious about. I have heard in the past of developers working on a third/third/third rule I.e a third of the total flat resale value being the land purchase price, the next third being the build cost and the final third being their profit. Not sure if there is any truth in that.

That is out the window now with the cost of Labour and material, probably a very well run site would get 15% profit now.
Local authorities take their chunk out before anything else so that comes out the profit.
Built 3 house in part of my garden a few years back and they were 5 bed and 2800sqft I had to agree pay the local council £115k CIL payment before they looked at the scheme
On your flats these would be at least £500-750k CIL to pay probably a lot more!!

 

[Van Aert]

That is out the window now with the cost of Labour and material, probably a very well run site would get 15% profit now.
Local authorities take their chunk out before anything else so that comes out the profit.
Built 3 house in part of my garden a few years back and they were 5 bed and 2800sqft I had to agree pay the local council £115k CIL payment before they looked at the scheme
On your flats these would be at least £500-750k CIL to pay probably a lot more!!

its beginning to sound like we probably won’t get an offer close enough to make selling worthwhile but we’ll have a chat with them and see where it goes. With all the add on’s that these private retirement developers tie in to purchases such as annual ground rents, maintenance charges and re sale commission fees etc they might decide to table something decent. We’ll see.

 

[TheMachMan]

its beginning to sound like we probably won’t get an offer close enough to make selling worthwhile but we’ll have a chat with them and see where it goes. With all the add on’s that these private retirement developers tie in to purchases such as annual ground rents, maintenance charges and re sale commission fees etc they might decide to table something decent. We’ll see.

It’s important to remember what your costs would be to move and have premium on top. Otherwise as you say it’s not worth it. Have a minimum value that you would happy with and then pitch above.

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[stevewagner]

Whatever you decide I would include that the developer pays all your costs. I would also strongly recommend a RICS valuation surveyor

 

[Coastal Cruiser.]

its beginning to sound like we probably won’t get an offer close enough to make selling worthwhile but we’ll have a chat with them and see where it goes. With all the add on’s that these private retirement developers tie in to purchases such as annual ground rents, maintenance charges and re sale commission fees etc they might decide to table something decent. We’ll see.

You never know, all depending on what the flats will sell for….
It doesn’t cost anything to see what’s on offer

 

[donkey]

This a very interesting thread. Please keep us updated as to what you decide and the eventual outcome.

Geoff

 

[philann]

50 flats at say £300000 each is a £15 million development. Don’t know what their expected profit margin is on that. But the land must be worth a lot! Quick Google looks like £1million per acre in the South, £300000 in the North p

 

[Coastal Cruiser.]

50 flats at say £300000 each is a £15 million development. Don’t know what their expected profit margin is on that. But the land must be worth a lot! Quick Google looks like £1million per acre in the South, £300000 in the North p

So many variables nowadays, mate has 3/4 of an acre up from where I built mine on the south coast and it has been provisionally sold for £1.2m

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