Letter re land purchase request

[Hoovie]

It's going to need all four freeholders to agree to a sale, so I'd be inclined to sound them all out first.
If one declines the deals off.
Agree, and let the interested parties fight it out.
Edit : answered above

"It's going to need all four freeholders to agree to a sale" ....Not always the case though

The person who bought our old family home was offered a price above market value for the house and land for a Waitrose supermarket development.
Our old neighbours (nice folks) took the money on offer for their house and gardens, but the owner of our old house held out for more because he thought he had the developers by the S&C (he was an arrogant SOB so no surprised he tried that).
He was wrong, and Waitrose just developed around him. Instead of a nice little woods to the side of him, he ended up with a supermarket car park on the other side of a wall and bottle recycling bins close to the house. Couldn't have happened to a nicer fella

 

[Van Aert]

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

Geoff

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

Geoff

I will indeed and thank you all very much for your valued knowledge and advice.

 

[Greasy Chap Butty]

Bungalows do take up a lot of land per / bedroom.
If the developer is thinking of flats, they could get quite a lot on in the place of the 4 bungalows.
You could get a feel from how much other flats in the area sell for. As above, estate agents , or professional advice will pay off.
Obviously you also have to find somewhere else to live that you like as much.

 

[HugoBNB]

As many have posted, seek sound professional advice. I would also suggest making sure their offer is "plus legals" so that they are bound cover the cost of your legal and professional fees. They could be pretty hefty if it is complicated and could easily strip the shine off the final sum you receive.
Good luck

 

[Carpmart]

There are two different things being discussed here. One aspect is a commercial one, the other a legal one.

These two separate aspects need handling with the correct support. I would not let a lawyer handle any commercial negotiations as they are not equipped to do so. They are there to legally draft the agreement with your (the four) interests properly represented.

WRT value, it’s worth what someone will pay to get the land and therefore create the opportunity to develop this site. It’s not worth an arbitrary X% above current market value, it could be worth significantly more and that’s where you need someone who can genuinely broker and negotiate the correct deal for you.

First step is VERY simple, get them to show your their opening move, this will inform your next action.

Wishing you a successful outcome.

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[Happy Jim]

I’m in your position but 3 years further on!

In a nutshell:
2 properties and a parcel,of woodland involved in the assembly.
3 separate Option contacts.
the offer for my place was market value +40%, subject to planning approval, includes an “upward only” house price index ratchet (we’re currently at +21% above the contracted figure) which you must get built in.
it takes time, a lot of it.
All solicitors fees met by the developer.
They’ve been back for a 6 month contract extension - we said “yes” and pocketed £10K for it, non refundable.

You can do lots of maths around GDV profit margins, build costs etc, but fundamentally you need to understand YOUR minimum number and then just listen to what they have to offer…..they’re not daft but will try to get it for the minimum possible obviously.

Cheers
Jim
Anxiously awaiting an appeal outcome!

 

[Carpmart]

A story from the late 1990’s:

Work colleague suddenly ‘disappeared’ and went full out of office. I called to check he was okay and not dying and was met by a very stressed but very excited bloke on the other end of the phone!

Setting the scene, he had recently bought a new build property on the outskirts of Newbury. His was a nice corner property on the edge of the development and up against the boundary where another developer was building a phase after his.

He noticed several ‘suits’ surveying with tape measure and plans and there appeared to be a somewhat animated discussion taking place. Curious he entered the dialogue and despite them being somewhat cagey, he gleaned that there was a problem with access from the road which was to be built passed his house and into the next phase of development.

Fast forward two weeks and he had a knock at the door and had a conversation with the two developers representatives with an offer to buy back some of the land that formed the curtilage of his new property’s land. They were suggesting that they would want a 0.75m strip, would pay for the land and re landscape the boundary to his specification. When pressed, they suggested it could be up to several 10’s of thousands of pounds. They left to formalise an offer and would get back the next day.

He received a call and then a visit by 10.30 the next day (they were clearly desperate to sort this) and an offer of around £80k and they would draw up new deeds etc, all costs to be met by them.

Sensing the urgency and the opportunity, my work colleague figured this was a golden opportunity as they had clearly messed up and ended up in a weeks negotiation culminating in him giving up a 0.75m strip of land, so they had the required access width and could proceed with developing several hundred further houses. They paid him just shy of £480k including his costs. His house was around £300k to buy, so as you can imagine, this was a fairly life changing event for him.

Could they have made him relinquish this in another way, maybe? Could they have played hardball and stuck to a much lower number, again maybe? I think with so many properties to get built and probably so many dates, contractors and so many legal hurdles to jump through to force it in a different way, nearly 0.5M GBP was a cheaper, quicker and lower cost way to sort the problem out!

 

[Chris]

I haven’t read the replies above but be careful.

Developers love this sort of stuff and enticing you in with offers of treasures.

Truth is they don’t give a stuff about you.

They will want an option agreement whereby they will only pay you £x if they get the planning they want and will tie you down for 2 years plus and will want this option (often for a fee of £1) as a restriction on your title so you can’t sell during the option period

Be careful..

 

[pampam]

A friend oop north 30 years ago sold his little garage and bit of land for over a million,to a developer it was way over what it was worth, he moved down south near to newmarket and had a big house built …it was life changing for him. Good luck and good things do happen

 

[Van Aert]

I’m in your position but 3 years further on!

In a nutshell:
2 properties and a parcel,of woodland involved in the assembly.
3 separate Option contacts.
the offer for my place was market value +40%, subject to planning approval, includes an “upward only” house price index ratchet (we’re currently at +21% above the contracted figure) which you must get built in.
it takes time, a lot of it.
All solicitors fees met by the developer.
They’ve been back for a 6 month contract extension - we said “yes” and pocketed £10K for it, non refundable.

You can do lots of maths around GDV profit margins, build costs etc, but fundamentally you need to understand YOUR minimum number and then just listen to what they have to offer…..they’re not daft but will try to get it for the minimum possible obviously.

Cheers
Jim
Anxiously awaiting an appeal outcome!

Thanks for sharing this Jim, I will suggest to Mrs Van Aert that she doesn’t spend too much time looking at Rightmove just yet.

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[Greasy Chap Butty]

A friend oop north 30 years ago sold his little garage and bit of land for over a million,to a developer it was way over what it was worth, he moved down south near to newmarket and had a big house built …it was life changing for him. Good luck and good things do happen

Why would anybody willingly move down south? Everybody knows it's rubbish.

 

[Carpmart]

Why would anybody willingly move down south? Everybody knows it's rubbish.

Newmarket is more East than South. Southerners wouldn’t associate with this being a South location.

 

[Greasy Chap Butty]

We live in a bungalow in a small cul de sac a short walk from a town centre (Home Counties, not far north of London). Three of the four bungalows in the road are in our family, it is only the four bungalows that are the subject of the land purchase request. Over the last 20 years or so we have had approximately a dozen letters from different house builders asking if we are interested in selling to them, we never replied to any of them and no offers were ever put forward. This week we got another letter (from a well known national retirement flat builder) asking if we are interested in selling our freehold interests for a ‘well above market value’ figure. We are all now in the position where we are interested in seeing what sort of offer we would get and whether it would make sense to sell or not. What would your next plan of action be? Would you bother contacting the previous enquiries or just see what the most recent enquiry comes to and , if we are happy, go with that? Any pitfalls we should watch out for? Any advice appreciated. Thanks

Just another thought. I've read in a few places that the costs of a new development are roughly estimated at one third each of:- Land, Building Cost and Developer overhead / profit.

So, from that you could work what the land is potentially worth to them. eg if they can put £3 million pounds worth of housing on it, the land would be worth £1 million.

 

[Bailey58]

"It's going to need all four freeholders to agree to a sale" ....Not always the case though

The person who bought our old family home was offered a price above market value for the house and land for a Waitrose supermarket development.
Our old neighbours (nice folks) took the money on offer for their house and gardens, but the owner of our old house held out for more because he thought he had the developers by the S&C (he was an arrogant SOB so no surprised he tried that).
He was wrong, and Waitrose just developed around him. Instead of a nice little woods to the side of him, he ended up with a supermarket car park on the other side of a wall and bottle recycling bins close to the house. Couldn't have happened to a nicer fella

Interesting, we currently have a development along the main road near us which was fields in all the years we've lived here. A row of some 30 new houses under construction but standing splendidly in the middle is one that perhaps didn't respond to any offers that came his way. Not forgetting Stott Hall farm splitting the M62 in half.

 

[chaser]

As someone else suggested a post or two ago, wouldn't getting the developer to build you all new houses be a good start with selling, you don't have the worry of looking elsewhere to buy, and you would have a mortgage free house plus your millions.

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[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.

Sorry, forgot to mention the dreaded capital gains tax liability.

 

[Van Aert]

Sorry, forgot to mention the dreaded capital gains tax liability.

When most individuals sell their main home there is no capital gains tax because of so called principal private residence relief (PPR).

Would the above not apply then?

 

[Carpmart]

When most individuals sell their main home there is no capital gains tax because of so called principal private residence relief (PPR).

Would the above not apply then?

My guess would be yes it would apply on the fair market value part of the transaction, but anything above that, I guess it is a capital gain and will be taxed accordingly…

 

[Emmit]

Here is Chapter and verse on the Gov website.

You do not pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:

• you have one home and you’ve lived in it as your main home for all the time you’ve owned it
• you have not let part of it out - this does not include having a lodger
• you have not used a part of your home exclusively for business purposes (using a room as a temporary or occasional office does not count as exclusive business use)
• the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
• you did not buy it just to make a gain

If all these apply you will automatically get a tax relief called Private Residence Relief and will have no tax to pay. If any of them apply, you may have some tax to pay.

 

[Happy Jim]

I took advice and it was “chill out and buy champagne” zero CGT applicable. If you do become the developer then it’s a different story

Cheers
Jim

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[Van Aert]

Here is Chapter and verse on the Gov website.

You do not pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:

• you have one home and you’ve lived in it as your main home for all the time you’ve owned it
• you have not let part of it out - this does not include having a lodger
• you have not used a part of your home exclusively for business purposes (using a room as a temporary or occasional office does not count as exclusive business use)
• the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
• you did not buy it just to make a gain

If all these apply you will automatically get a tax relief called Private Residence Relief and will have no tax to pay. If any of them apply, you may have some tax to pay.

I took advice and it was “chill out and buy champagne” zero CGT applicable. If you do become the developer then it’s a different story

Cheers
Jim

Thanks, panic over.

 

[NigelNovice]

This reminds me of an old work mate of mine who along with about 15 neighbours with really long back gardens were asked if they would sell half of it to this developer who had just bought a large property (ex petrol station/hardware store) around the corner, after a few discussions they all agreed to sell barring the one next to the large property but the all gave him a share of their payout and so they then lived like it for about 10 years until said neighbour had to sell up and the guy bought it and then built a load of bungalows on the land.

 

[Coastal Cruiser.]

Just another thought. I've read in a few places that the costs of a new development are roughly estimated at one third each of:- Land, Building Cost and Developer overhead / profit.

So, from that you could work what the land is potentially worth to them. eg if they can put £3 million pounds worth of housing on it, the land would be worth £1 million.

As before that myth is no more, probably 15% profit if they are lucky and sell the development quickly.

 

[Coastal Cruiser.]

I took advice and it was “chill out and buy champagne” zero CGT applicable. If you do become the developer then it’s a different story

Cheers
Jim

Yes correct, I had to sell part of my garden to a limited company I set up to build the houses to avoid a big chunk of tax.
As it was just under an acre no tax liabilities and I made sure the limited company paid top dollar for the land

 

[gus-lopez]

the only other properties that we would consider moving to nearby are more than 20% above our current open market value.

The sale of your 4 should be at double the going rate + expenses just to even be thinking about it.

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.

It always amazed me that someone can make an outline planning application on a property that they don't even own? Add in to that that there was no requirement for the council to inform the current owners of it apart from the usual notifications required. These days it would be spotted straight away but years ago far less so.

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[Van Aert]

Update for you.

The developer has now pulled out citing that planning advice has lead them to believe that our proximity to the conservation area of the town( and some trees that line our gardens) will limit what could be built on the site and is therefore not viable for them.

They stated that we are in the conservation area (we are not) so I sent them a map showing the conservation area clearly indicating we are outside of it- this received no reply.

I would have thought that their planning consultants could have deduced the lack of viability prior to making the approach but I’m no planning expert.

Maybe the market has just gone a bit quiet for them and they’ve decided to hold back on new developments for a bit or perhaps they will come back with a lowball offer in a few months!

Cheers

 

[Carpmart]

Update for you.

The developer has now pulled out citing that planning advice has lead them to believe that our proximity to the conservation area of the town( and some trees that line our gardens) will limit what could be built on the site and is therefore not viable for them.

They stated that we are in the conservation area (we are not) so I sent them a map showing the conservation area clearly indicating we are outside of it- this received no reply.

I would have thought that their planning consultants could have deduced the lack of viability prior to making the approach but I’m no planning expert.

Maybe the market has just gone a bit quiet for them and they’ve decided to hold back on new developments for a bit or perhaps they will come back with a lowball offer in a few months!

Cheers

Definitely the latter, cold feet with the market…

 

[The Wino]

I think either they will return or someone else will they're not making new land and sooner or later theyre going to need some more. We sold a plot we got planning permission on a few years ago it wasn't worth us building as the value of the finnished property was only 10% more than the land plus building costs maybe their sums changed with the state of the market and building material costs

 

[L' Hobo]

Update for you.

The developer has now pulled out citing that planning advice has lead them to believe that our proximity to the conservation area of the town( and some trees that line our gardens) will limit what could be built on the site and is therefore not viable for them.

They stated that we are in the conservation area (we are not) so I sent them a map showing the conservation area clearly indicating we are outside of it- this received no reply.

I would have thought that their planning consultants could have deduced the lack of viability prior to making the approach but I’m no planning expert.

Maybe the market has just gone a bit quiet for them and they’ve decided to hold back on new developments for a bit or perhaps they will come back with a lowball offer in a few months!

Cheers

I know little of the property market but in the Truck/Coach game, when working out future rates, one includes the cost of the next vehicle you are going to buy as a replacement. Not the value of your present one.

In other words, price up a replacement home that will make you just as happy, not the market value of the one you live in now.

Good luck whatever you decide and remember, if one developer is interested, there will be others.

 

[Coastal Cruiser.]

believe that our proximity to the conservation area of the town( and some trees that line our gardens)

My garden was in a strategic gap and the Chichester Harbour AOB zone but still obtained planning.
Just another report the get from another department, at a cost obviously

With the trees, if they have no TP on have them cut down before any planning goes in as the council may then put restrictions on what you can do with them.

I had cut some trees down before applying Council asked me not to cut any trees down but never put a TP on them so I cut down 4 more

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